with the second largest shareholder now suspecting Tariko of spoiling most of the company's assets
most likely in the way of some orchestrated bankruptcy proceedings in Russia I wonder what the common shares are going to do tomorrow.
if Kaufman knows Tariko for 20 years (like he points out in the letter) he should have negotiated a good deal for his shares long ago. Now he's getting his back kicked by the Russian gangster and will most likely end up with nothing for a whopping $40 mln loss.
I don't get your position. If you are holding junk bonds, you would want the company to do well, too. The only way the company will be able to meet its debt obligations in full, including dividends, is if the profits flow. If not, then neither the bonds nor the common shares will be profitable. You push the junk and say sell the common, but the junk will only pay off well if the company turns around.
an opaque situation with a Russian gangster in the driver's seat - not likely the kind of stuff educated investors would like to deal with. Especially not if the second largest shareholder accuses the largest to secretly strip the company of its valuable assets.
as Tariko now can do whatever he wants at CEDC there's little to no insight in what happens with the company. Tariko already made clear that he doesn't want to pay for the March convertible bonds anymore (as promised in former statements made by him) and that the company's debt is going to be "restuctured".
Debt restructuring means that the bondsholders will have to make concessions in exchange for avoiding bankruptcy proceedings.
As the common shares are last in line in the capital structure they will suffer the most in case of any debt restructuring. Perhaps the bondsholders are offered some cash and a myriad of new shares here - that would dilute common shareholders quite severe.
Perhaps there is no deal at all and CEDC will file for bankruptcy.
To place this bet with some kind of safety net below you the 2016 senior bonds are the only place to be currently as these bonds are ranked the highest in the capital structure and will have value even in case of bankruptcy. That's why I guess the bonds should be the instrument of choice here as there is a great risk for bankruptcy at this point.
The current state of the business at CEDC doesn't matter that much as long as the debt restructuring isn't done.
Don't make up things and spread fear so that you can cover your shorts cheaper. Nothing is going to happen to common shares. CEDC just have to show continuing operational progress which they are doing already and once capital restructuring is done all fears will evaporate.