I like GBGLF more. School Specialty is interesting - but I think moreso via the convertible debt. The ops are valuable, and Bayside clearly wants it for themselves on the cheap. The unsecureds will fight this, and I think they have a great case, most especially as they seem like they might bring the $$$ to the table to take out Bayside. But I think those unsecureds are then going to take it for themselves, and leave equity out. I found this language in docket item #177 not completely reassuring:
14. Prior to the Petition Date, the Debtors engaged an “ad hoc” committee of
Unsecured Noteholders (the “Pre-Petition Ad Hoc Committee”) in work-out and bankruptcyplanning
discussions. As part of those discussions, the Debtors provided the Pre-Petition Ad
Hoc Committee certain analyses, reflecting restructuring scenarios and outcomes anticipated by
the Debtors.3 None of those scenarios reflect zero distribution for unsecured creditors.4 To the
contrary, every one of the Debtors’ scenarios contemplated all of the reorganized company’s
equity being delivered to unsecured creditors.5
15. The Debtors’ proffered “illustrative” valuations ranged from approximately $198
million to $265 million, assuming blended multiples ranging from 4.5x to 6.0x and (what now is
an outdated, low) EBITDA of $43.9 million.6 Based on FY2013 projected EBITDA of $47
million, the Debtors’ “illustrative” model suggests a valuation range of $210 million to $280
million. With only approximately $140 million in alleged pre-petition secured debt7 and
anticipated post-petition borrowings of around $50 million, the Debtors “illustrative” valuation
range implies unsecured creditor recoveries perhaps near $100 million. The Committee may
come to conclude that even this estimate is greatly understated, once it has had an opportunity to
diligence data and model further.
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