The "Surprising" Answer What Energy Companies Have Spent Their Newly Issued Equity Proceeds On
By Tyler Durden
One week ago, as confirmation that the recent oil rally is merely being used by banks to force debtor companies to sell equity and to repay as much secured loans as possible,
Which goes back to what MatlinPatterson’s Michael Lipsky said some time ago: “we always assume that secured lenders would roll into the bankruptcy become the DIP lenders, emerge from bankruptcy as the new secured debt of the company. But they don’t want to be there, so you are buying the debt behind them and you could find yourself in a situation where you could lose 100% of your money.“
For the answer why banks are scrambling to get out, ask the Dallas Fed.
And since the Dallas Fed won’t answer, the question remains: if the secured banks “don’t want to be there”, why are new unsecured equity investors so desperately eager to take their place, and just what do the banks know that these new equity buyers clearly don’t?
Source: The "Surprising" Answer What Energy Companies Have Spent Their Newly Issued Equity Proceeds On
