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Doral Financial Corp. Message Board

  • sutherlanddean sutherlanddean Jan 10, 2006 6:14 PM Flag


    After exit from bankruptcy protection? Any one having some ideas about this(united airlines)?

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    • It depends on a number of issues -

      (1) I'm long a couple $mm of the unsecureds @ $15.25 - they are $23.75 - $24.75 today. I tihnk it depends how much further they run in this form as to how much upside they have from here.

      (2)If the bonds trade up around $30 by the time the plan is officially confirmed and the stock frees and the admitted unsecured claims wind up around $30 billion, then there is less upside.

      (3) Seen many a forward 12 mos EBITDAR estimate maybe $900mmm to $1.3bil is realistic.

      (4) Cash is estimated to be at least $4 - 5 bil and secured debt about $3

      (5)Leaves a valuation of EV (less cash) of $8 bil against a little over $1 bil of EBITDAR.

      The upside from there would be dependent on airline fuel price and load factor trend (both of which have been positive for UAL).

      I played ACE out of bk and the stock went up about 50%. I'm thinking it was valued at about 5.5x EBITDAR after cash on the break.

      I guess that's along way of saying that if the bonds don't appreciate much from here to beginning of FEB when the plan is scheduled to be confirmed - then you are looking @ 6.5x and yes, the stock would have some upside from there and alot of upside of the price of oil helps you out.

      Sorry for the length - but I hope that helps.

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