RE: RE: RE: My thoughts... Tembec is the only common stock I’ve bought and held through a recapitalization, it worked out ok (still holding it). I know there are at least a few others examples where shareholders got something, though can’t confirm there we’re prefferreds involved, If I get some time I’ll research other examples.
In a reorg under CBCA all stakeholders must vote and accept the proposal (I’m not sure if it’s a majority or two thirds that need to accept??) So common, preferreds, bonds, any other creditors would be individual groups that get to vote. Interesting, just reading that what held up the Abitibi restructuring was the unions. Agreed, there could be holdout investors that will think they deserve more than they are offered, but the longer market values stay low, the easier that will be. My concern is that unlike commodity or hard asset businesses, YLO’s main assets are goodwill and in their current state they are highly susceptible to loosing that (key employees, customers, and brand value) so it’s important is to get this done ASAP - Bankers, bondholders, and management know this.
I agree, a reorganization under CCAA would be easier, and it is much much less likely that current common & preferred shareholders will get anything; Issue is, anyone (management, bondholders, bankers) would have a tough time proving to the courts that YLO is insolvent. More importantly there is no incentive for anyone to take YLO that route instead of CBCA, (as long as it can be done quickly and cleanly).
And yes, I like the A’s vs. the commons as a trade right now, just think in the long run more values will be got out of the Cs’ & D’s if the reorg comes after the A’s (& likely B’s are converted) so at a straight up trade I’d take the non convertible preferred