More commentary on the proposition of Generak Growth (GGP, Financial) shareholder being kept whole in bankruptcy.Â
From Reuters, Ackman Commented:
He compared its plight to that of Alexander's Inc, the failed department store. Real estate titan Steve Roth, chairman of Vornado Realty Trust (VNO), bought the shares and put the company into bankruptcy in 1992. The stock eventually surpassed $450 a share
Read more on Ackman and Alexander's (ALX, Financial) here:
Real Estate mogul Sam Zell, who sold Equity Office, the giant U.S. office owner, at what is now seen as the top of the market, said General Growth would likely file for bankruptcy protection.
Here is more information on legal precedent for debt restructuring and equity being kept whole in bankruptcy
Now, a boilerplate warning for GGP. I know people have been following into this investment. If you do, you must be prepared to lose all of it. There is no guarantee of the above outcome. Buying this stock now is essentially buying a call option on the company's survival. It is hits, you win big, very big. If not, what you invested is worth nothing. I believe the above scenario plays out, I am also not going to be broke should it not.
Todd Sullivan
valueplays.blogspot.com
From Reuters, Ackman Commented:
"Bankruptcy is not just designed for companies that are insolvent," Ackman told a packed room of real estate investors, owners, analysts and bankers attending the New York University Schack Institute of Real Estate 14th Annual REIT Symposium.
"Bankruptcy is also designed for companies that are solvent, but have liquidity problems that are due to events outside of their control,"...
"It's one of the most interesting investment opportunities I've seen in my career," he said.
"I've learned that, when a solvent company files for bankruptcy and you have a lead equity holder, you can marshal it thorough the bankruptcy process," Ackman said.
"If you've got a situation where you have a small equity cap and you can sell 90 percent of your stock and de-equitize yourself or you can file and retain equity value for shareholders, you should look at that very, very seriously."
He compared its plight to that of Alexander's Inc, the failed department store. Real estate titan Steve Roth, chairman of Vornado Realty Trust (VNO), bought the shares and put the company into bankruptcy in 1992. The stock eventually surpassed $450 a share
Read more on Ackman and Alexander's (ALX, Financial) here:
Real Estate mogul Sam Zell, who sold Equity Office, the giant U.S. office owner, at what is now seen as the top of the market, said General Growth would likely file for bankruptcy protection.
"I do not believe GGP will be liquidated," Zell said, speaking at the same conference. "I expect the company to file bankruptcy. It will do a prepackaged. It will be reorganized and it will be taken public."
Here is more information on legal precedent for debt restructuring and equity being kept whole in bankruptcy
Now, a boilerplate warning for GGP. I know people have been following into this investment. If you do, you must be prepared to lose all of it. There is no guarantee of the above outcome. Buying this stock now is essentially buying a call option on the company's survival. It is hits, you win big, very big. If not, what you invested is worth nothing. I believe the above scenario plays out, I am also not going to be broke should it not.
Todd Sullivan
valueplays.blogspot.com
