SSCC- Gap down on 15 Jan due to company telling lenders it may file for Bankruptcy, and has hired Bankruptcy lawyers! Technicals look like setting up for potential bounce, but fundamentals suck. Could be a head fake like NT was-although we did luck out on that one.
Reuters-The company has hired bankruptcy counsel and financial advisers in an effort to line up about $750 million in debtor-in-possession (DIP) financing, the paper said citing the people.
Companies use DIP financing to help them fund operations while they restructure debt.
A Chapter 11 filing for protection from creditors could come within two weeks, once the company secures the financing, the paper said.
A company spokeswoman declined to comment to the Journal about a potential bankruptcy filing. Smurfit-Stone could not be immediately reached for comment by Reuters.
The company has a $7.3 million interest payment due later this week, but it was unclear it was going to make the payment, the people told the paper.
The company has about $3.5 billion in outstanding debt and roughly $7.5 billion in annual sales, according to the paper.
It has about $316 million in debt payments due this year and also also needs to refinance a $800 million revolving credit line due in November, the Journal said. (Reporting by Ajay Kamalakaran in Bangalore; Editing by Lincoln Feast)
AP-A bankruptcy could be bad news for common shareholders as they often get little or nothing back on their investment once management seeks court protection from creditors. That's because common shareholders' call on company assets is typically less than that of bondholders and preferred shareholders.
Jan 15 (Reuters) - Smurfit-Stone Container Corp (SSCC.O), a major corrugated packaging maker, has told lenders it could file for bankruptcy amid weakening sales and a cash crunch, the Wall Street Journal said, citing people familiar with the matter.
"The (company's) market cap has fallen below $100 million, and the bonds are trading at less than 20 cents on the dollar," Deutsche Bank-North America's Mark Wilde wrote Thursday in a client note. "This reflects its high debt levels, difficulties in refinancing, and deteriorating fundamentals."
Wilde said the news highlights the distress in the debt-laden industry, which is facing growing pressure as volumes decline steeply.
"The other extremely heavily leveraged name in our space is AbitibiBowater," Wilde said. "Other leveraged coverage names include Temple-Inland and International Paper, but we think that those two companies are in much better shape than Smurfit-Stone."
Smurfit-Stone shares fell 30 cents, or 83.4 percent, to 6 cents. In the past 52 weeks the shares have ranged from 5 cents to $9.99.
