News for the Week of 2/12/17

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  • Coal. Prices have risen and Trump is promising assistance. Is this enough to offset sagging demand? China's new measures aren't helping. But the capital markets are, as Peabody Energy, Arch Coal, and Contura Energy are all taking advantage of cheap financing/refinancing options. Peabody shopped an upsized term loan (by $450mm) with revised company-favorable pricing; it also issued new notes and bonds. Amazing how quickly things changed with coal.
  • Chicago. S&P is making threats. 
  • Electric Vehicles. Something tells us that oil and gas management teams and their wildly astute restructuring bankers and advisors neglected to bake this element into their business plans. 
  • European Debt. Increasing concerns about Italy and Greece. Meanwhile, in France, CVC Capital Partners' owned vehicle leasing firm Fraikin has hired Rothschild to restructure its 1.4 billion Euro debt. Lazard will represent the mezz debt.
  • Moelis & Co. & Aramco. "Ken of Arabia"? C'mon, that's just dumb.
  • Power. California has more power plants than it needs. After a slate of power-related bankruptcies, it looks like there is more hurt to come in this space. And big developments on the storage side probably won't help. And this new cooling tech won't help either - if it's legit.
  • Retail. And people wonder why private equity is vilified...case and point: Rackspace. Speaking of private equity, Canada Goose's proposed IPO reeks of a dump-and-run on greater fools. Millennials don't spend money, but Bain Capital will have us believe that $900 fur-lined jackets are the exception to the rule. Riiiight. 
  • Retail Part II. Organized Retail Crime = massive problem. 
  • Retail Part III. Gander Mountain = toast.
  • Retail Part IV. Amazon announced that the number of third-party sellers on its B2B site has reached 45k, up about 50% from the approx 30k sellers it had at the end of Q2...IN JUNE.
  • Return of the Maturity Wall. Nothing gets restructuring professionals' juices flowing like sexy maturity stats. So, here it is: $2 trillion of corporate debt comes due in five years. And this is, in part, because the capital markets are definitely wide open right now in the face of soon-to-be rising interest rates. Take THAT wall, President Trump! 
  • Sears. Everyone is looking at this oncoming trainwreck and wondering "when?", not "if." Nice recent CDS movements on it but then the company unearthed a remarkable $1b in cost savings. Like, out of nowhere. And, naturally, the stock soared 25+%.
  • Spotify. Typically there are tremors before the earthquake. Perhaps Filip Technologies, Violin Memory, and Nasty Gal are the tremors foreshadowing a venture debt-backed reckoning on the horizon. It's unclear. But, in Spotify's case, the interest ratchets attached to $1b of debt get more and more expensive with each consecutive quarter sans IPO. A big "unicorn" is going to fail and fail big. Spotify may not be the one, but it ain't looking great. But that one IS coming (Zenefits anyone?). Along these lines, how the eff is Theranos not bankrupt yet? 
  • Takata. Inching towards bankruptcy.
  • Fast Forward: Most retail-focused restructuring pros emphasize "omni-channel," the latest retail buzzword that, practically speaking, means basically nothing in today's climate. Case and point: Neiman Marcus, which was downgraded this week with projected 10x leverage on $4.77b of debt. Most of the cap stack traded at new lows this week. Omni-channel ain't a panacea, it appears.
  • Rewind I: This result for Relativity Media sure sounds positive.
  • Rewind II: The grocery space is getting hammered so badly that now even Whole Foods is retrenching, shutting more stores than it's opening go-forward.
  • Chart of the Week: 
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News for the Week of 10/30/16

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“It’s not like it was 30 years ago, but it’s a good mall”...

  • Athleisure - Lululemon, Nike and Under Armour had all killed it in recent years by focusing on athletic wear but the trend is in decline. Jeans may be making a comeback -- so long as they're not uber-cheesy, e.g., True Religion. Meanwhile, J.Crew recently announced a shift towards athleisure. Are they too late to the party?
  • More Under Armour. The Company reported down numbers this quarter, continuing to exhibit the effect The Sports Authority's bankruptcy has on its business. This holiday season will be make-or-break for a large number of retailers and may be watched closely by those who invest in malls...
  • "Dead Malls" - This really puts the disparity between "A" malls and "dead" malls in perspective: Schuylkill Mall in Frackville Pennsylvania filed for bankruptcy this week. Anchor tenants: Bon-Ton, Dunham Sports, KMart, Hess's, and Sears. The latter three closed in the last 24 months, contributing to a "large vacancy rate."
  • Fund Raising: Oak Hill Advisors raised $2.7b for its second distressed fund while Carlyle raise $1.5b for another distressed fund. Clearly folks are prepping for increased activity.
  • Last Week: To quote renowned bankruptcy expert, Keanu Reeves Esq., "Whoa". Last week we discussed the historic Saudi Arabian debt issuance in our piece about "yield." This week, a Saudi official noted that the country's continued busted budget deficit could lead to sovereign bankruptcy within a few years.
  • Last Week Part II: That Ryan Kavenaugh dude has nine lives. It looks like Relativity Media will avoid a Chapter 22 filing (or liquidation) in light of its announced $250mm sale to some Singaporean sucker. Clearly its the Netflix streaming rights that proved compelling given the whopping ~$6mm intake on "Masterminds."
  • "Captain Obvious" Headline of the Week: "Bankruptcies in Oil Field Services are Accelerating."
  • Chart of the Week: To put this in perspective, as recently as 2010, only three states had at least a 10% wind share. Think about that in the the broader oil and gas context: this energy downturn is not just debt-related. We are looking at the broad-based beginning of a secular decline. 

News for the Week of 10/23/16

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  • Stone Energy - the company announces plans for a prepackaged bankruptcy which, from our vantage point, will be one among a grouping of next-wave oil-and-gas-related prepackaged/prearranged chapter 11s to file this quarter (perhaps starting as early as this week).  
  • Distressed Debt Market - "They raised the money and now they have few places to put it." - an assessment of the overall state of distressed debt when low rates persist and bonds trade up. Marc Lasry, however, talks capital deployment in energy.  
  • Relativity Media - the Chapter 7 or Chapter 22 watch continues. 
  • Retail Grocery - continued movement in the battered space as Supervalu sells Save-a-Lot. 
  • Bill Ackman - is his comeuppance around the corner? 
  • True Religion - cheesiness, the millennial preference for athleisure, and too much debt put denim retailer in distressed territory.
  • Chart of the Week:
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News for the Week of 10/16/16

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  • In Australia, alternative capital providers like Oaktree and Bain Capital Credit look to replace banks pulling back from risky lending amidst the increasingly distressed commodities bust.
  • Last week, we discussed Chicago's stress and efforts there to stem the tide. Here is a more technical look at Chicago's options and whether it can even go the Detroit route.
  • Here is an interesting list of the worst corporate M&A flops, some of which are familiar to restructuring professionals, e.g., KMart/Sears.  
  • Number of new pianos sold in the US is down nearly 1/3 since 2005, a fact that may force Paulson & Co. to navigate loan defaults for portfolio company, Steinway Musical Instruments.
  • As predicted last week, Relativity Media inches closer to a Chapter 7 liquidation mere months after emerging from Chapter 11. 
  • On the heels of Cosi and Garden Fresh both filing for chapter 11 recently and grocers like A&P, Haggen, and Fresh&Easy having already filed, food is filling the docket more than our stomachs these days. Along these lines, the news that Amazon is now pursuing fresh groceries has raised eyebrows and called into question, generally, the "Amazon effect":

News for the Week of 10/9/16

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News for the Week of 10/9/16