Agree. The only thing that makes sence to me is somebody has restrictive covenants ( must keep min X amount cash at all times) and I think it's the ABL lender
Or put another way LG is in balance sheet clean up mode .. Anyway he can ( using cash as a last resort)
I Think we will get there.. Plus they may be nibbling in open market while eyes r focused on tender..
At levels below 1.5 sp co was priced at high chance of bk. W the bond exchange , the bk chance has been reduced, and equity / BV will b increased. Remember the co did billions in write downs so any future mark to market (up) will increase availability on the borrowing base . I expect the shorts to slowly cover over next few months and sp to keep drifting up...
Yup w bk risk much lower think people who tender looking to turbo return going long common
I'm thinking most will as institutional holders they will want to say to their investors "ya, but we traded up the credit curve so we r now fully secured" and only mom n pop investors will hold to maturity ( I'm guessing 70% will tender)
im talking about their ABL credit line which think they reduce to 250 or 300mm (asset based lending facility "ABL") which they have a 0 balance / never used
the ABL is a secured facility w specific assets like inventory, so it cant be used buy back debt or equity due to restrictive covenants. however, i think a way around this is what they r doing, selling current inventory for cash (using the cash buy back in smaller tranches in open market more discounted bonds) than will use the abl to build new inventory (very clever)
i think the market is saying (on debt tender) "ill believe it when i see it"
whats funny is he is doing a cramdown without really (formally) doing it and without the costs assoc.. all without using cash! (i think the institional debt knows this co was toast without playing ball.. but the real $ will be made going long which is coming as this ship slowly turns)