Southern Pacific Resource Corp STPJF

2018 bonds

[risk-tolerant13]

Here is a recent post found in the "Members" section of the 5iresearch.ca website:

Question: I own $6000 (par value) of Southern Pacific Resources (STP) non-secured senior bonds, due in 2018, that I purchased some time ago through my discount brokerage. All indications are that STP is on the verge of bankruptcy. Today, the market price of the STP bonds is 62 cents, indicating that likely some fraction of the bonds' face value should be recoverable during the (probable) bankruptcy proceedings. As a retail investor, I do not know what the procedure is for small bondholders when a company is in bankruptcy. Assuming that bankruptcy occurs, will I need to personally make a claim for my money, or will I normally be able to "piggy-back" off the legal efforts of major bondholders and wait for the settlement? Do all bondholders need to share the legal expenses related to the bankruptcy proceedings? Thanks for any clarifications you may be able to provide. 5i Research Answer: In situations like these, a majority of bondholders typically votes for a restructuring. You will be able to piggyback on the major holders, and the most likely outcome is that bondholders end up with the majority of equity in the company. You will be sent a voting/restructuring package, which we would fill out and send back regardless of the size of your position. This prevents delays in getting whatever you are entitled to. With a $25 million market cap and debt of $568 million, this certainly looks like the outcome here. If you would be uncomfortable owning the common stock, or perhaps extending the maturity of your bonds (perhaps for a very long time) we would sell these and move on.

[wdr2]

After the Lawyers and the Trustees are done there won't be a dime .They'll rape the shareholders for years with fees. wdr2

[rad10]

wdr - how many restructurings have you been through? Whilst there won't be a dime for shareholders if there is a restructuring - (the stock is currently trading at a nickel anyway), the prospects for recovery on the debt is actually quite good.

[wdr2]

Really lol wdr2

[edmbonds]

Don't forget the banksters.   Another ridiculous post.  Congrats.

[edmbonds]

This is good advice.   You can do the math yourself quite easily.  Calculate the enterprise value by adding the market cap and the market value of all the debt.  Make Credit Suisse whole in the calculation as they are getting their money back in CCAA. You'll end up with $300-$400M depending on the value you ascribe to the 2nd Lien notes ($430M if you make them whole).