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My motivation will become clearer shortly.
Currently, I own only FMGC.GB. I sold my FMNPQ holdings several weeks ago after retreating from above $15. Although I have no duty to do so, it appears that fact was never disclosed.
Anyone who has watched the lack of trading action in FMGC.GB knows it would be nearly impossible to increase a stake in the Senior Notes with one institutional investor controlling a super-sized position. Plus, Tennebaum has the class vote locked up on any plan. This has frustrated me. My plan is to now redeploy the proceeds into FMNPQ. Hopefully, I can help confirm a plan that does not lead to slow liquidation.
I am not going anywhere. I will continue to post information and make comments.
However, it does not appear that securities and cash will flowing in time for Trick or Treat. ;o)
E, you sold your commons but I assume you are still a TOPrS holder? Is it a fair guess that as a TOPr or Sr holder you are a creditor? We will sorely miss your contribution, knowledge and education and would appreciate any additional parting thoughts or gift that you think would help us be: Enterprising Investors. Thank you.
Why Convertible Cumulative Participating Preferred?
Even if FMNPQ is successfully reinstated, holders would own a security that would continue to trade at a discount since the deferred dividends will not be paid until 2012. The value of the Convertible Cumulative Participating Preferred should trade at par. The conversion feature provides unlimited upside potential.
The security is designed to never pay cash dividends unless FB liquidates or there is a change of control. The accrued dividends provide holders with a margin of safety.
The dividend rate may seem high compared to the earnings rate of 6 percent detailed in the OEC plan. Most importantly, the preferred can be used as capital. The secondary distribution of TARP funds cost banks such as C and BAC 8 percent. Plus, the balance sheet can be levered 8 to 10 times with deposits. This is a great time to be gathering retail deposits. Deposit rates for one-year CDs is the 2.00 percent range. Go out 5 years, Ally Bank (fka GMAC Bank) or Discover Bank might pay you 3.25 percent.
I would hope the FMNPQ holders would accept a lower rate, for example, 6 percent, to be given the opportunity to participate in the appreciation of FB shares.
When Scottish Re Group needed a large capital infusion, MassMutual and Cerberus invested $600 million via Convertible Cumulative Participating Preferred. The stock is convertible at $4.00. Those sophisticated investors could never have predicted the decline of SKRRF to $.07 per share.
One potential solution.
This plan retains all classifications and treatments outlined in the OEC plan except Class 2C (TOPrS).
Assumptions:
(1) Financials based on Opening Pro Forma Balance Sheet and Cash Flow Projections as detailed in the First Amended OEC Plan.
(2) Class 2C has a claim of $120.8 million in principal and accrued interest or $30.20 per share.
Treatment: Exchange TOPrS for 9.00% Convertible Cumulative Participating Preferred Shares.
Each preferred share has a par value of $0.01 per share with a liquidation preference of $25. [The $120.817 million transfer from Liabilities to Equity would increase Stockholders Equity from $35.013 million to $155.830 million.]
The Convertible Cumulative Participating Preferred Shares are convertible at the option of the holder, at any time, into shares of Fremont Bancorp (FB) common stock. The conversion rate will be based on the lower of: (a) the 30-day average closing price or (b) the closing price on Day 30. [The first 30 trading days of any post-bankruptcy stock can be very volatile]
The Convertible Cumulative Participating Preferred Shares will automatically convert into the required number of common stock shares on the fifth anniversary.
FB is not required at any time to redeem the Convertible Cumulative Participating Preferred Shares for cash, except in the event of liquidation or a change-in-control event. [The $56.051 million dividend payment in December, 2012 as detailed in the First Amended Plan would be eliminated. The Cash Balance would more than double to $111.435 million. The Convertible Cumulative Participating Preferred Shares liquidation preference would grow $10.9 million per year.]
Dividends on the Convertible Cumulative Participating Preferred Shares are cumulative and accrete daily on a non-compounding basis at a rate of 9.00% per annum on the stated value of $25. Dividends will only be paid in a liquidation preference scenario upon liquidation or change-in-control of FB prior to the fifth anniversary.
