ION Geophysical Corporation: Stock Craters After Reports Of Upcoming Chapter 11 Filing
Summary
- Stock takes a beating after reports of the company looking to sell itself in a court-supervised auction emerged.
- Last month, the company missed an aggregate $12.3 million in bond principal and interest payments.
- The company has entered into forbearance agreements with lenders which are scheduled to expire on February 15.
- A sale of the business under chapter 11 is unlikely to generate sufficient proceeds to repay creditors, which would result in equityholders being wiped out.
- Investors should consider selling existing positions and moving on. Even after Thursday's sell-off, a short position could still yield decent gains.
I am mostly a trader engaging in both long and short bets intraday and occasionally over the short- to medium term. My historical focus has been mostly on tech stocks but over the past couple of years I have also started broad coverage of the offshore drilling and supply industry as well as the shipping industry in general (tankers, containers, drybulk). In addition, I am having a close eye on the still nascent fuel cell industry.
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