tag:blogger.com,1999:blog-1527840491496268397.post1998594219467206170..comments2024-03-08T11:20:30.095-07:00Comments on Credit Bubble Stocks: Possible Genco Shipping Restructuring $GNKUnknownnoreply@blogger.comBlogger37125tag:blogger.com,1999:blog-1527840491496268397.post-9356728292234468922014-02-04T21:59:48.675-07:002014-02-04T21:59:48.675-07:00At the *earliest* you buy in after the company com...At the *earliest* you buy in after the company comes out of bankruptcy, after the smart money has done all the leg work.CPhttps://www.blogger.com/profile/12701174164478027499noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-6170017677114416262014-02-04T19:44:29.846-07:002014-02-04T19:44:29.846-07:00Great discussion!
Now, unless I miss something ob...Great discussion!<br /><br />Now, unless I miss something obvious, doesn't it mean the simplest way to play in the dry bulk space is to buy the equity after the company comes out of bankruptcy, after the smart money has done all the leg work, and wait for the industry to recover? Johnhttps://www.blogger.com/profile/14682393043392310140noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-5062238555805969772014-02-04T14:48:24.628-07:002014-02-04T14:48:24.628-07:00Very good two most recent comments.
I don't ...Very good two most recent comments. <br /><br />I don't see the equity getting cut in on a new deal.CPhttps://www.blogger.com/profile/12701174164478027499noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-4278406069577499922014-02-04T13:42:48.972-07:002014-02-04T13:42:48.972-07:00In a Ch11 recap, there would typically be impairme...In a Ch11 recap, there would typically be impairment of the debt in exchange for the equity (or a very large portion of it). <br /><br />Assuming that the bank debt holders want a very quick resolution (get the company out of Ch11 with the equity before rates improve), the convertibles have nuisance value. As the converts are a small part of the cap structure, cut them in a bit on the equity (maybe warrants) and give them a chance to buy in some additional equity as well. Leave a 2-3% tip of NewCo equity to the old equity holders to get them to sign off. Then exit Chapter 11.<br /><br />The End. Coming soon to a Southern District Court near you.<br /><br /> Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-35396532625765149642014-02-04T13:38:18.597-07:002014-02-04T13:38:18.597-07:00Here's what we know:
1. The bank debt has sec...Here's what we know: <br />1. The bank debt has secured every asset under the sun. Nothing can be sold or borrowed against without the banks getting proceeds.<br /><br />2. The company doesn't have the cash to make the 4/1 amortization payment and still make covenants.<br /><br />3. DnB NOR (admin agent) sold its entire position in the bank debt, somewhere between $500-600m.<br /><br />Thus, the company needs the banks to play ball, and a large owner of the bank debt is not a bank.<br /><br />We can surmise that the bank debt holders want to own the company in some form. The bank debt may be "covered", but LTV of this paper is usually 70% or less. TBC...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-32115712903991776012014-02-04T12:55:51.504-07:002014-02-04T12:55:51.504-07:00One guide who is leading a pack of recreational pa...One guide who is leading a pack of recreational participants to the top of this tanker market is New York-based shipowner Peter Georgiopoulos, or Peter G as he is ubiquitously known. Peter G's General Maritime, the largest private shipowner in the US, has assembled a party of adventure-seeking backers that includes both hedge funds and private investors. With today's rising tide of the tanker market having reversed General Maritime's ill-timed acquisition of four aframax tankers from Euronav, market sources indicate that General Maritime is shopping for an underwriter to lead the company's IPO this autumn.<br /><br />http://www.marinemoneyoffshore.com/node/5838CPhttps://www.blogger.com/profile/12701174164478027499noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-60981699113341787792014-02-04T12:54:43.104-07:002014-02-04T12:54:43.104-07:00Institutional Shareholder Services, the proxy advi... Institutional Shareholder Services, the proxy advisory firm, said on July 27 that the entire transaction, not just the most recent proposal, was "thin gruel served cold - a clear and striking failure of governance by the entire board, not simply its chairman." <br /><br />http://henzelaw.com/gmr.htmCPhttps://www.blogger.com/profile/12701174164478027499noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-6509748813714782012014-02-04T12:51:57.743-07:002014-02-04T12:51:57.743-07:00 Determine an industry that has staying power (... Determine an industry that has staying power (i.e. will be around in 20 years) that is under severe stress<br /> Purchase the senior bonds of a company in that industry at distressed levels<br /> File the company, and convert your senior ownership to a majority equity share<br /> Clean up operations<br /> Wait<br /><br />http://www.distressed-debt-investing.com/2011/09/on-value-traps.html?m=1CPhttps://www.blogger.com/profile/12701174164478027499noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-64088346192158611602014-02-04T12:51:41.132-07:002014-02-04T12:51:41.132-07:00
