Frankly speaking you are an idiot as you should know that chapter 11 proceedings are in fact designed for preparing the company to emerge STRONGER and as a much more viable entity. Debt will be cut substantially lowering break-even levels and making Paragon a highly competitive company during this downturn that might even be able to pick up some distressed assets themselves later in the cycle.
I think the shares will be worth close to zero pretty soon. The company has a $160 mln bond maturity due in October and they don't have the money to pay it back. This will go the same way like LDK and Suntech.
Yes, hiring prominent bankruptcy lawyers always gives investors great faith in their company I guess. Lazard is on board to advice on the new capital structure while the lawyers will negotiate the exact terms with banks and bondholders. Current equity will be wiped out and banks and bondholders will then own a new company with much lower debt and stronger competitiveness.
This looks like wishful thinking. Remember the company has another short term bond maturity in October (around $160 mln). At this point it looks highly unlikely that the company will be able to make that payment.
This is ultra low margin China business and I would bet the contract has already been included into the company's most recent projections. Overall this is a great chance to get short some shares here.
Of course it has. Perhaps you should think about the fact why the company hired one of the most prominent bankruptcy lawyers alongside Lazard to assist with this review. Bankruptcy is a given now.
This is plain dumb as Quiksilver already said that the shares will be worthless. Even worse the shares will be cancelled after the new Quiksilver emerges from chapter 11 shortly.
Carl obviously does not think that Endo (or anyone else) will buy the company as otherwise he would have actually bought the shares outright instead of going after the converts at a huge discount.
Again - VVUS won't be able to pay that convertible back in 2020 anyway - so they will have to address this bond at some time going forward and that's exactly why Carl is bidding for those bonds currently. They would simply agree to a much lower conversion price and that's it.
When calculating with 70 mln outstanding shares and a share price of $0.18 the current value of the new DBG is roughly $90mln.
Graham shareholders get 47% of the new DBG shares so the value of Graham calculates to $42 mln currently. I have assigned the remaining market value of $48 mln to Hudson.
This is of course utter nonsense. Icahn in fact is positioning himself to swallow the company on the cheap in a future restructuring. Being the sole creditor of the company puts him in a senior position to all shareholders and moreover gives him superior negotiation power. He doesn't want to buy the company by paying a premium, he in fact is looking to get into the driver's seat by avoiding dealing with the current shareholders.
If his offer is successful he could just offer to Vivus to convert the $220 mln bond into new shares at a VERY LOW PRICE. The company would be debt free and Icahn would get a vast majority of shares all at once. This will be the most likely outcome here.
Vivus won't be in the position to pay back the bond in 2020 anyway given their roughly $10 mln cash burn rate per quarter so this issue will have to be addressed sooner or later.
The purchase price for Hudson was close to $100 mln two years ago and I think it is fair to say that the brand took some kind of beating (business wasn't great already before JOEZ swallowed them) under the JOEZ umbrella. So given that former Graham shareholders will own 47% of the new company the caclulation looks pretty easy at 18 cents:
Graham valuation $42 mln
Hudson valuation $48 mln
JOEZ managed to devalue the brand by 50% within eight quarters. While clearly ugly I guess Hudson wasn't worth even close to the $100 mln JOEZ paid at that time.
I would expect the company to file more information on these issues around the closing date of the transaction. For now I guess $100 mln doesn't look too cheap for investing into a black box. I suspect Graham to be another Tengram investment that did not go so well just like Hudson did before JOEZ finally acquired them (a major mistake) so I would doubt that combining two lefts will make a right here.
Of course that doesn't work. Bankruptcy proceedings always require legal action. But we are talking about a restructuring outside court with Icahn as the company's sole creditor. He might propose to convert the bonds into new equity at prices substantially below the current share price and effectively get control of the company this way.
It will be automatically stopped out once the shares cross $1.80 as said above...