When The McClatchy Co. made its offer to swap notes coming due pretty soon for new notes at a steep discount on face value -- but with far-higher yields -- it said wanted to exchange as much as $1.15 billion of debt.Fitzgerald spoke with newspaper analyst Mike Simonton from Fitch, who says the amended offer isn't uncommon, but points out Fitch has assigned McClatchy's issuer default rating a "C" -- which indicates "a default of some kind is imminent or inevitable."
Before markets opened Friday, McClatchy disclosed that so far it’s received tenders amounting to a grand total of just $102.4 million.
.
.
.
19 comments:
Obama need make sure dees greedy creditors don't get our monies back.
McClatchy meeting observation:
The less than dapper Gary Pruitt whispers to his sidekicks,
another round of Geritol Tonic for the Board of Directors.
They have to wake up for the vote! I just need a little more time to turn this thing around.
Well, they tried.
If you cant’ fix the ice water gushing in from the hull breach, rearrange the deck chairs.
A month from now, they’ll focus on the band music playing on the deck of the Titanic.
McClatchy even offering the exchange is a technical default because the creditors are getting less than face value.
First:
How can 2011 (first due date of debt at MNI) be labeled "coming due pretty soon"?
Second:
Has anybody here watched debt exchanges lately? Seems not otherwise you would know that so far 10% is the norm (iStar Financials managed to get a 20% rate and that was very good).
Whom to blame? The CDS. It is more attractive for debt holders to let companies go bankrupt than help saving them (take GGP for example).
Whom to blame? The CDS. It is more attractive for debt holders to let companies go bankrupt than help saving them (take GGP for example).
=================
So in your view, owners of debt should not be able to get insurance via a CDS?
If the CDS insurance did not exist, the bond owners would be more vulnerable to companies doing these shotgun debt exchanges.
The company is defaulting on debt (via the debt exchange offer) and trying to avoid bankruptcy so that the current shareholders (McClatchy family) can remain in control.
THAT IS WRONG.
The proper thing to do, when a company cannot make debt payments, is to file for bankruptcy. Then within the BK court system the secured debt owners would become the new owners of the reorganized company. (See Minn Star news)
The McClatchy family, with their super voting stock, is trying desperately to avoid this because they know they will be ousted in bankruptcy and receve $0 in the reorganization.
Bankruptcy does not destroy a company. In many cases is actually fixes what is wrong and allows a healthy company to emerge with a fresh start.
The only question is whether McClatchy is really a healthy company without the debt. That is doubtful.
I think that bankruptcy would be the best option because then they could reduce debt, get rid of unneeded leases from empty office space, renegotiate contracts, etc.
I do not say that debt holders should not be allowed to insure against default. I just say that debt holders are to blame for the low acceptance. And thats it.
Until now McClatchy has paid every debt due and in these times 2011 is far away.
"...The only question is whether McClatchy is really a healthy company without the debt. That is doubtful..."
What? I am sorry but this sentence either does not make any sense or I did get something wrong.
"..Bankruptcy does not destroy a company. In many cases is actually fixes what is wrong and allows a healthy company to emerge with a fresh start...."
So what exactly is wrong at McClatchy besides the debt? They are suffering like every other newspaper in this economy and that has nothing to with any supervoting stock. It's just the economy.
Typical lib answer for everything.
"It’s everyone's fault, other than McClatchy"
If only the greedy bond holders...
WAHHHHHHHHHHHHHH
BLITHERING IDIOT ALERT. BOY, SHE JUST DOESN'T GET IT, DOES SHE
"So what exactly is wrong at McClatchy besides the debt? They are suffering like every other newspaper in this economy and that has nothing to with any supervoting stock. It's just the economy."
I do not say that debt holders should not be allowed to insure against default. I just say that debt holders are to blame for the low acceptance.
============================
Why is there "blame" for the debt holders? It was a lousy low ball offer from McClatchy. Anyone that accepts it is either desperate or stupid.