General Maritime Corp. (GMR), the second- larges...<br /><br />General Maritime Corp. (GMR), the second- largest U.S. owner of oil tankers, won approval of financing agreements with Oaktree Capital Management LP after changing terms to address creditors’ objections.<br /><br />U.S. Bankruptcy Judge Martin Glenn in Manhattan today approved a $75 million loan from lenders including Nordea Bank Finland Plc and a $175 million equity investment from Oaktree. Glenn questioned expense reimbursements and a breakup fee for Oaktree, a junior secured lender to General Maritime that will be the lead, or stalking-horse, bidder at an auction to sell the company.<br /><br />“This has all the hallmarks of a loan-to-own structure,” Glenn said. “Even if the committee is satisfied, I’m not necessarily satisfied.” <br /><br />http://mobile.bloomberg.com/news/2011-12-15/general-maritime-reaches-agreement-with-creditors-on-75-million-loan.htmlCPhttps://www.blogger.com/profile/12701174164478027499noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-40069954418725119922014-02-04T12:50:55.615-07:002014-02-04T12:50:55.615-07:00This all happened in the case of General Maritime....<br /><br />This all happened in the case of General Maritime.<br /><br />First, Oaktree dictated hard terms. The loan terms look very much like those only a company on the verge of bankruptcy, and therefore with few negotiating options, would agree to. Oaktree is getting a right to 19.9 percent of the company. The interest rate that Oaktree is charging fluctuates, but in June it was at 12 percent a year.<br /><br />This is far from your typical subordinated debt deal, where a lender simply lends money at a rate of interest. General Maritime was in distress, but it also had assets like tankers that it could sell and did not appear to near insolvency. It also had at least another year before it needed to secure this financing.<br /><br />Second, Oaktree has provided Peter C. Georgiopoulos, General Maritime’s chairman and owner of about 6 percent of its stock, 4.9 percent of the profit from the loan. It does not appear that Mr. Georgiopoulos paid for this interest.<br /><br />Instead, it appears to be a reward bestowed by Oaktree — but a reward for what? This is the worst sort of conflict. The chairman is making money off his company’s distress. Because of the conflict, the company’s independent directors needed to approve the loan, which they did, but this is still poor optics at best.<br /><br />http://dealbook.nytimes.com/2011/08/09/hazards-of-borrowing-money-from-hedge-funds/?_php=true&_type=blogs&_php=true&_type=blogs&_r=1CPhttps://www.blogger.com/profile/12701174164478027499noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-48267198574555610142014-02-04T12:50:22.042-07:002014-02-04T12:50:22.042-07:00“The plan is fair and equitable,” Glenn said, noti...“The plan is fair and equitable,” Glenn said, noting that it restructures more than $1.3 billion in pre-bankruptcy debt. The plan’s terms will cancel all of General Maritime’s old stock, giving nothing to holders of 121.7 million common shares. Secured debt will be repaid in full and converted to equity in the reorganized company, giving 98 percent of stock in a new firm to Los Angeles-based Oaktree.<br /><br />General Maritime, which operates in more than 230 ports in more than 70 countries, filed for bankruptcy in November. The company listed assets of $1.71 billion and debt of $1.41 billion in its Chapter 11 petition. In February, when Glenn approved a draft of the plan, he told creditors to either prepare evidence for a fight over the final plan or negotiate an agreement.<br /><br />An amended version of the plan resolved objections from most unsecured creditors, improving their estimated recovery from as much as 1.88 percent to a maximum of 5.41 percent. The majority of creditors voted in favor of the plan and Glenn overruled the three objections that remained at the opening of today’s hearing. <br /><br />http://mobile.businessweek.com/news/2012-05-03/general-maritime-plan-to-be-approved-by-bankruptcy-judgeCPhttps://www.blogger.com/profile/12701174164478027499noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-86776420177032797922014-02-04T12:47:24.677-07:002014-02-04T12:47:24.677-07:00 “Approximately three months ago, the debtors a... “Approximately three months ago, the debtors appeared before this court arm in arm with their old friend, Oaktree Capital Management, … toting a fully baked plan of reorganization that would deliver all of the equity and upside in these cases to Oaktree at the expense of the debtors’ unsecured creditors,” lawyers for the committee said Tuesday in a filing in U.S. Bankruptcy Court in Manhattan.<br /><br />The committee claims General Maritime “contrived” with Oaktree to value the company at a “friendly” price while releasing company insiders and Oaktree from any liability connected to lawsuits the creditors might pursue.<br /><br />http://gcaptain.com/general-maritime-oaktree-blasted/CPhttps://www.blogger.com/profile/12701174164478027499noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-37429518367732931922014-02-04T12:47:04.055-07:002014-02-04T12:47:04.055-07:00Creditors of General Maritime Corp. (GMRRQ) are ac...Creditors of General Maritime Corp. (GMRRQ) are accusing the oil tanker operator and “old friend” Oaktree Capital Management LLC of contriving to give the hedge fund manager ownership of the company and leave them holding the bag.<br /><br />http://gcaptain.com/general-maritime-oaktree-blasted/CPhttps://www.blogger.com/profile/12701174164478027499noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-87365980248577400602014-02-03T20:46:21.670-07:002014-02-03T20:46:21.670-07:00SBLK is pretty different from GNK. Less leverage.
