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 / Bonds

Cengage Learning Plan Filed

Cengage Learning filed with the U.S. Bankruptcy Court a Chapter 11 Plan of Reorganization and related Disclosure Statement. According to the Disclosure Statement, “Among other things, the Plan contemplates the following:An approximate $4,300 million reduction of funded debt;A de-leveraged post-reorganization capital structure consisting of (i) a new first-out revolving credit facility of no less than $250 million and up to $400 million to be raised from third-parties on market terms and (ii) $1.5 billion first lien term loan facility (subject to the terms of the RSA); Holders of First Lien Secured Claims will receive their pro rata share of (1) 100% of the equity in the reorganized Debtors less any amount of New Equity that is part of the Unsecured CLAI Recovery or the Unsecured CLI Recovery (and subject to dilution on account of the Management Incentive Plan), (2) the New Debt Facility Consideration, and (3) the Excess Cash; Unsecured creditors (including the holders of first lien deficiency claims) (1) against CLAI will receive a distribution on account of that portion of the Disputed Cash determined by Final Order to be unencumbered and the CLA C.V. 35% Equity, which shall be in the form of either: (a) Cash and/or New Equity in an amount to be determined by the Bankruptcy Court, which will be distributed on the Effective Date or adequately reserved for pursuant to a Final Order of the Bankruptcy Court or (b) interests in a Trust established on the Effective Date holding (i) Cash and/or New Equity in an amount to be determined by the Bankruptcy Court or (ii) the CLA C.V.35% Equity and Disputed Cash and (2) against CLI will receive a distribution on account of that portion of Disputed Copyrights determined by Final Order to be unencumbered and the Non-Wholly Owned Subsidiaries, which shall be in the form of either: (a) Cash and/or New Equity in an amount to be determined by the Bankruptcy Court, which will be distributed on the Effective Date or adequately reserved for pursuant to a Final Order of the Bankruptcy Court or (b) interests in a Trust established on the Effective Date holding (i) Cash and/or New Equity in an amount to be determined by the Bankruptcy Court or (ii) the Disputed Copyrights and the Non-Wholly Owned Subsidiaries, which distribution shall be made in accordance with a priority waterfall that shall take into account all applicable priority principles of the Bankruptcy Code and other applicable law, including but not limited to subordination provisions and provisions in intercreditor agreements;The terms of certain post-reorganization governance rights applicable to the holders of new equity (including rights to nominate directors);The cancellation of existing equity interests other than to the extent necessary to preserve the general corporate structure of the Debtors; and Certain other customary terms and provisions.” Interested parties must submit ballots and/or objections for the Plan by November 1, 2013; and the Court scheduled a November 8, 2013 hearing to consider the Plan.

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Amazon = US GDP 1970

Amazon joined Apple in reaching a $1 trillion market capitalization. $1 trillion is about the same as the total value of New York City property and the total value of loans at JP Morgan, the nation’s largest bank in terms of assets. Jeff Bezos’ $160 billion stake would place him (personally) as the #33 largest company in the S&P 500 in terms of market cap, next to Coca-Cola, Disney and Netflix. We aren’t bold enough to predict whether the shares will continue upwards or if they are in a bubble reaching maximum inflation. Setting aside for a moment their investment prospects, let’s admire the truly remarkable milestone that these two companies have reached. Read More.

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."