Mike Cutler
Long/short equity, event-driven, mid-cap, small-cap

Genco Shipping Estimates Its Shares Worth $0.89

Genco Shipping (GNKOQ) management recently put a $0.89 value on the company's stock price (Black-Scholes estimation of $30-$36 million total value across 36,760,000 shares). Based on the company's estimate, the opportunity cost of selling now and buying the new reorganized shares at a likely lower price, and the risks associated with holding the warrants through bankruptcy and waiting for a recovery, I estimate the current per share value at $0 to $0.75.

The strike price for the warrants obtained from owning current shares (the only value of current shares) is $20.99. The company plans to issue new, post-bankruptcy shares at $20 per share, and the company estimates that after the current shareholder warrants dilution the price will be $19.42-$19.52. Current...

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