Tuesday, April 10, 2012

More About A123 Systems (AONE)

Greentech Media has a good post about the troubles at AONE.

This is an even more extreme enterprise value disparity than what we saw in ENER. The market value of the debt is about $40 million, but the company has ~$200 million in cash, meaning that the bond market implied enterprise value is negative $100 million or even less. Meanwhile the market capitalization is like $130 million! That is a huge disparity!

This is a clear restructuring candidate. It's hard to sell enterprise products when your bonds are trading at 30; people wonder whether you are going to be around, etc. It's hugely distracting. I don't know why they haven't already announced an exchange offer?

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