It appears totally upside down when looking at it. No chance of recovery. But certain items are starting to be filed that make it at least worth looking at, and show a possibility of some recovery for equity.
The company has been bleeding for a while in the end of last year and took on a secured credit facility of 35mm from a distressed debt vulture known as Gores Group last Sept.
There were certain covenants in place that if thresholds weren't maintained Gores had ramifications.
The Debtor states that when Gores swept all it's cash in Jan due to breaking the covenant agreement it was forced to file.
One of the items in the 10K though, in the Agreement for the CF with Gores, was a 'Solvency Certificate' where they state in Sept 2012.....
"Pursuant to Section 4.01(g) of that certain Credit Agreement, the undersigned, Kevin Michaels, as Chief Financial Officer of Borrower, hereby certifies, solely in his capacity as an officer of Borrower and not in any individual capacity, that as of the Closing Date, the sum of the Borrower’s current liabilities do not exceed the present fair saleable value of the Borrower’s assets.
http://www.sec.gov/Archives/edgar/data/1023362/000119312513014948/d469213dex101.htm
All the way down to the bottom almost.
This directly contradicts the Statements of Assets and Liabilities when they filed only 3 months later. By a huge margin.
Maybe things have changed, and I know Gores has argued in some of the docs ( Use of Cash Collateral for one) that the assets are not enough, and used that argument to try and sway the court into siding for that particular motion . But have never actually challenged that Solvency Certificate, or even mention it.
So the Debtor is now looking to sell all assets in a 363 sale.
Here is what originally caught my eye about that and made the possibility of equity seeing some recovery if certain things fall into place .....
http://www.kccllc.net/documents/1310134/1310134130304000000000007.pdf
Part of the sale they might be seeking (and/or) is to try and have a 'Plan Sponsored Agreement' where the buyer will purchase all , or part of, the equity interests in the debtor.
http://www.kccllc.net/documents/1310134/1310134130222000000000004.pdf
pg 8
And/or is the catch.
But clearly some of the thought process of the Debtor is for an equity recovery.
Something to notice and depending on the individual, possibly risk an investment.
It is worth noting that the UCC is representing two underlying notes large held by large funds that hold large convertible notes in the agreements. These are the largest Subordinated Debt the debtor has.
The holder at the bottom is P-Wave Holdings ( Gores Group) that is secured.
Kryznowski is Deutsche Bank, and I believe Silver Lake ( big fund..took Dell private) , Empire and Aries are part of the repurchase of the two notes that took place in 2011.
They all took a large stake in the company.
This is from the Financial Statements when they filed. Any of these become less than 5% owners they need to file and none have so far.
Of course they could be selling presently, but would have to exercise the notes first and then file as soon as they get below 5%
http://investorshub.advfn.com/uimage/uploads/2013/3/14/ckrfrrsz_pw1.jpg
Most have been represented in the courtroom telephonically. As well as some other big distressed debt funds.
http://www.kccllc.net/documents/1310134/1310134130204000000000004.pdf
Also interesting to note, from the sign in sheet of the hearing last week on the 21st, ( the sign in sheet was on the minute entry court doc....now it is gone for some reason...was 3 pages when entered...now 1) that an 'Ad Hoc Note Holders Committee' is being represented. Why they are not part of the UCC is a development I would like to uncover. Their interests should be aligned, as well as paid for by the estate...yet some have sought their own representation.
As far as these funds holding the convertible notes, they are presently convertible, yet none seem to be divesting. .Although I do not ever get my hopes up when dealing with these funds anymore since their self interest can very easily submarine equity...even when it appears they are aligned.
The share structure is small. About 32mm OS, and about 15mm is held by those funds and insiders. There were a few 13g filings after BK showing that the convertible is being counted towards the present OS ( I believe I'm right about that.)
http://investorshub.advfn.com/uimage/uploads/2013/3/14/ckrfrrsz_pw1.jpg
http://investorshub.advfn.com/uimage/uploads/2013/3/14/sgiivrsz_pw2.jpg
The company has been bleeding for a while in the end of last year and took on a secured credit facility of 35mm from a distressed debt vulture known as Gores Group last Sept.
