Sometimes I think I am dealing with the slow reading group on this board. And y'all can get as surly as you want but you really need to pay better attention.
"Where is ALD going to get $1450m to pay down debt?" Let me explain. This company is gushing cash, about $250m per quarter and the portfolio companies are continuing to pay that according to the last quarterly report.That money used to go to paying the dividend but now it is available to pay down debt. The first quarter is probably shot because of the cost of the restructuring and maybe the remaining quarters are reduced by $50m each due to the higher interest rate but between now and the end of 2011 that leaves $2.25B of cash.
They did NOT say they will have no net operating income. What they said is they have none right now because of the "unrealized" depreciation writedowns they keep taking. And they said because of that they have no requirement to pay a dividend to maintain their BDC status. They also said because of their results this year they will not be required to pay a dividend next year. If they have net operating income in 2010 (because they stop taking writedowns) then they may need to pay a dividend sometime before the end of 2011.
Since they have all this cash coming in there is no need to fire sale any assets. If good deals occur, half of the proceeds go toward the private debt but that money is in addition to all the cash I mentioned earlier. And as quickly as they can pay down the debt, the quicker they can reestablish profitability and net operating income.
Lost in all this discussion is that ALD is in great shape from a cash standpoint and the reason for their "event of default" and need to restructure is all non cash nonsense created by the "unrealized" writedowns.
There will be no common dividend for the next two years, at least, but the company will survive and do just fine. That is why I have bought into the AFC issue, which is rated BB+ by S&P.