Author Topic: SHLD - Sears  (Read 2518336 times)

Greyhound

  • Newbie
  • *
  • Posts: 31
  • https://twitter.com/GreyhoundValue
Re: SHLD - Sears
« Reply #9160 on: May 29, 2018, 05:50:45 PM »
Quote
We wanted to emphasize that finding an appropriate partner soon will be a critical factor that will materially impact any definitive proposal that we are able to make. Specifically, we believe that our ability to execute the ESL Proposal depends on our ability to engage with partners that can provide strategic and/or management experience to these businesses.


walt373

  • Full Member
  • ***
  • Posts: 115
Re: SHLD - Sears
« Reply #9161 on: May 30, 2018, 11:54:36 AM »
Have we considered the possibility that Eddie was willing to continually do seemingly uneconomic deals with SHLD so that he could profit by selling CDSs that he could make sure would not pay out?

https://www.bloomberg.com/news/articles/2018-05-22/sears-looks-like-the-next-company-with-head-scratching-cds-trade

benhacker

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 823
Re: SHLD - Sears
« Reply #9162 on: May 30, 2018, 12:35:18 PM »
:)

Quote
Have we considered the possibility that Eddie was willing to continually do seemingly uneconomic deals with SHLD so that he could profit by selling CDSs that he could make sure would not pay out?

https://www.bloomberg.com/news/articles/2018-05-22/sears-looks-like-the-next-company-with-head-scratching-cds-trade

Thesis for first 10 years was Eddie was going to "screw" debtholders by hiving off all the good assets.

Now Eddie is long CDS (basically a debtholder) so he's screwing equity to enhance his trade.

Maybe it's just:
1) company had tons of assets so NAV was higher than anyone believed (except Eddie and a few others)
2) he's not that good at running retail so he obliterated much of the margin of safety

And that's pretty much it. :)

Half joking... I don't know about the CDS angle, but as a former (long suffering and long voiced creditor) debt holder, just thought the comment/suggestion was amusing.
Ben Hacker
Beaverton, Oregon - USA

TwoCitiesCapital

  • Hero Member
  • *****
  • Posts: 1950
Re: SHLD - Sears
« Reply #9163 on: May 30, 2018, 04:11:48 PM »
Have we considered the possibility that Eddie was willing to continually do seemingly uneconomic deals with SHLD so that he could profit by selling CDSs that he could make sure would not pay out?

https://www.bloomberg.com/news/articles/2018-05-22/sears-looks-like-the-next-company-with-head-scratching-cds-trade

Quote
"Those bonds have been the lowest-priced of the unitís debt. A buyer of credit derivatives profits from the difference between the face value of a companyís debt and its cheapest bonds, so eliminating low-priced debt decreases the potential payouts for the buyer and gives a higher return to the seller."

Aren't CDS all cash settled now via auction? The return to the CDS seller is the spread/coupon paid for the protection less any amount owed in a default. Since physical bonds aren't used for settlement anymore, isn't statement a bit dated?

BeerBBQ

  • Full Member
  • ***
  • Posts: 124
Re: SHLD - Sears
« Reply #9164 on: June 05, 2018, 12:42:17 PM »
Anyone have any thoughts on the 2019 unsecured debt?

With today's 8-k, it looks like $4b out of the $5B in outstanding debt now matures on 7/20/20.  Of the $1B that matures before then, I think ESL owns $400m of it.  Also, roughly $134m is due 10/15/18 with the rest due in 2019.  With the impending potential purchase/cash infusion from ESL for Kenmore, Home Services, Real Estate, etc., shouldn't the 2019 debt have a much better chance of being paid than what is implied by current price?

Also, it seems curious that the maturity extensions for various debts over the past few years seem to all have land on 7/20/20.   



doughishere

  • Hero Member
  • *****
  • Posts: 1275
Re: SHLD - Sears
« Reply #9165 on: June 15, 2018, 06:05:41 PM »
Is the BOD even interested in doing a deal..there hasnít been a peep from them at all.