To the extent that the Convertible Cumulative Participating Preferred Shares participate on an as-converted basis in dividends paid on common stock, a corresponding reduction will be made to the liquidation preference for the Convertible Cumulative Participating Preferred Shares.
The Convertible Cumulative Participating Preferred Shares have a liquidation preference equal to their stated value, as adjusted for (x) the accretion of dividends and (y) any cash payment or payment in property of dividends or distributions. The holders of Convertible Cumulative Participating Preferred Shares may, among other things, require FB to redeem the Convertible Cumulative Participating Preferred Shares upon a change-in-control. Upon a change-in-control, the redemption price is an amount equal to the stated value of the outstanding Convertible Cumulative Participating Preferred Shares, plus an amount equal to the sum of all accrued dividends.
The liquidation preference of the Convertible Cumulative Participating Preferred Shares is not applicable once the Convertible Cumulative Participating Preferred Shares have been converted into common stock.
Holders have the right to designate two-thirds of the members of the Board of Directors. [The First Amended Plan details six board members. Board increased to nine. Former TOPrS holders would select six members.]
The number of board members representing holders of Convertible Cumulative Participating Preferred Shares would decline by one for each one-sixth of preference amount converted into common stock with a member representing Common Stock replacing the departing member. One member will remain until the earlier of: (a) the fifth anniversary or (b) conversion of 90 percent of the Convertible Cumulative Participating Preferred Shares.
FMGC.GB up 3 to 68 on one trade (7/22/09)
Issue: FMGC.GB Description: FREMONT GENERAL CORPORATION Coupon Rate: 7.875 Maturity Date: 03/17/2009
Execution
Date Time Status Quantity Price Yield Comm. Modifier 2nd Modifier Special As Of Reporting Party Side
07/22/2009 16:21:37 T 8000 67.587 0.000 Y @ B
07/22/2009 16:21:37 T 8000 68.000 0.000 N @ D
07/22/2009 16:21:37 W 8000 68.000 0.000 N @ B
07/22/2009 16:21:00 T 8000 68.000 0.000 N @ D
07/22/2009 16:18:00 T 8000 68.250 0.000 Y @ S
Equity Committee plan pays creditors in full.
FMGC.GB holders will accept $175 million if the plan becomes effective 10/31/09.
FMNPQ will be reinstated. Accrued interest will be paid in December 2012. Interest will paid-in-kind in 2013 and 2014
FMNPQ hits new 52-week high (7/15/09)
FREMONT CP I 9 TOPRS(Other OTC: FMNPQ.PK)
Last Trade: 16.00
Change: 1.00 (6.67%)
Prev Close: 15.00
Open: 15.45
Bid: N/A
Ask: N/A
1y Target Est: N/A
Day's Range: 16.00 - 15.45
52wk Range: 2.45 - 16.00
Volume: 13,600
Short Interest: 15,600 July vs 12,900 June
Up 20.93 percent
2.6 days
Most likely the result of long bond/short preferred trade.
CRG Partners Group LLC is extremely credible.
I was introduced to one of the Dallas-based managing partners by a friend in 2001. I had just spent 5 1/2 years growing and one year liquidating our family retail business. I needed a job. It was a dream meeting, but due to my lack of working for a large company in a senior operating position killed any opportunity of me getting in the door. I continue to track his assignments.
The address shown of the doc for Nerland details Irvine, but the main CRG office is located in LA. It is not unusual for their professionals to set up a satellite office near an assignment.
http://www.crgpartners.com/professionals/jeff-nerland.html
I could envision an Equity Committee plan that would include a management change now that CRG is engaged.
CC, EC, and Debtor have all agreed with EC to allow a Plan to be written up by CRG for no more than 75K. Says the Plan was written in June. Court doc says no one has objected since the stipulation of the 1 month cap of 75K was added for CRG.
July 14th court will hear this.
Should have some news on Bony as well on the 14th.
No word on IRS.