There were certain covenants in place that if thresholds weren't maintained Gores had ramifications.
The Debtor states that when Gores swept all it's cash in Jan due to breaking the covenant agreement it was forced to file.
One of the items in the 10K though, in the Agreement for the CF with Gores, was a 'Solvency Certificate' where they state in Sept 2012.....
"Pursuant to Section 4.01(g) of that certain Credit Agreement, the undersigned, Kevin Michaels, as Chief Financial Officer of Borrower, hereby certifies, solely in his capacity as an officer of Borrower and not in any individual capacity, that as of the Closing Date, the sum of the Borrower’s current liabilities do not exceed the present fair saleable value of the Borrower’s assets.
http://www.sec.gov/Archives/edgar/data/1023362/000119312513014948/d469213dex101.htm
All the way down to the bottom almost.
This directly contradicts the Statements of Assets and Liabilities when they filed only 3 months later. By a huge margin.
Maybe things have changed, and I know Gores has argued in some of the docs ( Use of Cash Collateral for one) that the assets are not enough, and used that argument to try and sway the court into siding for that particular motion . But have never actually challenged that Solvency Certificate, or even mention it.
So the Debtor is now looking to sell all assets in a 363 sale.
Here is what originally caught my eye about that and made the possibility of equity seeing some recovery if certain things fall into place .....
http://www.kccllc.net/documents/1310134/1310134130304000000000007.pdf
Part of the sale they might be seeking (and/or) is to try and have a 'Plan Sponsored Agreement' where the buyer will purchase all , or part of, the equity interests in the debtor.
http://www.kccllc.net/documents/1310134/1310134130222000000000004.pdf
pg 8
And/or is the catch.
But clearly some of the thought process of the Debtor is for an equity recovery.
Something to notice and depending on the individual, possibly risk an investment.
It is worth noting that the UCC is representing two underlying notes large held by large funds that hold large convertible notes in the agreements. These are the largest Subordinated Debt the debtor has.
The holder at the bottom is P-Wave Holdings ( Gores Group) that is secured.
Kryznowski is Deutsche Bank, and I believe Silver Lake ( big fund..took Dell private) , Empire and Aries are part of the repurchase of the two notes that took place in 2011.
They all took a large stake in the company.
This is from the Financial Statements when they filed. Any of these become less than 5% owners they need to file and none have so far.
Of course they could be selling presently, but would have to exercise the notes first and then file as soon as they get below 5%
http://investorshub.advfn.com/uimage/uploads/2013/3/14/ckrfrrsz_pw1.jpg
Most have been represented in the courtroom telephonically. As well as some other big distressed debt funds.
http://www.kccllc.net/documents/1310134/1310134130204000000000004.pdf
Also interesting to note, from the sign in sheet of the hearing last week on the 21st, ( the sign in sheet was on the minute entry court doc....now it is gone for some reason...was 3 pages when entered...now 1) that an 'Ad Hoc Note Holders Committee' is being represented. Why they are not part of the UCC is a development I would like to uncover. Their interests should be aligned, as well as paid for by the estate...yet some have sought their own representation.
As far as these funds holding the convertible notes, they are presently convertible, yet none seem to be divesting. .Although I do not ever get my hopes up when dealing with these funds anymore since their self interest can very easily submarine equity...even when it appears they are aligned.
The share structure is small. About 32mm OS, and about 15mm is held by those funds and insiders. There were a few 13g filings after BK showing that the convertible is being counted towards the present OS ( I believe I'm right about that.)
http://investorshub.advfn.com/uimage/uploads/2013/3/14/ckrfrrsz_pw1.jpg
http://investorshub.advfn.com/uimage/uploads/2013/3/14/sgiivrsz_pw2.jpg
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