Hertz shares may yet be roadworthy 18 Jun 2020 The bankrupt car-rental firm halted plans to sell stock after the SEC raised concerns. Equity is usually wiped out in Chapter 11. But if a re-emergent Hertz could rev its EBITDA up to, say, 60% of pre-pandemic levels, shareholders could stay along for the ride.
Wall Street underwriters get their day in the sun 16 Jun 2020 Investors are going bananas for new shares. Even bust rental-car firm Hertz can sell stock. Re-equitizing companies is bringing a bonanza of fees to global equity capital markets desks at investment banks. But the window is only open now thanks to central banks and governments.
Hertz throws equity wrench in bankruptcy melee 12 Jun 2020 The car-hire firm wants to raise up to $1 bln by selling shares to replace debt that usually finances a restructuring. It may pay off, but equity usually crashes into a wall in Chapter 11. The stock market’s irrational exuberance is letting Hertz test-drive an unusual vehicle.
Mall-to-retailer relationships will get creative 29 May 2020 Brookfield Asset Management launched a $5 bln fund to invest directly in retailers. It’s an effort to salvage some of the Canadian mall owner’s top customers. As Neiman Marcus and J.C. Penney march into bankruptcy, other real estate owners will rethink traditional rents, too.
Latin America puts new spin on airline distress 26 May 2020 The region’s largest carrier, Latam Airlines, has filed for bankruptcy protection weeks after rival Avianca did. It can’t bank on government bailouts and has hefty dollar liabilities, amplifying the shock of having to ground planes. The future looks a lot smaller.
Hertz is a study in financial comorbidities 26 May 2020 The car-hire company’s heavy debts crushed it when Covid-19 curtailed travel. Other businesses with overengineered balance sheets have similarly come unstuck. It’s not that Hertz could have seen this coming – but the system has quickly switched to favoring flexibility over risk.
Buyout barons will keep getting cake and eating it 18 May 2020 Private equity blowups like retailer J. Crew take on extra frisson in a crisis, because buyout firms themselves are benefiting from subsidized credit, low asset prices and tax loopholes. The cycle can continue while investors keep coming, and politicians have bigger fish to fry.
Hong Kong’s reeling companies need a quicker fix 7 May 2020 Local businesses have been battered by Covid-19 and months of protests, but the city still lacks a regime to give them breathing room while they nurse themselves back to health. A mooted Chapter 11-style system will take too long to implement, but other options are available.
Neiman’s squabble shows retailer valuation problem 27 Apr 2020 The Dallas-based department store is preparing to file for bankruptcy, hurt by $5 bln of debt and a pandemic that has halted shopping. Whether and how many high-end patrons return is a big unknown for anyone bailing them out. A deal offers the most value but least certainty.
U.S. Senate boss opens state-finance can of worms 23 Apr 2020 Mitch McConnell is resistant to giving states more help, especially for their pensions. He prefers letting them file for bankruptcy – currently not allowed. It’s political posturing, but just floating the idea could eventually backfire, including for his own state of Kentucky.
More regulation, less return for U.S. utilities 19 Mar 2020 A defensive sector looks less so amid the coronavirus pandemic. A sharp rise in unemployment will make regulators less willing to green-light rate increases. Yet the grid still needs heavy investment, virus or not. PG&E’s return from bankruptcy illustrates the dilemma.
U.S. virus bailouts require good instructions 11 Mar 2020 Donald Trump wants to help airlines weather the hit from Covid-19. Unlike cruise lines, also on his list, that makes sense. Some carriers, like Delta and United, may not need aid. But taxpayer rescues can work with the right structures. Breakingviews offers a bluffer’s guide.
Texas becomes oil vampire squid 21 Feb 2020 Even though fracking doesn’t produce corporate profits, the Lone Star state’s plentiful oil continues to attract investment. That’s been a boon for state coffers. But much like OPEC, U.S. drillers elsewhere are feeling the squeeze. Texas’s success is at the expense of others.
Energy debt woes are a canary in the shale mine 27 Jan 2020 U.S. oil and gas group McDermott is filing for bankruptcy and Chesapeake may default after undisciplined deals left them crumbling under piles of debt. Low natural gas prices are a bigger problem than oil right now. But their woes are a warning for the likes of Occidental.
PG&E is squandering its bankruptcy 23 Jan 2020 The California utility’s latest restructuring plan helps wildfire victims and insurers. But PG&E would be left more indebted than when it started, and the Golden State has punted tough decisions. Being reliable, green, cheap and profitable at the same time remains a challenge.
PG&E deal gets another restructuring ball in air 9 Dec 2019 The bankrupt California utility has seized the initiative from creditors by settling wildfire victims’ claims for $13.5 bln. It’s a big step in qualifying for a state wildfire fund. Satisfying other political, legal and financial demands on the firm requires more deft juggling.
India’s shadow bank fix shows much-needed audacity 21 Nov 2019 The regulator is taking control of a credit crisis, sending housing lender DHFL and $12 bln of liabilities to bankruptcy court. Unpicking a financial institution’s woes with a process designed for regular corporates is bold. It might also be the only way to break an impasse.
How Big Milk failed to see writing on the carton 15 Nov 2019 The bankruptcy of Dean Foods, America’s biggest milk processor, stems from falling demand and retailers like Walmart aggressively pushing their own cheaper brands. Yet the company’s poor decisions helped curdle its finances, and may now leave hundreds of farmers in the lurch.
PG&E faces judicial bankruptcy brownout 10 Oct 2019 Just as the California utility cut off customers to avoid wildfire risks, a judge opened the door for creditors to seize power over its restructuring. They are offering more to fire victims, and less to equity holders. Running the agenda matters: PG&E stock fell another 30%.
Thomas Cook crash is dry run for Brexit failures 23 Sep 2019 The UK government refused a 150 mln pound bailout of the travel firm, citing moral hazard, but will fund the repatriation of thousands of stranded Brits. A chaotic departure from the EU will leave more businesses ailing. That will test Prime Minister Boris Johnson’s tough stance.