Bankruptcy News

We've summarized the latest docket activity and news for publicly traded companies currently operating under U.S. Bankruptcy Court protection.

Bankruptcy/Chapter 11 / Stocks That Pay Dividends / Real Estate

William Lyon Homes Backstop, RSA Agreement Approval Sought

William Lyon Homes filed with the U.S. Bankruptcy a motion for approval to assume a backstop commitment letter, dated as of November 4, 2011, by and among Luxor Capital Partners, LP; Luxor Wavefront, LP; Luxor Capital Partners Offshore Master Fund, LP; OC 19 Master Fund, L.P.-LCG; Luxor Spectrum, LLC; GAM Equity Six, Inc. and Luxor Spectrum Offshore Master Fund; LP. Under the agreement, the backstop parties would purchase the lesser of (1) $60 million of rights offering securities or (2) the amount of rights offering securities that are offered pursuant to the rights offering in connection with the restructuring and not otherwise purchased. The Debtors propose to pay the backstop party a non-refundable fee in an amount of 2.0% of the standing capital stock of DE Lyon, payable in Class C common shares if the rights offering securities are purchased pursuant to the commitment. If the backstop parties do not purchase the rights offering securities, the Debtors propose to pay the initial backstop party a breakup fee of $2.5 million. In addition, in order to effectuate the transactions contemplated by the Company’s Prepackaged Joint Plan, the Debtors, the administrative agent, the pre-petition lenders and members of the ad hoc noteholders’ group entered into restructuring support agreements (RSAs). As a result, the Debtors also filed a motion for approval to assume the Colony restructuring support agreement with pre-petition secured lenders holding 100% of the principal amount of the loans outstanding under the pre-petition secured loan agreement as well as a restructuring agreement with the holders of approximately 63.5% of the principal amount of the old notes outstanding. The RSA motion explains, “The Debtors have determined, in the exercise of their business judgment, that it is critical to the execution of the Plan to assume the Restructuring Support Agreements. The Restructuring Support Agreements, among other things, provide that a majority of the holders of the Old Notes and the Prepetition Secured Lenders - the only two classes of impaired claims - will, subject to the terms and conditions of the Restructuring Support Agreements, support the Plan. Indeed, without the Restructuring Support Agreements and the support of the Consenting Lenders and the Consenting Noteholders, it would be far more expensive and difficult for the Debtors to successfully reorganize. The Noteholders RSA is of particular importance because the Consenting Noteholders have agreed to reduce their claims - and the Old Notes Class is the only class of general unsecured creditors that will not have its Allowed Claims paid in full. It is the Noteholders Agreement to receive less than 100% of their claims that enables the Debtors to pay trade claims and other general unsecured claims in full.”

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In reading recent editions of The Turnaround Letter, you have probably noticed that we are increasingly using EV/EBITDA as a valuation measure, rather than the better-known price/earnings multiple.  We thought it might be useful to describe this measure and why we like it.

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Turnaround Letter Stock Pick Named Top Performer of 2017

 

stock market advicex

 

What Last Year's Top Stock Pickers Are Buying in 2018

 

This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.

 

George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."