It's certainly a plausible scenario and one that I've run through myself; the preferred, at this price, seems attractive, especially when you consider the year of distributions that have accrued. I just worry because a week of bad weather can have a serious impact on something so close to the edge. I hope it works out, anyway!
Excluding accts payable, derivative liability, and preferred liability, they have ~$20k/key of debt. The amount owed the prefs adds nearly $10k/key. The props they've sold over the last two Qs have sold, in aggregate, for under $20k/key, i believe based on some late-night back-of-envelope math. This might be small sample size, and might be selection bias, since they've been selling weaker props (they say), and obviously there's cash from ops, but still...not necessarily a slam dunk.
Put another way: at the end of the 2nd Q, they had ~5500 rooms and ~$81MM in debt, plus negligible cash. At the end of Q3, they have ~4800 rooms and $81MM in debt, plus negligible cash. They have spent $2.2MM this year in upgrades--$400 a room doesn't buy you much--so that's not where their cash is going. It's still a difficult situation.
Good point, Larry, though made in a way that almost guarantees they won't be heard...
Also, since it's likely to go to a few cents in March, the rate of return may actually be something like 20% over 4 months--even better.
I'm living more dangerously with various puts starting in December. I wonder whether this is people who know about the nature of the trust doing greater-fool buying, in which case at some point it'll implode rather than deflate, or if it's just uninformed buyers. Agree that it's a near-guaranteed return if you go out to June.
It is still a bankruptcy candidate, but it's much, much less likely after this refi. The 1st share issuance reference period doesn't start until ~Dec. 16, so despite standard message board hysteria about convertible holders driving the prices down so they can get more shares, that's not what's going on. Capital structure is more viable, and this becomes once again an execution story. They've had some problems with that in the past, of course, but may be ambling in the right direction. What's happened over the past few days is noise; we'll know whether this was a good deal or not in, say, 6 months to a year. For my sins, I bought more.
WALK did, but yes, it's rare. Leasehold improvement won't fetch anything; fixtures will be pennies on the dollar. The slow-moving merch was part of what led to this mess, so I can't see it fetching book or anything close. That said, this isn't a hopelessly indebted company...just almost hopelessly. There might be some residual value for equity holders but we're talking rounding errors. This is a speculation, nothing more; put whatever multiple you think fair on the asset classes in the last Q, add friction of BK and liquidation costs, and wait.
You're welcome. That's not to say the price won't go up on its way to zero (as often happens), but this is at best a trading idea. Good luck; high dividends these days tend to be fraught...
Right; that was the on-book valuation, but was that the sale price? I guess we're all trying to figure that out.
I'm a dummy, and on SEC and ACAS site all I'm seeing is the aggregate buyout price for the ACE III companies--where are you getting the $65MM figure from? It was last on the books at $77MM. This is quite interesting...good realization, but obviously accrues less to ACAS than if it were on the BS.
Seriously? No offense intended, but do you understand what this security is? It's a pass through entity entitling you to a portion of the proceeds of a defined quantity of energy production. It has a finite life, which is rapidly coming to an end. The current price is significantly higher than the sum of future dividends under any reasonable scenario. If you are holding this in anticipation of a $5 price you will lose money. Read the trust's SEC filings.
Again, not trying to be harsh, but if you understand what this is, you'll understand that any kind of normal valuation method--particularly valuation on yield--does not apply here because this is not a going concern much beyond the end of 2014.
Debt and preferred stock at FV of $82.3MM in the most recent 10Q (cost of $57MM). Will be interesting to see if they realized this or higher, and whether they rolled debt into the new deal, which I doubt.
Unwired, on the books at $82.3 million, though most of that is debt and so may roll over. Scheduled to close Q4. Just thought I'd mention in case anyone missed it.