Quote:
Originally Posted by PTLou
I havent read through the mounds of docs on the debt. Richas and a few others have (to some degree) and the general consensus was they were pretty hard to decipher. Never got a clear answer on exactly what the loan covenants were. I had thought those were typically spelled out pretty clearly.
I remember someone suggesting there are some out of the norm clauses that give more shares to bazzov (and blackrock I think) should any more shares get registered and sold so as to maintain their current % ownership.
There was nothing that special about the bonds. They pay interest. They are not liked to it being a listed firm, they are debt for the firm regardless if it is listed or not. They don't have covenants like bank loans, bonds carry the risk.
The obvious partners for Baazov are BlackStone and Blackrock - they would earn huge fees for the extra bonds issued, they would also get their shares in their investment funds paid at $21 not $20.
Meanwhile the bondholders for the existing debt don't really get a say, they can sell or hold - that's it.
Blackrock et al have warrants over 10 years for about 11m shares that let them buy at $24 regardless of price for a decade, options effectively. Baazov has half a mill options likely at better prices. If this happens they get cash for these options.
For me the leverage here is too rich, but that is what private equity do.
Meanwhile I suspect that a bunch of shorters who started in the new year post holiday got a nasty shock with this announcement 1 month after they seem to have started, well just before 1 month :-)
Some of the share price movements have raised suspicions, indeed it may have happened again here but Baazov was not the insider buyer, he ain't that dim to cheat for dimes.
There is nothing special about these bonds or a private buyout - it is standard investment bank stuff - the investment bank makes loads, the CEO makes loads and beyond that if anyone does OK that is a happy accident.