Replies to post #5000 on ARO Liquidation Inc. (fka AROPQ)

[MasterBlastr]

Good pragmatic view of the situation. You pretty much pinned the tail on the donkey here.

[GohanGSM]

Yes, as positive and encouraging as I like to be, I mostly agree with this analysis... however, I do believe there is a 1-5% chance they emerge with shares intact w/o buy-out imo

[GohanGSM]

Yes, as positive and encouraging as I like to be, I mostly agree with this analysis... however, I do believe there is a 1-5% chance they emerge with shares intact w/o buy-out imo

[CanItBThisEZ2Make]

POR Already effective and profits will come in and debts will be met. They requested bonuses for the employees who helped manage the POR. IMO ... If judge approves what are the odds the AROPQ will request common shares be cancelled, maybe 10 percent. If judge doesn't approve, maybe 15 percent. Odds of AROPQ not cancelling common shares close to 85 percent. The reason is the POR has already been proven to bring in profit from the past sales at the stores they left open for business and the new ones they open. So if the economy stays on track which it should even with the Brexit dilemma, Hillary, and Trump their will be substantial profits to begin AROPQ growth. Aeropostale wants to return to the NYSE ASAP and it would be easier to this by simply restoring stock over 1.00 per share, and the other guide lines needed. They know this would happen faster by just claiming that common shares will not be cancelled, that the POR is successful, and that bankruptcy is over.
Now if they were to cancel common shares or dilute, then how long would it take the newly issued stocks to sell at 1.00 per share. Most investors would lose their trust in Aeropostale if they did this and would not invest for quite a while. So I seriously doubt they will not go this route.
There always is the possibility of a merger or acquisition, but not really seeing a need for that anymore.
The other possibility is, and this is where the 10 or 15 percent chance comes in of cancelling common shares, is if they decide they just want to go private. Quicksilver was an example of a company that did this.

Time to just kick back and enjoy the ride this week. Hopefully I will have a smile rather than a frown comes Friday afternoon.

[cdhames]

I think common has a good chance of coming out intact. There's 2 senior debtors (Crystal $160M DIP loan, and Sycamores $150M in credit facilities). The BoA credit facility is already resolved via the DIP disbursement of $73M.

The senior debt will be restructured. They will most likely receive some form of equity vehicle, whether it's common shares, or some new form of equity (debenture, note, bond, warrant, etc..) that we haven't seen yet remains to be seen.

Again, as I've said before, there's no other equity stakeholders here. Just us, the common shareholder, and the two senior debtors.

Now, IMO under their current share structure they can easily absorb the full $348M ($160M DIP + $188M Sycamore Tranch A,B,C) under the current equity class. Preferred alone was only tapped for 1000 shares and based on what I've read it appears Sycamore already converted those to common. At minimum, ARO can create a new, senior equity vehicle in the form of Preferred B or C. Or issue Bonds or warrants. And it doesn't have to be for the full amount. ARO can support the full $348M but they don't have to. They can issue equity for half of their debt and restructure under new 5 or 10-year terms for the remaining portions. There's many ways to do this.

All without wiping out the common.

There just isn't much of a case any way you look at it that would support starting over with new equity. Just because they file Chapter 11 doesn't provide reason and justification to wipe out common. There has to be a need , and I'm not seeing that here.

Now I'm not buying into the hope of riches, just trying to make a logical case. If someone want's to provide a counter-perspective I'd welcome that.