FMGC.GB up 9 to 65 on two trades (7/01/09)
Issue: FMGC.GB Description: FREMONT GENERAL CORPORATION Coupon Rate: 7.875 Maturity Date: 03/17/2009
Execution
Date Time Status Quantity Price Yield Comm. Modifier 2nd Modifier Special As Of Reporting Party Side
07/01/2009 10:43:41 T 15000 65.000 0.000 N @ D
07/01/2009 10:43:39 T 15000 65.073 0.000 Y @ S
07/01/2009 10:08:34 T 25000 65.000 0.000 N @ D
07/01/2009 10:08:32 T 25000 65.043 0.000 Y @ S
Shoot me an email at Guster0@yahoo.com
Unable to reply on this board.
I thought the CC wanted an all out chapter 7. Somewhat what the Debtor proposed but with a little more control.
EC says they have info that CC does not. That is one of the reasons for them to put a Plan together.
We need an IRS ruling that one holds the biggest danger to all. IF they rule negative and want 100 million + we are all just wasting each other time.
I don't think BONY is a major disruption and OMNIBUS I am sure will be approved to disallow multiple claims for TOPS and common holders.
I really have no idea after those 3 are settled what could be standing in our way of a re-org.?
I just don't think (unless the confusion is misleading me) that the CC will come up with any plan that commons will be happy with. But what say will we have in all this anyway?
Debtor in control until exclusivity ends.
Liquidation may be the best initial plan based on outstanding litigation. If the exclusive period is extended, then more of the cases could be resolved. However, the legal fees continue to ramp up.
The Creditors Committee will be developing its own plan. The members have insight to FRC, which we do not.
What did you think about EC trying to put a plan of re-org. together?
What I can't understand is why couldn't the debtor put one together (re-org. vs liquidation)?
Nothing seems logical?
But is this the confusion they want us in as they work through all the legal issue's?
My hope is that is truth and clarity will come our way once this legal mess is taken care of. Otherwise this might have been the mistake of a lifetime.
Time is running out for good or bad news. I hope we know soon.
Book value can be very deceiving.
TPL owns 963,248 acres of land located in 20 counties in the western part of Texas. The trust has been trying to go out of business since 1888 - it was created in the wake of the bankruptcy of the Texas and Pacific Railway Co. BHIT sells at multiples of book. Its main asset is cash, but no were near $.35 per share. GMGMQ is an example of a company with a huge negative book value selling for $1.16.
In most cases, I deem it a floor, not a ceiling.
FMNTQ would approach book value as the Investment in Subs becomes more cash. The problem is all of us are flying blind. I know a great number of people downplay the importance of NOL's. If an estate can come out of bankruptcy with its shareholder base nearly intact, it has tremendous value if future income can be generated. A liquidating trust would be a bad thing.
I have developed a plan framework based on what the CC demands. I am just sure if I should make it public?
Good points. I wish you could clarify cloudy on the outlook for commons. I think you take 50 million from current value of 8K you start to get close to a book value. I am in the .80 to .90 range so far. Of course we don't have IRS and BONY answered yet so it could go lower.
IF you give some detail as to "cloudy" for future of commons it would be MUCH appreciated.
Thank you!
Two words - much higher.
How high depends on the investing strategy?
I think for traders it will easily hit $.50 based solely on the announcement of an alternative plan from one of the two committees.
Longer term is cloudy.
Most non-professional investors only know stock. Some may dabble in preferred. Nearly no one buys bonds. I have investments in all three (FMNTQ=$.0945, FMNPQ=$4.70 and FGMC.GB=61.09). The day the plan was announced I was in stunned. I really thought that would be "bump day". Others were in shock and SOLD. Fear set in. Even I was influenced by the actions of others, instead of buying more when it got cut in half. However, FMNTQ has come right back.
FGMC.GB is my portfolio insurance against FMNTQ going to zero.
What is your outlook for commons at this point.
TIA!
Friday's action is what we have been waiting for...
FMNPQ now back to trading in parity with FMGC.GB. FMNPQ at prices in excess of $14.25 indicates to me that the value/timing of cash and securities to be received in the competing plan will match FMGC.GB.
FMNPQ action today signals good news on its way.
Most of the days trades occurred in the last 49 minutes of trading. The $15 mark was hit at 15:11 (1000). Prior to this time, only 2,240 shares had changed hands.
