$350 million Senior Secured ***First*** Lien NotesWow! Shareholder are screwed here. And with this, so are part secured bond holders that now take a back seat. Still in front of the worthless shareholders.
Here is the reason. These are $350 million of Senior Secured First Lien Notes. That means that if people think the assets are there, the can get at the special positon in the pecking order. Problem is, are the assets even strong enough? With all these drugs being written off really fast and the pipeline being non-existant except to acquire old pills and reformulate existing ones under a different skew?
I see money moving out of the bonds and common shares to these first secured lien notes. It's a last minute cash grab that will be interesting to watch.
Now, it seems the assets are very weak but investors might buy the notes and then, somehow, push for bankruptcy to flush the remaining shareholding stragglers, then flush the bond holders?
Boom, you get the assets (back?) without all the liabilities. Sounds like an interesting possible market play here?
I can think of a few PE firms that will jump on this only if there is wording that gives them control of the company. One a more simplistic view, it could just be a futile cash-bait.
In any case, shareholders and bondholders become bagholders with worthless equity since the equity has all been transferred to these First Lien Notes holders. Horror movie - The Sequel.
I need to see the impact on the stock price tomorrow. I know people who follow this stock closely. Some think the market is so stupid, we might see a run on the stock. Let's see.
I would imagine both the stock and bonds will fall, maybe not tomorrow but once they understand how this highly negatively impacts the common shares and bonds.