FACTS on this one for those who care to hear and profit:
From the PR announcing bankruptcy:
The company said in a statement Monday that it made the move after reaching an agreement in principal with its lenders for a financial restructuring.
As part of the agreement, current senior debt holders will convert their holdings into new shares of the reorganized company and provide Regent with new debt. According to court papers, the new debt will consist of $95 million in senior secured term loans plus $25 million in payment-in-kind, or PIK, loans.
Regent listed $166.5 million in assets and $211.3 million in debts in its bankruptcy petition filed with the U.S. Bankruptcy Court in Wilmington, Del.
Regent's existing unsecured debt holders, namely lenders with deficiency claims against the company will waive those claims. All other unsecured claims will be paid in full with cash.
Meanwhile, secured lenders will give to current shareholders a "gift," or a distribution from their collateral, of $5.5 million. Once that amount is distributed, Regent's outstanding shares will be canceled.
So the plan already approved with lenders, gives shareholders 5.5 million or 0.13 a share.
Now when have you ever heard of the creditors giving shareholders a "gift". Give me a break. A major shareholder, Resilient Capital, recognized this and filed a motion to form an equity committee. They contend that equity holders are due a much larger amount closer to 83 cents a share.
So at current prices you have the following risk/reward scenario: 0.13 Low, 0.83. From current prices that is a 13% loss if you buy at the ask and the plan goes through vs 5.5 times your money if the equity committee's valuation is correct and is accepted.
AI