FMNPQ hits new 52-week high (6/26/09)
FREMONT CP I 9 TOPRS(Other OTC: FMNPQ.PK)
Last Trade: 14.25
Trade Time: 3:57pm ET
Change: 0.25 (1.79%)
Prev Close: 14.00
Open: 14.00
Bid: N/A
Ask: N/A
1y Target Est: N/A
Day's Range: 14.00 - 15.95
52wk Range: 2.45 - 14.89
Volume: 17,300
Avg Vol (3m): 8,267.69
References in the Debtor Attorney invoice out on the KCC site last night indicates:
1) IRS matter may be settled and there may be an additional refund.
2) While BONY is not settled yet there have been at least a few settlements proposed.
3) TOPrS look like they will be taken care of.
4) Stalking Horse still in play.
One after another - do not take my word for it. go read it. It is up and away from here.
Creditor's Committee is prepared to submit a plan confirmable within 60 to 70 days.
http://www.kccllc.net/documents/0813421/0813421090608000000000006.pdf
Creditor's Committee does not want to wait until 9/01/2009 to file an alternate plan.
The Creditors’ Committee seeks entry of an order terminating the Solicitation Exclusivity Period to permit the filing of an alternative plan of reorganization because (i) the Debtor has not demonstrated any genuine interest or ability to negotiate with the constituencies in this case and has squandered an already extraordinary lengthy period of exclusivity, (ii) the Debtor failed to use the last exclusivity extension (and the lengthy extensions previously granted) to formulate, negotiate and document a confirmable plan of reorganization, violating representations to this Court upon which the Debtor preserved exclusivity, (iii) the Debtor’s plan is not the product of any negotiation among creditors and is not supported by those constituencies, (iv) the Creditors’ Committee and its members do not have any confidence that the Debtor can formulate a plan that creditors will support or move this case forward, (v) having spent over seven months in an unsuccessful and expensive effort to locate a third party investor, and having had nearly a year of plan filing exclusivity, the Debtor’s plan is patently unconfirmable as a matter of law, (vi) the Debtor’s plan and disclosure statement also are materially incomplete, guarantee expensive and time consuming plan-related litigation, and do not even begin to approach so much as a blueprint to finally bring this case to any conclusion and (vi) numerous other reasons set forth in this Motion.
http://www.kccllc.net/documents/0813421/0813421090608000000000005.pdf
FMNPQ hits new 52-week high (6/02/09)
FREMONT CP I 9 TOPRS(Other OTC: FMNPQ.PK)
Last Trade: 14.50
Trade Time: 4:00pm ET
Change: 1.50 (11.54%)
Prev Close: 13.00
Open: 13.95
Bid: N/A
Ask: N/A
1y Target Est: N/A
Day's Range: 13.00 - 14.89
52wk Range: 2.45 - 14.89
Volume: 8,200
Avg Vol (3m):
Who is selling their TOPrS for $14? The plan pretty much guarantees $25+. How can you leave a 75% return off current prices on the table?
"Class 2A
General Unsecured Claims (Impaired)
Entitled to Vote
Creation of Creditor Trust to pay claims
Claim plus post-petition interest
$175 million pro rata to Senior Note holders
Class 2B
TOPrS Claims (Impaired)
Entitled to Vote
Claim plus post-petition interest"
N I C E !
Chapter 11 Plan filed (6/01/09)
Class 1
Priority Non-Tax Claims (Unimpaired)
Deemed to Accept Plan
Paid in full
Class 2A
General Unsecured Claims (Impaired)
Entitled to Vote
Creation of Creditor Trust to pay claims
Claim plus post-petition interest
$175 million pro rata to Senior Note holders
Class 2B
TOPrS Claims (Impaired)
Entitled to Vote
Claim plus post-petition interest
Class 3A Equity Interests (Impaired)
Entitled to Vote
Receive Series A Equity Trust Interests (1 interest for 1 share)
Class 3B Section 510(b) Claims (Impaired)
Entitled to Vote
Claims for rescission of or damages arising from the purchase or sale of a security.
