$350m (+50m) sen unsec cb coming tonight from MS/CITI. Terms: 5y 4½-5% up 30-35%, full pctns. Cncrrnt $175m 7% conv prfd shs to P2 Capital. UOP=repay ~$178m revolver/~$200m PRU 4.5% loan (lev ratio covnnts tripped).$1.5bn supply chain mgt provider w/global rev split=NA 34%/AFRICA 19%/ASIA 22%/EUR 25%. Macro env/costly exec of global system factors for poor performance.PFcash=271.8m debt=482.3m,LTMebida=100m,gross lev=4.8x. We’d assume L+750. ADV =580k, no leaps, 1y 100d=25%. CPN provides some pctn on way down but exp no/-ve gamma until it hits distressed zone. We’d cap vol @ 25%. Theo=100.5/102.5/104.5. Turnaround plays are obv not for everyone. Stk -24%, big cpn, $175m raised below CB & severe lack of primary all +ves. Exp x/over demand BUT this obv needs work.
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Reference Materials
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Credit Analysis
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Convertible Topics
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Fixed Income Topics
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Special Situations