Velti auction to be held Dec 9 in Manhattan; to [hopefully] close Dec 20--Highyieldbond
Velti had been in default under a credit agreement with HSBC Bank USA for nearly a year when GSO purchased about $57.5 million in principal outstanding on Nov. 1, according to court documents. With the debt sale completed, GSO agreed to provide $26.25 million in debtor-in-possession financing, consisting of $10 million in new money, $15 million in prepetition loans and $1.25 million in DIP fees to be paid in kind. US Bank is administrative agent for the DIP, which will bear interest at 12%.
The auction will be held Dec. 9 in the Manhattan office of law firm DLA Piper, which is representing Velti during its restructuring. GSO’s bid consists of the assumption of certain liabilities, the $26.25 million under its DIP facility, a reduction of $3.75 million outstanding under Velti’s credit agreement, and up to $1.25 million in cash for the payment of cure costs. Competing bids must include reimbursement of GSO expenses and an additional $2 million, with subsequent bidding in increments of $1 million. Velti has not yet revealed the exact figure for initial competing bids, according to a company spokesperson.
Velti asked U.S. Bankruptcy Judge Peter Walsh for a sale hearing on Dec. 16, so that the transaction may close no later than Dec. 20.
A hearing on the company’s “first-day” motions had not yet been scheduled, as of press time
So automatically, Velti value was assigned 57+26=83 Million Dollars, not including what the auction will bring in. Im going to have to get my cost as close to 1$ if auction goes for 17M, that puts the balance sheet better by 1$ per share. is my reasoning off heere
GSO did not assume VELT's HSBC loan debt at 100%. More like 20%. The difference became an HSBC loan loss. And there's a former HSBC commercial loan officer somewhere looking through the Linked In job postings, right now.
GSO will then attempt to auction off the debt at the highest price they can get. This will be a high yield situation and the terms will be onerous. Think $57 mil, crammed down to $18 mil carrying a 10% coupon in a senior position. There will still be less debt, but the payments won't change that much because the interest payments will be sky-high.
Hi ed, this has been a humbling experience. Any value in this company will only be created with how they turn around the money losing parts that were not included in the sale. Your calculation is the aggregate debt this company had/has. We need to see how much assets they have to come up with the valuation. It won't be anywhere close to the liabilities. Right now, even $11M seems like a rich valuation given the unknowns. This is no investment grade material anymore. There will be no earnings release nor any CC to explain the company status. However, there will be a few big bounces and dips as traders play with this stock on lower volume but that will be it for the foreseeable future. The management has proven it's 100% incompetent with the latest move. I'll see if this is trade worthy but at 12-13 cents it can go either way and I shall wait. Maybe at 7 cents, it will be worth a gamble to 15-20 cents again...