Monday, April 14, 2014

Och Ziff Takes Position in Genco $GNK

Och Ziff filed a 13D showing a 7.32% stake in the Genco equity. This is exactly why I covered:

The Genco restructuring is inexplicably generous to the equity, and the problem is that if you give them an inch they'll take a mile. There's a big risk that they will view what they are being offered as a floor and agitate for more.
If I wanted to own ships, I'd order some newbuilds. At least they'd be brand new and fuel efficient and wouldn't arrive for a couple years, giving my bullish shipping rate scenario time to materialize. Of course, a hedge fund PM isn't allowed to buy actual dry bulk ships, they have to buy claims on ships at a higher level of abstraction, and that creates a principal-agent incentive problem to overpay for ships so that they can engage in some "action".


Anonymous said...

GNK filed a new 8k this evening.

According to Blackrock Advisory Partners:
"Such warrants, which are effective for a period of 7 years from the effective date of the Plan, are exercisable at a cash-less strike price of a total equity value of $1,295 million. This strike prices equates to approximately $20.99 per share of reorganized Genco common stock. The estimated value of such warrants is approximately $30 million to $36 million based on the Black-Scholes pricing model. After accounting for such warrants, the implied share price of reorganized Genco common stock would range from approximately $19.42 to $19.52 before accounting for any subsequent dilution from the Management Incentive Program contemplated under the Plan."

The company also released new financial projects, including a forecast of the new Genco equity value (not accounting for dilution):
2014: 1,233 million
2015: 1,335 million
2016: 1,359 million
2017: 1,384 million

Anonymous said...

The Plan goes to the banks now.

Chapter 11 filing is due on/by Monday.

So, GNK shares will get cancelled in about a month or so.

Anonymous said...

Interesting to see SVP's included in the new agreement.

Anonymous said...

OZ showing up with counsel is just the start of a party in this case. Anything goes in the world of distressed..