The fed did the right thing. JPM is just holding it in case nothing else materializes. But it will. The Fed needed something done in 36 hours and no one can properly evaluate an entity in that amount of time. Others are looking at BSC and evaluating their assets. Look for multiple additional bids to emerge over the coming weeks and months.
bidask, what planet are you on? You are right to be skeptical, but the stock did not plunge from 30 to 2 during market hours.
But you could do that by simply sitting on the bid at $2.01. If the only possibilities are JPM deal or bankruptcy, there is no reason other than short-term short covering to pay above $2. The bond holder could simply sit on that bid and then own all the stock they want. The only way that wouldn't happen is if someone else has a rational reason to pay >$2 i.e. a bidder.
Excellent thread Cutten. Thank you. Now toc, WTH? Dude?!?! That article was poorly written and unoriginal and only marginally related to the topic at hand. Why did you cut and paste it here, or anywhere for that matter. How rude! Delete the post if you are able to.
For those who werent paying attention lets just fan those flames a little higher... http://www.elitetrader.com/vb/showthread.php?threadid=121275
This makes no sense. If the deal is so certain, why don't people (those who don't own BSC bonds) just short BSC and long equivalent amount of JPM. It's risk free money.
I.e. someone (Lewis for example) thinks the stock is worth far more than the $2 per share JPM bid, and closer to $6-8. I'd say that pretty much proves my point. The ONLY reason for bondholders to pay up is if they have genuine competition for control of the equity. If there is a genuine rival bidder, then BSC is worth more than $2 and the Fed bailout was totally unnecessary, and an extremely questionable use of government power and nepotism to bilk shareholders out of close to a billion dollars in favour of the scion of the Wall Street establishment. Does that seem reasonable?
No it doesn't. Illiquid for a day is illiquid for a day. That's just like saying it's unreasonable for a broker to send your account into liquidation if you don't meet margin requirements for a day. The Fed did the right thing and did Main Street a big favor.