Brett Scheiner

A Blockbuster Arbitrage Opportunity

I wrote a piece on this in May...

seekingalpha.com/artic...

Best situation is a pre-pack Ch. 11 where the equity is wiped out and the spread is therefore zero. Anyone analyzed the company's cash burn rate vs. available cash going forward? This spread may not close without a big move up or down (i.e. bankruptcy or turnaround) both of which will take some time...

Also, in the GaryLucid piece above, the author dismisses liquidity concerns, but this is not a marginal concern. The A's traded $7 million worth of stock today (hardly enough for an institution but admittedly enough for retail). The B's on the other hand traded $500k. This is not enough to even get a large retail position on without price disruption. Even more importantly, these levels are nowhere near sufficient to close out a decent size position, a key factor in trading any illiquid security.

Hopefully this thing closes as did Mueller water as I mentioned in my piece, but it could be a while...

DISCLOSURE: I have the Long B/Short A trade on...