RE: RE: RE: RE: why they offered more to the conve
Is the fair value greater than 100% of par? Good question. It looks like it could quite possibly be 100% of par, but the ultimate value of the new equity is very uncertain. However, the presumption must be made that the long-dated MTN holders are satisfied with the proposed exchange because THEY were the ones who proposed it...and they proposed it as a strategy to forestall the maturation of the bank debt, the early maturing MTNs and ultimately the debs.
The MTN holders are exchaning something that trades for 55 cents on the dollar. They don't need to think what they are getting in exchange is worth more than $1. Very few people would value their package of new bonds and shares at more than 100% of par. I think 60% or 70% is more likely.
The deb argument is that the MTNs and banks are probably getting pretty close to 100 cents on the dollar (recognizing that liquidity and uncertainty of the new equity valuation remain a concern). However, for the deb holders, we see that our senior creditors are coming out roughly whole, but the debs get 7 cents on the dollar.
I understand that the banks don't want to own common shares, but I don't believe they would go to court to fight a deal that made them almost whole.
Now that wouldn't be the end of the world except that this package is giving out shares and warrants worth maybe $100-125m to the existing equity holders. That $100-125m would go a long way to making the existing deb holders closer to being whole (ie, maybe we'd be at 70 or 75 cents on the dollar). But that ain't going to happen because that $100-125 million was taken from us to bribe the existing equity holders to vote Yes to this deal...and most of those equity holders don't even seem to realize that they should probably view it as manna from heaven!
I wish every shareholder who voted no would read the above paragraph. A revised deal is unlikely to be better for the common and preferred shareholders.
When the senior creditors propose a package that seems to put them somewhere around 100 cents on the dollar, and THEY were the ones who concocted the deal, the notion of them "taking a hit" strikes me as crocodile tears. They got their compensation, and gues who should be next in line to take the lion's share of the scraps.....the debs who are litigating!
Getting 100% wasn't a possibility for the MTN holders becuase the total enterprise value of Yellow Media is less than the total value of bank + MTN debt.