So the suitor would buy 2.7 billion of debt plus something for the shareholders.
In this deal the 2.7 billion would be reduced to something above the discount debt purchase price that the hedge funds paid but below the 2.7 billion face value. It would have to above the liquidation value that the hedge funds see.
Lets say the final amount is 2.4 billion.
The suitor would have to re-finance 2.4 billion in debt backed by AEJ assets and perhaps a guarantee from the suitor or take a debt for equity swop or part and part.
The problem is what do the shareholders get?
3c? Why not, if we vote against it the hedge funds liquidate and get there money plus some back and we get nothing and that is why the banks are selling at a discount.
And there is not much management can do. They can't re-finance the debt themselves even at discounted amounts without a guarantee from a suitor.
AEJ Price at posting:
5.5¢ Sentiment: ST Sell Disclosure: Held
