RE:RE:Credit bidding and common shareholders
RHertig, fantastic link you included earlier, very insightful. And yes, Tuscany opted for Chapter 11 in US and Canada, but none of the South American units (the operations units) were included in the filing.
I'm hearing words out there about TID asset's not being equal to its liabilities, and/or CS removing assets to a different corporation without having to give value. But I'm not seeing any citations of precedent or specific means by which this would be attempted, much less approved by a bankruptcy judge. I agree that, for as long as the secured creditors are owed, common shareholders are effectively not in the room. But according to the last balance sheet I saw, those creditors cease to be creditors once they receive approx. $200M. Then shareholders are back in the room. I'm not expecting TID's assets to sell for full value, but going to credit bidding is a very good sign, especially considering the number of other players in this market, transportability of the assets in question, and number of firms (especially Asian firms) which have been eager to acquire equipment and operations this past two years.
So, this brings up an unexpected point which may turn out to be crucial: The shorter the bidding process (any bidding process), the lower the winning bid. This forbearance agreement, Chapter 11 filing, and restructuring agreement have been executed with the sort of rapid-fire timing that only comes from a pre-planned operation in which each player has a rehearsed role they can act out with utmost haste. It should be obvious to We The Shareholders that the process is designed in theory to allow for our interests, but this haste lessens our interest in practice. So, unlike the past few weeks, we may have arrived at a place where we can do more than talk. Any oil connections out there? Any lines to potential bidders? Anyone writing on other financial sites? Just getting the word out can help.
CS is obliged by the court to participate in a bidding process. It goes without saying that a quick, quiet process would be advantageous for them, at our expense. Let's keep our eyes out for notice of bid progress, and spread the word however we can.