where do you guys see their preffeared debt trading at next week.. i bought some a few ago for 6.75.. i have heard about 10 to 20 cents on the dollar so that means for the $25 issue value around 2.50-5.00 value
DPH common will probably trade in the 40-60 cent range on Monday, based on the usual pattern. However, I can tell you of one bankrupt company, operating under DIP financing, that trades at $65/share! USG
The coupon on the preferred is 8.25%. Delta has some preferreds with similar coupons and they traded under $3 after the bankruptcy announcement, but then moved up (a little). Each situation is unique though. Where did you hear 10-20 cents on the dollar?
many big hedge funds have been heavy short this company --- that was a big score. some have been in this short from january through february of this year --- what a call. lets see --- delphi makes auto parts {lots of GM stuff} and gas/oil prices were going up. what was the prospect of this with companies that were heavier in the SUV sales side of the auto market being the primary customer for delphi. that seems like a very good probability play from what i can see --- and boy was it!
or uhaul, but it was a prepackaged bankruptcy, and there was enought in the end to give the common stock holders, some position in the new company. When your dealing with situations like delphi,northwest, and delta your dealing with debt to equity ratios of 10 to 1. In the sake of delta your dealing with a company with debt of 21 billion dollars, and yearly losses in the billions. Or delphi debt of 21 billion, equity of 16 billion, and losses of in the billions a year.
But if you were looking at the debt, they were trading at 70-85 cents to dollar on wednesday and thursday, and even a bit on friday. The bond holders, the people who are the most in and knowlege in delphi were blindsided. , Like I said, from jp morgan ,either the guy was incompetent or he was getting pushed by a big hedgefund. You have to remember just 4 days ago, everybody was saying delphi wouldnt declare bankruptcy because GM would have to stomach at least 6 billion in costs, but now it ballooned to 11-12 billion. And everybody was saying a deal would come because of the CAW agreement, and news that a GM/UAW healthcare deal was tied to GM helping them out with delphi uaw workers. Everybody was blindsided, or just blind to reality. As I see it, the GM/UAW healthcare deal is dead. And if GM continues to fight their obligations to uaw delphi workers, it will knock down any further deals till they declare bankruptcy or till the UAW/GM contract expires in 07. And back to research reports, yes they are bias, but it gives you insights to what the street and other hedgies *implied* are thinking. And if you were looking at the bonds and debt at delphi you got the impression delphi would make it.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=55422 i wasnt blindsided. everybody including the "positive research" banks were short.