Receive Series B Equity Trust Interests
Source: PACER
FMNPQ hits new 52-week high (6/01/09)
FREMONT CP I 9 TOPRS(Other OTC: FMNPQ.PK)
Last Trade: 13.00
Trade Time: 4:00pm ET
Change: 0.10 (0.78%)
Prev Close: 12.90
Open: 12.90
Bid: N/A
Ask: N/A
1y Target Est: N/A
Day's Range: 12.90 - 13.95
52wk Range: 2.45 - 12.90
Volume: 20,795
Avg Vol (3m):
FMGC.GB up 11.746 to 65 on three trades, $290,000.
Issue: FMGC.GB Description: FREMONT GENERAL CORPORATION Coupon Rate: 7.875 Maturity Date: 03/17/2009
Execution
Date Time Status Quantity Price Yield Comm. Modifier 2nd Modifier Special As Of Reporting Party Side
06/01/2009 17:15:03 T 130000 65.000 0.000 N A Y D
06/01/2009 17:12:27 T 130000 64.000 0.000 N @ D
06/01/2009 14:33:10 T 60000 54.000 0.000 N @ D
06/01/2009 14:33:10 T 60000 54.000 0.000 N @ B
06/01/2009 13:16:00 T 100000 57.875 0.000 N @ B
06/01/2009 12:35:00 T 100000 58.000 0.000 N Z D
FMNPQ's recent price rise now indicates the proposed payout is highly likely to be equivilent to FMGC.GB. Both are now selling about 52 percent of par (claim amounts will differ due to different amounts of accrued interest).
The price is increasing at a good clip, but volume is still a "light" with daily total often below the 3-month average.
FMNPQ hits new 52-week high (5/29/09)
FREMONT CP I 9 TOPRS(Other OTC: FMNPQ.PK)
Last Trade: 12.90
Trade Time: May 29
Change: 1.70 (15.18%)
Prev Close: 11.20
Open: 11.20
Bid: N/A
Ask: N/A
1y Target Est: N/A
Day's Range: 11.20 - 12.90
52wk Range: 2.45 - 12.90
Volume: 6,430
Avg Vol (3m): 7,423.81
Market Cap: N/A
P/E (ttm):
FMNPQ hits new 52-week high (5/28/09)
FREMONT CP I 9 TOPRS(Other OTC: FMNPQ.PK)
Last Trade: 11.20
Trade Time: May 28
Change: 0.20 (1.82%)
Prev Close: 11.00
Open: 11.00
Bid: N/A
Ask: N/A
1y Target Est: N/A
Day's Range: 11.00 - 11.20
52wk Range: 2.45 - 11.20
Volume: 1,100
Avg Vol (3m): 7,438.71
Market Cap: N/A
P/E (ttm): N/A
EPS (ttm): N/A
Div & Yield: N/A (N/A
FMGC.GB up .254 to 53.254 on two trades, $40,000.
Issue: FMGC.GB Description: FREMONT GENERAL CORPORATION Coupon Rate: 7.875 Maturity Date: 03/17/2009
Execution
Date Time Status Quantity Price Yield Comm. Modifier 2nd Modifier Special As Of Reporting Party Side
05/28/2009 16:30:01 T 30000 53.254 0.000 N @ B
05/28/2009 16:30:01 T 30000 53.254 0.000 N @ D
05/28/2009 15:25:06 T 10000 62.000 0.000 N @ D
05/28/2009 15:25:02 T 10000 62.109 0.000 Y @ S
My trade was the first one of the day. It was the first time my broker had shown any available for purchase. The spread may seem a little large, but the ability to buy using margin makes up for it. I just could not resist! ;o)
Now, I have all three slices of the Fremont General pie.
The tale of two cases: FMNTQ and WAMUQ.
As I write this on 5/28/09, there are 45 bookmarks for FMNTQ on investorshub.com and 574 bookmarks for WAMUQ.
Someone asked me for my thoughts on WAMUQ. I did a little research last night and just posted on that board. WAMUQ senior debt is trading at about 85 cents on the dollar. The subordinate debt is trading around 60, while junior subordinate debt is around 23.
