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why throw good money after bad ones? :O
1) Try NOT to LOSE money!
2) Do NOT SELL in BEAR, BUY-BUY-BUY! invest in managements/companies that does the same!
3) CASH in hand is KING in BEAR!
4) In BULL, SELL-SELL-SELL!
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22-09-2016, 09:42 PM
(This post was last modified: 22-09-2016, 09:49 PM by Clement.)
Interesting proposals.
Let's do a game theory exercise, in the event that the restructuring fails, liquidation occurs and bondholders probably get nothing. Therefore rejecting even the alternate proposal becomes a dominated option for bondholders.
Knowing this, why would the unit holders vote to dilute themselves any more than necessary at the EGM?
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Rickmers just wanna drag it out.... bondholders kicking the bucket down the street.... see who blink first?
1) Try NOT to LOSE money!
2) Do NOT SELL in BEAR, BUY-BUY-BUY! invest in managements/companies that does the same!
3) CASH in hand is KING in BEAR!
4) In BULL, SELL-SELL-SELL!
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For shareholders, they are stuck too
Vote down the equity dilution; Rickmers kaputs, they get zero.
Vote for equity dilution; they live another day, hopefully getting something back.
Its going to be a very long shipping cycle downturn if everyone follows this route.
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Given that the MTN holders are likely to receive units of Rickmers Trust, shouldn't they borrow shares to hedge their position
If the latest restructuring deal go through, the hedge will allow one to locked in the price ahead of the rest, assuming that most will want to sell upon receiving the units
If it fails, the hedge will allow one to record gains in the short to set off losses of owning the MTN
Any thoughts?
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24-09-2016, 04:14 PM
(This post was last modified: 24-09-2016, 04:17 PM by specuvestor.)
In theory yes. In practice it's not so simplistic pay-off diagram
Most people don't lend out shares in a distressed company as they need speedy flexibility to sell in case something happens. So in such structure sometimes the IB have to get major shareholders to agree to lend out shares
If say the company bankrupt and suspend. You might not reap the full benefit cause the settlement price for you to buy back your shorts OTC may not be zero. And if you don't settle you might have to pay the borrowing cost as long as the case drags. You might not have the bargaining power you thought you have
Shorts sound sexy but it's not so simple. That's why sometimes bonds rise on default or stock rise on chapter 11 as covering happens.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
Think Asset-Business-Structure (ABS)
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04-10-2016, 09:36 AM
(This post was last modified: 04-10-2016, 09:37 AM by CityFarmer.)
Latest update. Professionals, and businessmen are common within bondholders...
Singapore millionaire, 77, joins bondholders uniting in workouts
SINGAPORE (Oct 4): Jerry Tan, a 77-year-old retired Singaporean businessman, was among dozens of bondholders in the city who joined forces last week to submit their demands as more companies seek to restructure debt payments.
“The only way to put ourselves in a position of some strength is to come together as a group,” said Tan, who said he owns more than $8 million of notes. “The whole bond market is really bad and you can expect a lot more defaults. The authorities should step up to protect investors and Singapore’s reputation as a major financial centre.”
...
http://www.theedgemarkets.com.sg/sg/arti...g-workouts
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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Multi-Millionaire blaming gov not protecting him on unrated bond ?