RE:RE:RE:RE:Delisting Noticerad10, ask yourself why the common stock always are left with something in these restructurings.
You are doing strict numbers, but the result is rarely determined strictly by the numbers. In order to complete a restructuring under the CBCA, they will require a fairness opinion from an independent expert. That opinion is not likely to use my conservative post-restructuring value of $1.5B. It will almost certainly use industry averages, which put the value more than double that. Moreover, the court is unlikely to accept as "fair" and arrangement, or an opinion supporting it, that cuts out the common shareholders altogether. They should get at the very least an amount that would result in a share price equal to what it was immediately before the filing, not today's share price.
You assume that the unsecured would fare better under the CCAA, but they would not. Even senior secured creditors do not really like to have to go through such proceedings, notwithstanding that they know that they will come out whole. One of the major reasons is that the company that the company may be severely damaged. The fact of the insolvency will entitle parties to all sorts of contracts, for example, supply and distribution agreements, leases, etc. to terminate them. Some of those contracts may be very valuable.
So, in my view, something will go to the common shareholders. We just do not know what. The big risk is that management will focus on their own interests and, in that regard, negotiate a new ESOP that gives them generous share options that are in the money, and leaves merely a few crumbs for the common equity, They are not supposed to do that, and the board is supposed to protect against that. But who knows with these people. Meanwhile, the fairness opinion could be twigged to support a wide range of results. Although the expert is supposed to work for the court, the report will favour the position of whoever retains the expert to produce it.
On a separate note, here is what is wrong with your investment in the notes. Sure, you are guaranteed a return. But it's boring. What, 10, 12, 15 percent per annum maybe? Alright. Good enough. But I am not in this for that. I am in this for a 3, 4 or 8 bagger. A 10-bagger is probably out of reach unless I want to stay in for a few years, but that is not me. I like get in late, when the company appears to be on its death bed. Place my bet, and hope that it is rescusitated, preferably all within a few months. This one is taking a little longer than I expected, but it has all the excitement of less educated gambling.