It would make more sense to say, "McClatchy low offer is to blame for the low acceptance."
What? I am sorry but this sentence either does not make any sense or I did get something wrong.
===========
From the very first word of your entire post it was clear that you don't have the slightest clue what you babble about.
Go out and raise a billion dollars by 2011 then come back and tell us how far that was.
Then put your life savings into some McClatchy paper and have some idiot try and tell you that you are evil for insuring it.
F(*&ing idiots. I swear.
LOL (11:56) My guess is that they are planning the dinner menu to go with the music....
The problem with the CDS is that the holders of the swaps or insurance policies are now an interest party who would benefit more by forcing a bankruptcy of MNI than by seeing the company survive.
If I bought $10 million worth of MNI bonds, but then insured them for $20 million in the event of bankruptcy, I would make more money by seeing a bankruptcy go through than by not. Since there are naked CDS on the market as well, there are thousands of wealthy parties who hold insurance policies betting MNI is forced into bankruptcy.
The problem with the CDS is that the holders of the swaps or insurance policies are now an interest party who would benefit more by forcing a bankruptcy of MNI than by seeing the company survive.
===========================
Why do you see that as a "problem"?
And why do you believe that bankruptcy = not surviving?
That point of view is wrong. Bankruptcy is an opportunity to fix the real problems that the company has. Restructuring some debt does not fix the core problems.
McClatchy has fired about 40% to 50% of their staff in the past two years. There is a ton of office space that is empty, yet McClatchy is still paying rent on those leases. A bankruptcy would allow McClatchy to really address this problem and other contracts that are dragging down the company.
The best thing that could happen, for the long term health of the newspapers, is a bankruptcy filing.
The McClatchy family is destroying the core newspapers by avoiding bankruptcy. Dragging this out with a slash and burn policy will only make the newspapers more dysfunctional. It is getting to the point that they are stuggling to produce newspapers on a daily basis. How much deeper can the cuts go before it is functionally impossible to complete basic tasks?
If I bought $10 million worth of MNI bonds, but then insured them for $20 million in the event of bankruptcy, I would make more money by seeing a bankruptcy go through than by not.
=======
First off, it doesn't work like that. Even if you could do that, the cost would outweigh your total expected or promised return. The very thought of being able to do this underlines a complete misunderstanding of the process. Under the best conditions bond holders were able to insure for a little less than .80 cents on the dollar. Most did not even approach that.
So, in your world, McClatchy should be able to pay their creditors .20 cents on the dollar, keep their same incompetent and corrupt management and it's all the evil bond holders who are responsible because they might force McClatchy into a situation where they have no choice but to fix their broken down business model.
It amazes me at the thought process of the modern day enlightened. Just unbelievable.
5:56 You can do that, and they have done that. Naked CDS are very common. You don't have to hold the bond to buy a CDS, and it is a financial instrument like any other. This is part of the reason AIG is under government control, and other insurance companies are reeling. The costs were not that prohibitive when the bonds were issued, perhaps $2,000 of credit default swap (think insurance policy) on a $1 million bond. There was no prospect of a recession 10 years ago, and only blue skies ahead, so it was a simple way for insurance companies to make extra money. What was the liklihood of a company as strong as MNI going bankrupt? Also proof of the existence of these CDS or bankruptcy insurance contracts is the refusal of bond holders accepting a very generous new bond offer. Ask yourself: Why would bond holders not accept these if they didn't believe there was something better out there?
5:56 Doesn't work that way? Read the following involving Gannett's debt problem, and you will see how wrong you are:
http://www.thedeal.com/newsweekly/features/gannet-default-option.php
GCI also tried to float new bonds, only to see no one pick them up.
3:53 AM Your cognitive skills are completely void. You cannot and never could insure 10m in paper for 20m dollars.
It doesn't work like that.
"Your cognitive skills are completely void. You cannot and never could insure 10m in paper for 20m dollars."
Interesting insult, but the combination is a complete non sequitur.
Post a Comment