There are three worrisome dates for Cooper Tire & Rubber (NYSE:CTB). The first is December 31, 2013. When the ball drops on 2013, it also drops on Apollo's merger agreement with Cooper as well as the deal's financing commitments. Neither Apollo nor Apollo's banks have any incentives or duties to extend the drop dead date.
Before the deal dies, there are two earlier dates worth watching. In just over two weeks from today, Cooper will need to deliver new financials to the banks, which will probably be impossible unless they can quickly resolve their problems at their Chinese subsidiary. Given that they have already made generous offers and had those offers rejected, there is little hope for such a resolution.
But the Chinese insurrection is not only problematic for the deal's debt financing. What else? Cooper needs to be able to issue a 10-Q in order to stay in compliance with the SEC. Early next month, it may become increasingly unlikely that they will be able to do so. They will have only sixty days before they could be delisted from the NYSE.
When does the ball drop on Cooper? New Year's Eve, at the very latest. However, like the many stores that put up Christmas decorations earlier and earlier each year, it is possible that the ball will drop before Thanksgiving. What should they do next? Many things that they are unlikely to do: settle with Apollo, use whatever payment they can negotiate as well as any financing that they can raise for a public recapitalization, settle with their Chinese JV partner, and work towards reestablishing their flagging competitiveness.