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".
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4 comments:

  1. AnonymousApril 16, 2014 at 4:18 PM

    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

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  2. AnonymousApril 16, 2014 at 4:22 PM

    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.

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  3. AnonymousApril 16, 2014 at 11:48 PM

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

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  4. AnonymousApril 23, 2014 at 10:11 AM

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

    ReplyDelete