FMNTQ's other paper are bargains when compared to those of WAMUQ. FMGC.GB is trading at 53, while FMNPQ selling at $11 (or equal to 44).
There is obviously a great number of investors betting that JPM and the FDIC will be sending large amounts of cash their way in a hurry.
FMNPQ hits new 52-week high (5/27/09)
FREMONT CP I 9 TOPRS(Other OTC: FMNPQ.PK)
Last Trade: 11.00
Trade Time: May 27
Change: 0.11 (1.01%)
Prev Close: 10.89
Open: 10.40
Bid: N/A
Ask: N/A
1y Target Est: N/A
Day's Range: 10.35 - 11.00
52wk Range: 2.45 - 11.00
Volume: 1,900
Avg Vol (3m): 7,469.35
Market Cap:
FMNPQ hits new 52-week high (5/26/09)
FREMONT CP I 9 TOPRS(Other OTC: FMNPQ.PK)
Last Trade: 10.89
Trade Time: 3:39pm ET
Change: 0.74 (7.29%)
Prev Close: 10.15
Open: 10.50
Bid: N/A
Ask: N/A
1y Target Est: N/A
Day's Range: 10.50 - 11.00
52wk Range: 2.45 - 10.15
Volume: 4,490
Avg Vol (3m): 7,281.25
Market Cap: N/A
P/E (ttm): N/A
EPS (ttm):
Bankruptcy impact on a FMNPQ holder.
Filing Date:
Date Open High Low Close Volume Adj Close
18-Jun-08 4.25 4.40 4.20 4.30 160,200 4.30
First Trading Date:
Date Open High Low Close Volume Adj Close
19-Jun-08 4.25 4.25 3.20 3.55 643,900 3.55
FMNPQ hits new 52-week high (5/22/09)
FREMONT CP I 9 TOPRS(Other OTC: FMNPQ.PK)
Last Trade: 10.15
Trade Time: May 22
Change: 1.05 (11.54%)
Prev Close: 9.10
Open: 9.75
Bid: N/A
Ask: N/A
1y Target Est: N/A
Day's Range: 9.60 - 10.15
52wk Range: 2.45 - 10.15
Volume: 5,990
Avg Vol (3m): 7,281.25
Market Cap: N/A
P/E (ttm): N/A
EPS (ttm): N/A
Div & Yield: N/A (N/A)
FMGC.GB up 6.887 to 61.250 on only one trade, $50,000.
E is awesome! Solid DD...
E,
THANK YOU!!!!!
Great info!
The Debtor retains control until the judge ends the exclusive period.
Although a Debtor may have a only one "official" plan, it is not uncommon for other interested parties to show up once the first plan is announced and everything is on the table. In order to participate in the process before a plan has been presented requires signing a confidentiality agreement. All the new potential investor(s) has to do is take the plan and reengineer it with their own assumptions. First plans generally do not become final plans.
Committee members not only have to sign confidentiality agreements but also must refrain from buying additional claims. Some large creditors may turn down a spot just so they can continue buying claims. Claims are better than cash. Claims are valued in the amount owned, not what the buyer actually paid (Original Issue Discounts can be an issue).
A company in Ch 11, for example, has $400 million in debt subject to compromise. An investor buys $100 million of various claims for $16 million over time post filing. They would own 25 percent of claims. People who retained their claims may not get 100 percent. The sellers have already taken their losses. The buyer capitalizes on any appreciation in value, which can be significant if the reorg leads to full recovery.
Tennenbaum is in the driver's seat - committee membership and more than $135.1 million or 81 percent of FMGC.GB. Other FMGC.GB and FMNPQ holders are just along for the ride.
I own FMNTQ because "ignorant investors" will jump in once there is some good press. I have seen it time after time. Others are banking on the same thing. With FMNPQ, there are several outsomes: (1) cash settlement in whole or part; (2) retain ownership or (3) receive equity. We are currently in Phase II. This is the riskiest time because of the unknowns, but can be a great time to get equity at a discount.
Phase III begins when a plan is announced. The profit potential and risk is much less.
EI,
You are the most knowledgeable of the folks posting when it come to BK's and restructering. If the court opens up plans can anyone put one together? In theory could you contact the significant creditors and get buy-in and present a plan? Do you need to even contact the creditors?
