The stars have aligned for a Smurfit Stone unsecured debt purchase. Smurfit Stone unsecured debt is attractively priced trading below 80. Our rating on Smurfit Stone has been upgraded to Buy from Neutral at a price of 79. On 6/8, our model porfolio purchased the unsecured debt at 79. Estimated recovery is 90-92 % of par. Our recovery estimation has been reduced from 95% due to an agreement to distribute 5% of the new equity to the common and preferred shareholders.
Oberservations
Bondholders believe that the debtor used valuation assumptions that are not in line with industry analysts, and that EBITDA projections likely underestimate the value of the company.
The company disclosed that $3.3 billion would be distributed to $4.5 billion of unsecured claimants. The Plan of Reorganization has been approved and a Modified Plan has been filed on 5/26.
Conflicts with common and preferred holders have been settled with a distribution of 2 1/4 % each.
Smurfit Stone will authorize the issuance of 150 million shares, and will issue 100 million shares of common stock for distribution to creditors.
Adjusted EBITDA & Forecasts
2009---495
2010---469
2011---554
Research on distressed debt securities is provided by Performance Plus Advisors, Inc. To receive a research report on Smurfit Stone or any other company we follow contact us at (727)-441-1305 ext 201.
Stephen P. Vlahos
Download Smurif Stone Distressed Debt Research
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Posted by: Austin | 10/10/2012 at 08:50 AM