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School Specialty Inc. Message Board

  • captainodestin captainodestin Jan 9, 2013 11:56 PM Flag

    This will be a total wipeout of shareholders.

    Had a look at the 8k and its pretty clear the shareholders are going to be completely wiped out.

    The forebearance agreement gives the company until the earlier of either (1) Feb 1; or (B) a default on the terms of the forebearance agreement itself; to cure the default amounting to $93 million to the term loan lenders.

    The default on the term loan in turn has caused an acceleration of the companys outstanding $169 million of debentures, so that if the term loan default is not cured within the next 30 days that $169 million also becomes due and payable.

    The term loan lenders here are Wells Fargo and GE Capital, with Wells acting as administrative agent for the term loan.

    As part of the forebearance agreement the company has agreed to appoint a CHEIF RESTRUCTURING OFFICER wo is acceptable to the administrative agent (Wells Fargo).
    In the real world this means that Wells Fargo is going to "suggest" to SCHS who they should appoint as the restructuring officer and SCHS is going to point blank accept the "suggestion".

    The appointment of a cheif restructuring officer for SCHS has a purpose. If you are too stupid to understand that purpose I will spell it out for you.

    That purpose is either (A) to prepare SCHS for sale in order to pay Wells and GE the $93 million; or (B)else prepare a pre packaged BK of SCHS that will turn the company over to the creditors who will then sell it whole or in pieces so that Wells and GE get their money.

    As of the last q report, the net tangable worth of SCHS was NEGATIVE $60 million, so neither an outright sale of the company or a pre packaged BK will leave the shareholders with anything. The holders of the debentures will not even be made whole.

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