Hartford Connecticut is Getting Closer to Bankruptcy

The Pros Are Managing Expectations

Hartford ConnecticutGreenberg Traurig LLP and Rothschild & Co. are getting folks up to speed quickly. Interesting quote which, to us, reflects a deep-ridden skepticism: "'Very honestly, we need honesty from you people,” she said. “And I will gladly pay you — well, the city will gladly pay you — $1,400 an hour for you guys to tell us the truth.'”

Notable (3D Printing, Elliott Management, Sycamore Capital Partners, etc.)

3D Printing. We've previously noted the potential game changing effect of advancements in 3D printing technology. This view - from the bloggers at UPS - is a little more tempered but interesting nonetheless.

Brookfield Asset Management. Interesting.

Energy M&A. Reportedly, Vistra Energy Corp. is making moves to take over Dynegy Inc.

Gearing for Battle. Elliott Management
is hiring to prepare for a restructuring wave (firewall).

Short Coke & Pepsi (read: Bottled Water). On one hand, the volume of plastic water bottles is absurd and harmful to the environment...we get that. On the other hand, however, do we really need a BtoB subscription service for...wait for it...NYC tap water?!? We're split as to whether this is "notable" for its earnest save-the-environment vibe or for its "is this really a frikken problem in need of solving" vibe. We're leaning towards the latter.

Smoking-More-Crack.live. A nice little ranty blogpost from a petulant Eddie Lampert.

Sun Capital Partners & Sycamore Partners. The firm is looking to sell British bedding retailer Dreams - which it acquired out of administration back in 2013 - with Chinese companies in the mix to bid. Rothschild is the investment banker. Meanwhile, to avoid seeing another portfolio company in bankruptcy court, the firm has agreed to, in the event of a rights offering, recapitalize Vince Holding Corp. ($VNCE) with $30mm. Meanwhile, this was an interesting piece on Sycamore Partners and its potentially evolving strategy (though it neglected to acknowledge how dire Nine West is beginning to look).

Trickle Down EconomicsBullsh*t.

News for the Week of 2/12/17

  • Coal. Prices have risen and Trump is promising assistance. Is this enough to offset sagging demand? China's new measures aren't helping. But the capital markets are, as Peabody EnergyArch Coal, and Contura Energy are all taking advantage of cheap financing/refinancing options. Peabody shopped an upsized term loan (by $450mm) with revised company-favorable pricing; it also issued new notes and bonds. Amazing how quickly things changed with coal.
  • Chicago. S&P is making threats. 
  • Electric Vehicles. Something tells us that oil and gas management teams and their wildly astute restructuring bankers and advisors neglected to bake this element into their business plans. 
  • European DebtIncreasing concerns about Italy and Greece. Meanwhile, in France, CVC Capital Partners' owned vehicle leasing firm Fraikin has hired Rothschild to restructure its 1.4 billion Euro debt. Lazard will represent the mezz debt.
  • Moelis & Co. & Aramco"Ken of Arabia"? C'mon, that's just dumb.
  • Power. California has more power plants than it needs. After a slate of power-related bankruptcies, it looks like there is more hurt to come in this space. And big developments on the storage side probably won't help. And this new cooling tech won't help either - if it's legit.
  • Retail. And people wonder why private equity is vilified...case and point: Rackspace. Speaking of private equity, Canada Goose's proposed IPO reeks of a dump-and-run on greater fools. Millennials don't spend money, but Bain Capital will have us believe that $900 fur-lined jackets are the exception to the rule. Riiiight. 
  • Retail Part IIOrganized Retail Crime = massive problem. 
  • Retail Part IIIGander Mountain = toast.
  • Retail Part IVAmazon announced that the number of third-party sellers on its B2B site has reached 45k, up about 50% from the approx 30k sellers it had at the end of Q2...IN JUNE.
  • Return of the Maturity Wall. Nothing gets restructuring professionals' juices flowing like sexy maturity stats. So, here it is: $2 trillion of corporate debt comes due in five years. And this is, in part, because the capital markets are definitely wide open right now in the face of soon-to-be rising interest rates. Take THAT wall, President Trump! 
  • Sears. Everyone is looking at this oncoming trainwreck and wondering "when?", not "if." Nice recent CDS movements on it but then the company unearthed a remarkable $1b in cost savings. Like, out of nowhere. And, naturally, the stock soared 25+%.
  • Spotify. Typically there are tremors before the earthquake. Perhaps Filip TechnologiesViolin Memory, and Nasty Gal are the tremors foreshadowing a venture debt-backed reckoning on the horizon. It's unclear. But, in Spotify's case, the interest ratchets attached to $1b of debt get more and more expensive with each consecutive quarter sans IPO. A big "unicorn" is going to fail and fail big. Spotify may not be the one, but it ain't looking great. But that one IS coming (Zenefits anyone?). Along these lines, how the eff is Theranos not bankrupt yet
  • Takata. Inching towards bankruptcy.
  • Fast Forward: Most retail-focused restructuring pros emphasize "omni-channel," the latest retail buzzword that, practically speaking, means basically nothing in today's climate. Case and point: Neiman Marcus, which was downgraded this week with projected 10x leverage on $4.77b of debt. Most of the cap stack traded at new lows this week. Omni-channel ain't a panacea, it appears.
  • Rewind IThis result for Relativity Media sure sounds positive.
  • Rewind II: The grocery space is getting hammered so badly that now even Whole Foods is retrenching, shutting more stores than it's opening go-forward.
  • Chart of the Week
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