TIA
Personally, I have found one name inside very interesting, but have been unable to locate this person on any committee. Our paths crossed about a dozen years ago when we attended a shareholders meeting in NYC. The ironic thing is I found the subject file tonight and read the comments to my wife. Small world!
Debtor's Reply Brief:
http://www.kccllc.net/documents/0813421/0813421090428000000000002.pdf
Exhibit "A" (pages 36-37) provides an outline of terms the Creditor's Committee is seeking from a Plan Proponent, including treatment of the New Senior Notes (the Old Notes would have matured on 3/17/09) and TOPrS (FMNPQ).
Hearing 10:30
Committee of Unsecured Creditors objection to extending debtor's exclusive period.
That, sir, is the real question. 3B(?) belongs to WAMU but JPM stole it with the help of the FDIC.
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The goal of the moderator is to provide insight into the events leading to value creation primarily for TOPrS (FMNPQ) holders but also Senior Note (FMGC.GB) holders and other creditors since both are currently represented by the Creditors Committee. This is a work in process.
In 1996, Fremont General formed Fremont General Financing I, a statutory business trust, which sold $100 million of 9% Trust Originated Preferred Securities (TOPrS). Each TOPrS share represents an undivided beneficial interests in the assets of the Trust. Holders are entitled to receive cumulative cash distributions at an annual rate of 9% of the liquidation amount of $25 per TOPrS share, payable quarterly. The proceeds were invested in 9% Junior Subordinated Debentures issued by Fremont General, which are the sole asset of the Trust.
The $100 million in TOPrS will be redeemed at par upon maturity of the Junior Subordinated Debentures in 2026, subject to the election available to Fremont General to extend the maturity up to 2045, and they may be redeemed, in whole or in part, at any time. Fremont General has the right to defer payments of interest on the Junior Subordinated Debentures, at any time, for up to 20 consecutive quarters. If interest payments on the Junior Subordinated Debentures are so deferred, distribution on the Preferred Securities will also be deferred; Fremont General would also generally not be able to declare or pay dividends, or make any distribution, redemption, purchase or acquisition, with respect to its common stock.
The Junior Subordinated Debentures represent liabilities of the Fremont General to the Trust and are subordinate and junior to all indebtedness of Fremont General. Payment of distributions out of cash held by the Trust, and payments on liquidation of the Trust or the redemption of the Preferred Securities are guaranteed by Fremont General to the extent that the Trust has funds available to make such payments.
On February 28, 2008, the Fremont General announced that the Fremont General’s Board of Directors approved exercising the Fremont General’s right to defer the regularly scheduled quarterly interest payments on its 9% Junior Subordinated Debentures.
In 1999, Fremont General issued 7.875% Senior Notes due 2009 (FMGC.GB). These notes are unsecured senior indebtedness of Fremont General ranking equally with Fremont General’s existing and future unsubordinated indebtedness.
On March 18, 2008 Fremont General announced that it has determined to delay its semi-annual interest payment of approximately $6.6 million which is payable on March 17, 2008 on its $169.0 million of Series B 7.875% Senior Notes due March 2009.
To obtain pricing data for FMGC.GB / CUSIP: 356609AF4, click below:
http://cxa.marketwatch.com/finra/BondCenter/BondDetail.aspx?ID=MzU2NjA5QUY0
Fremont General filed for bankruptcy under Chapter 11 on June 18, 2008. Schedule F - Creditors Holding Unsecured Nonpriorty Claims detailed $326,529,372.29 of liabilities subject to compromise. Holders of the 9% Junior Subordinated Debentures had total claim of $106,958.763 ($103,092,784 in principal and $3,865,979 in pre-petition interest). Holders of the 7.875% Senior Notes had a total claim of $175,554,838 ($166,302,015 in principal and $9,252.823 in pre-petition interest). If Fremont General is deemed "solvent", it is possible that post-petition interest will be due to creditors.
Tennenbaum Multi-Strategy Master Fund owns $135,101, 000 in principal amount or 81% of the 7.875% Senior Notes outstanding.
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