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

FriendFinder Networks Plan Filed

FriendFinder Networks filed with the U.S. Bankruptcy Court a Joint Chapter 11 Bankruptcy Plan of Reorganization and related Disclosure Statement. According to the Disclosure Statement, “Prior to the Petition Date, the Debtors engaged in extensive negotiations with the Consenting First Lien Noteholders, the Consenting Second Lien Noteholders, and the Holders of the Cash Pay Second Lien Notes regarding the potential terms of a consensual restructuring of the Debtors’ capital structure. As a result of those negotiations, the Debtors determined, in consultation with their legal and financial advisors, that it was in the best interest of their estates to pursue Confirmation of the Plan, which implements a recapitalization transaction that has the support of the Consenting First Lien Noteholders (representing approximately 80% in principal amount of the First Lien Notes) and; Consenting Second Lien Noteholders (representing approximately 78% of the Second Lien Non-Cash Pay Notes) under the terms of the Transaction Support Agreement entered into prior to the Petition Date. The Plan also has the support of 100% of the Holders of the Cash Pay Second Lien Notes pursuant to the Bell/Staton Settlement Agreement entered into prior to the Petition Date.” $234 million in first lien noteholder claims and $331 million in second lien noteholder claims are allowed under the Plan. The Plan further contemplates a recapitalization of the Debtors that will result in first lien noteholder claimants receiving, among other things, new first lien notes and second lien noteholder claimants receiving, among other things, 100% of the Company’s equity. FriendFinder Networks explains, “The Debtors believe that the Plan provides the best means currently available for the Debtors to restructure their balance sheet and emerge promptly from chapter 11.”

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Turnaround Investing Blog

Turnaround Investing Blog

IBM: Not Yet Time to Swing at this Pitch

IBM’s stock underperformance since IBM’s current CEO took the helm in 2012 has been stark, with the shares declining 23% while the S&P500 Index has more than doubled. One big problem: revenue growth rate is zero, at best. Without revenue growth, what’s left to entice investors? The real driver of value at IBM – free cash flow that is used to repurchase shares. Can IBM borrow its way to shareholder prosperity as its cash flows shrink? What to do with IBM shares? Wait for a better pitch in the form of a catalyst or much lower valuation. Read More.

Comparing Stocks Vs. Bonds

While the common stock of a turnaround candidate usually has the greatest upside potential, other classes of securities, such as bonds or preferred stock, may offer attractive profit possibilities with less risk. Many turnaround companies have only one class of securities available to investors but where there are different classes to choose from, it can pay to do a little extra analysis of the various options.

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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."