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Otelco, Inc. Message Board

  • aharonlevy aharonlevy Feb 1, 2013 2:56 PM Flag

    Post-bk equity value (back of the envelope)

    Considering that the trade creditors who are pari passu with the subordinated IDS holders will receive 40.5% of their allowed claims if the IDS holders reject the plan, we can assume our equity value post-BK is roughly 40% of our $7.50 junior claim (the current equity component is worthless). That's because we're basically in the same place on the waterfall as trade creditors (who will receive 100% if we vote yes--we can't be treated differently from them). So an IDS should be worth ~$3.00 right out of BK, according to the co's calculation, which is possibly conservative since it's in their interests to have as low an enterprise value as possible after emergence. This may have been addressed in greater detail elsewhere in the plan, which I've just started reading.

    Sentiment: Buy

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