Author Topic: PHIIK - PHI, Inc  (Read 1194 times)

Gregmal

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PHIIK - PHI, Inc
« on: March 15, 2019, 03:56:47 PM »
« Last Edit: March 16, 2019, 03:12:01 PM by Parsad »


samwise

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Re: PHI, Inc- Another Unique Bankruptcy case
« Reply #1 on: March 15, 2019, 08:00:27 PM »
https://www.prnewswire.com/news-releases/phi-inc-takes-action-to-address-maturing-debt-strengthen-its-liquidity-and-balance-sheet-and-position-the-company-for-long-term-success-300813039.html

Quick summary- management totally f*** shareholders... However there seems to be value here, especially in the bonds.

Yes this is fascinating to watch. Is non-voting stock treated differently in banckruptcy ? Why the huge discount? Is it just to get alignment with the CEO and largest owner?

Also I am not sure they intend to destroy shareholders, although that might happen anyway . They want to restructure the bonds. They have been playing hardball with the bonds for months now, and they mentioned renegotiating above market leases in the latest press release. So seems like this is a strategic banckruptcy. If they can't get the bond holders to agree to a restructuring, they will try to force it via a judge. Don't ask me how they do that. But the SeekingAlpha piece today had extracts from their dockets mentioning negotiations with the bonds committee. And the press release says the same thing.


Edward

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Re: PHI, Inc- Another Unique Bankruptcy case
« Reply #2 on: March 16, 2019, 06:51:27 AM »
In my opinion since the CEO has control of the situation via a 130M$ secured loan, the bondholders will be massively haircut via debt/equity exchanges and the shareholders wiped out.

Gregmal

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Re: PHI, Inc- Another Unique Bankruptcy case
« Reply #3 on: March 16, 2019, 07:17:07 AM »
I would agree that the above seems to be most likely. However if there was ever a case that could be brought against a management/BOD for breach of fiduciary duties, this would be it. My understanding is that in addition to poor disclosure, there may even be outright lies here relating to the "strategic evaluation". You can't say there weren't adequate offers when you may have refused to let people even bid. Should be another interesting story to watch play out, and heck, maybe invest in.

maybe4less

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Re: PHI, Inc- Another Unique Bankruptcy case
« Reply #4 on: March 17, 2019, 08:37:12 AM »
In my opinion since the CEO has control of the situation via a 130M$ secured loan, the bondholders will be massively haircut via debt/equity exchanges and the shareholders wiped out.

Yeah, right. The asset value is incredibly high compared to his piddly $130M loan. Even if the equity is wiped out, the bondholders will just refinance the CEO's loan. The unsecureds are the fulcrum security.

Edward

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Re: PHI, Inc- Another Unique Bankruptcy case
« Reply #5 on: March 18, 2019, 08:11:38 AM »
In my opinion since the CEO has control of the situation via a 130M$ secured loan, the bondholders will be massively haircut via debt/equity exchanges and the shareholders wiped out.

Yeah, right. The asset value is incredibly high compared to his piddly $130M loan. Even if the equity is wiped out, the bondholders will just refinance the CEO's loan. The unsecureds are the fulcrum security.

Using this website (and a few other reference points): https://www.avbuyer.com/aircraft/helicopter

I reached a value of about 300-400M$ for the entire helicopter fleet. And this would not account for a firesale, just a very orderly asset sale over a few years. Now, we could argue about the value of Air Medical as a going concern vs asset values, but I think that the bonds are actually trading at a premium to a liquidation scenario. The entire situation is such a mess that it is unclear what valuation would be relevant under which scenario.

maybe4less

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Re: PHI, Inc- Another Unique Bankruptcy case
« Reply #6 on: March 18, 2019, 12:44:20 PM »
In my opinion since the CEO has control of the situation via a 130M$ secured loan, the bondholders will be massively haircut via debt/equity exchanges and the shareholders wiped out.

Yeah, right. The asset value is incredibly high compared to his piddly $130M loan. Even if the equity is wiped out, the bondholders will just refinance the CEO's loan. The unsecureds are the fulcrum security.

Using this website (and a few other reference points): https://www.avbuyer.com/aircraft/helicopter

I reached a value of about 300-400M$ for the entire helicopter fleet. And this would not account for a firesale, just a very orderly asset sale over a few years. Now, we could argue about the value of Air Medical as a going concern vs asset values, but I think that the bonds are actually trading at a premium to a liquidation scenario. The entire situation is such a mess that it is unclear what valuation would be relevant under which scenario.

No one is going to ask for this business to be liquidated. It's in no one's interest as both major operating segments are more valuable as going concerns.

There is a not insignificant chance that one or both segments are sold to strategic buyers. The price of the sale of either segment will be well over $200M, so the secured debts will simply be paid off in cash.

In the case that nothing is sold, the unsecureds will get the equity of the company and simply refinance the $200M in debt, a debt burden that these businesses can easily withstand.

No way the CEO can use his loan to steal the company.