Seeking Alpha
Profile| Send Message|
( followers)  

[Further update below]

I forgot to mention in the report - the new equity is owned almost entirely by bond funds that exchanged their notes for equity in the restructuring.

In exchange for each of the 2013 notes and 2014 notes, the holders got 47.30 shares of convertible preferred stock and 2.11 shares of common, and in exchange for each of the 2016 notes, holders got 18.36 shares of convertible preferred stock and 0.82 shares of common. So that's 49.41 shares for the senior notes and 19.18 shares for the sub notes. Which is worth 1432.89 and 556.22.

At current equity trading price, they have totally lucked out on the junk debt they originally bought. The seniors got a huge windfall - even if they paid par! They'd be crazy not to sell.

The company filed an S-1 registration statement on September 25. So my understanding is that the SEC needs to approve, and then these shares can hit the market.

Now the question is: are these bond funds going to hold these overpriced shares or dump them ASAP? And, what is going to happen when they go to sell 30 million shares of a stock that trades 350,000 a day? (Only 46,000 Monday! This is going to dump so fast it'll make your head spin.)

Update: Here was something I was going to post on August 5, 2009 about GGC, but somehow I never got around to it:

There are a bunch of penny stock traders and retail day-traders buying GGC who don't know anything about the company.

"That’s right, my little $20 buy point was a great call all the way up tot $30, but I had NO idea of what GGC was capable….all the way up to $47 is just awesome."

Right now GGC has only $50 million in free floating shares.

But I'm not upset about it - I'm going to sell the daytraders as many shares as they want.

And the bottom is going to fall out.

This was during a huge momentum/short-squeeze rally that Barron's even mentioned. Hope they are enjoying those shares. Still time to sell!

Source: Georgia Gulf Holders: Updated Trading Idea