...SBLK is pretty different from GNK. Less leverage.<br /><br />Do you honestly think people would invest in GNK equity and give a gift to the bonds AND loans both trading below par?<br /><br />You also need to read the tea leaves. The catalyst is coming up and no rights offering or exchange offering announced yet. They take time to implement.<br /><br />Are you long the stock or something?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-89289979698461618792014-02-03T20:36:36.223-07:002014-02-03T20:36:36.223-07:00Take a look at all of the seeking alpha analysis ...Take a look at all of the seeking alpha analysis on the Starbulk backstopped rights offering. The back stop allowed Starbulk to restructure their German bank loan payments (so they wouldn't need to pay interest for years) and improved nearly every operating and financial metric, and even created enough of a cash pile for them to make a down payment on future orders for new boats. The banks reduced their principal risk, while raising floating interest rates and extending the maturity.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-16808097251483142014-02-03T20:15:35.361-07:002014-02-03T20:15:35.361-07:00Banks are still required to take metal deposits. A...Banks are still required to take metal deposits. And you can earn fixed income on your deposits during a deflation.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-89069054637869618342014-02-03T20:01:53.088-07:002014-02-03T20:01:53.088-07:00Why on earth would there be a rights offering? Wha...Why on earth would there be a rights offering? What the loans want to do is stuff the bonds and the equity. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-81324638321032724062014-02-03T19:37:26.723-07:002014-02-03T19:37:26.723-07:00Thanks for clarifying, yes, the bank notes make at...Thanks for clarifying, yes, the bank notes make attractive investments, but not unsecured loans (like the convertible bonds).<br /><br />If there's a backstopped rights offering in 2014, then the 2015 and 2016 options will surely go down in value.<br /><br />Peter and the PE firm both gain with a back stop. Dumb money gets diluted. And also management/board and backstopping investors always get a nice discount for back stopping.<br /><br />I'm not bullish on dry bulk. I think we can agree that it's either near or at the bottom of the cycle. Eventually it will rise , which makes also makes the long put play less attractive.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-16097522874600965492014-02-03T19:32:26.485-07:002014-02-03T19:32:26.485-07:00Look how well SFL did in 2008:
http://finance.yah...Look how well SFL did in 2008:<br /><br />http://finance.yahoo.com/q/bc?s=SFL&t=my&l=on&z=l&q=l&c=<br /><br />Great deflation trade - if you short it!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-60601138913313180282014-02-03T19:28:46.979-07:002014-02-03T19:28:46.979-07:00Ships aren't a hedge against deflation (!).
...Ships aren't a hedge against deflation (!). <br /><br />They are only an inflationary bet. Inflation thesis failed in spring 2011 and the dumb money still hasn't gotten the message.<br /><br />They'll learn.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-6079158561805404252014-02-03T19:27:11.414-07:002014-02-03T19:27:11.414-07:00By the way, you don't need to be bullish on bu...By the way, you don't need to be bullish on bulk carriers; they make a nice hedge for either inflation (as ships) or deflation (as metal) as real assets with some tax advantages.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-89453492196377527742014-02-03T19:22:23.926-07:002014-02-03T19:22:23.926-07:00To be bullish on dry bulk you'd have to be bul...To be bullish on dry bulk you'd have to be bullish on China/emerging markets/commodities.<br /><br />But at the same time if those bounced back... Asian shipyards would just build more ships.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-4603672673247754842014-02-03T19:21:23.796-07:002014-02-03T19:21:23.796-07:00There are no secured bonds, it's a bank loan. ...There are no secured bonds, it's a bank loan. <br /><br />The put options are a steal because you know the equity is going to be a zero in a year.<br /><br />Some people can't tell a silk purse from a sow's ear.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-10058295892390675532014-02-03T19:16:01.952-07:002014-02-03T19:16:01.952-07:00I agree, the secured bonds are somewhat attractive...I agree, the secured bonds are somewhat attractive. However, this is not a good short candidate for a variety of reasons. Also, the options are illiquid and unattractively priced.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-78351119073660798122014-02-03T17:16:03.055-07:002014-02-03T17:16:03.055-07:00Thanks, great example.
Private equity firm Oaktre...Thanks, great example.<br /><br /><i>Private equity firm Oaktree Capital Management invested about $175 million as part of General Maritime's restructuring.<br /><br />Oaktree had lent General Maritime a $200 million loan in May last year prior to the company's Chapter 11 filing. That loan was converted into equity once General Maritime emerged from bankruptcy. Oaktree now owns about 98 percent of General Maritime's stock.</i><br /><br />http://www.reuters.com/article/2012/07/13/us-generalmaritime-idUSBRE86C10220120713CPhttps://www.blogger.com/profile/12701174164478027499noreply@blogger.com