Bankruptcy News

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

Large Cap / Bankruptcy/Chapter 11 / Post-Bankruptcy Stocks / Materials

W.R. Grace & Co. Plan Confirmed

W. R. Grace & Co. announced that the U.S. District Court has denied all objections and issued an order confirming its First Amended Joint Plan of Reorganization as Modified in its entirety. The U.S. Bankruptcy Court decision confirming the Plan was issued on January 31, 2011. “This is another necessary step in emerging from Chapter 11,” said Fred Festa, chairman and C.E.O. “Two Federal courts have now ruled that our Joint Plan is fair to all parties.” The Plan establishes two asbestos trusts to compensate personal injury claimants and property owners. Funds for the trusts will come from a variety of sources including cash, warrants to purchase W.R. Grace common stock, deferred payment obligations, insurance proceeds and payments from certain third parties. The trusts’ assets and operations are designed to cover all current and future asbestos claims. “I am optimistic that the legal process related to our Joint Plan is coming to an end and we can emerge in the near future,” said Festa. “It is time to put the Joint Plan into effect so that money can begin to flow to claimants who have been waiting for more than a decade to be compensated, and Grace can move forward as well. I look forward to Grace emerging from Chapter 11 as a vibrant, growing company with a great future.” In response to the confirmation order, Sealed Air issued the following statement: “We stand ready to contribute our payment directly to the two trusts to be established under Section 524(g) of the Bankruptcy Code once the provisions of the settlement agreement are fully met. Our payment includes cash and 18 million shares of common stock. As of September 30, 2011, the total cash payment would have been approximately $820 million, which reflects the principal settlement amount of $512.5 million and approximately $308 million of accrued interest, which accrues at 5.5% per annum and is compounded annually. We intend to fund a substantial portion of the payment using available cash with the remainder from our committed credit facilities. The shares are currently recognized in our diluted weighted average number of shares outstanding for our net earnings per common share calculations. Our payment would resolve all current and future asbestos-related, fraudulent transfer and successor claims against us as a result of the Cryovac transaction with W.R. Grace in 1998.” This chemicals and construction holding company filed for Chapter 11 protection in April 2001, listing $2.6 billion in pre-petition assets.

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Is there value in bankrupt PG&E’s stock?

In nearly every case, the shares of a company in bankruptcy become worthless. In very rare cases, however, they can become great investments. W.R. Grace (NYSE:GRA) shares produced a 75-fold return, as an example. With California utility PG&E (NYSE:PCG) now in bankruptcy, the range of possible outcomes for its equity is wide.

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EV/EBITDA: What Is It & Why Are We Using It More?

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

 

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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."