Unlocking Pacific & Atlantic’s Option Value

by Kevin Oates

In recent months it has become apparent that the tone, if not the terms, of each shipping high yield bond restructuring will to a greater or lesser extent depend upon the proverbial “last done”. As a result we think the inevitable restructuring of Pacific & Atlantic will contain elements of the Golden Ocean and Ermis as well elements from the ongoing restructuring of TBS and Global Ocean.

In an attempt to avoid buying high and selling low, the trend in shipping restructurings at present is the exchange of original notes for a reduced quantity of new notes. In addition, bondholders take a high equity stake in the company, or preferred stock or both and management is given control and equity claw backs if certain goals are achieved.

This is only an excerpt of Unlocking Pacific & Atlantic’s Option Value

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