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Update Discounted Bonds

Positive news from Erickson Aviation (EAC).

music selection:  “I Don’t Care Anymore” — Phil Collins

On 7DEC2015 I bought two 8.250 coupon 1MAY2020 maturity bonds from Erickson Aviation (EAC) for 60.50 cents on the dollar.  On 9NOV2016, the company declared bankruptcy.  The bonds have since been trading under 4 cents on the dollar.  I’ve been patient expecting to receive shares post bankruptcy and see some recovery.

On Wednesday, Interactive Brokers reported that Erickson was the target of an acquisition.  There was no indication who the interested party is.  There is nothing about this on the Erickson website and Investor Relations does not respond to emails about the rumor.  Yahoo Finance and Google Finance have nothing to report either.  Today, the bonds briefly traded above 62 cents on the dollar.  The current price is back down to 2.25 cents on the dollar.

I’ll keep monitoring this situation and will report when I have a resolution.

Devour your prey raptors!

{ 5 comments… add one }
  • financialfreedomsloth April 29, 2017, 1:04 pm

    Hmm, might be an interesting gamble at 2.25 cent on the dollar. If i would want to invest around a 1.000 USD in this bond, do I then give in an order for 30K at 3.0 cent on the dollar for a total cost of around 900 USD?

    • The Lizard King April 29, 2017, 2:40 pm

      Don’t forget you will also pay 2 dollars or more in commission per bond! Commissions seriously distort returns in this range!

      • financialfreedomsloth April 29, 2017, 3:00 pm

        O, it would just be to see how all this works, especially with a company in bankruptcy… Getting a little inside view of this process. And with a 1.000 USD investment at 3 cent on the dollar the risk of loss should be very limited!

    • The Lizard King April 29, 2017, 8:33 pm

      Your math doesn’t make much sense now that I’m awake… 2.25 cents on the dollar is 1000 * .0225 = $22.50 per bond. Make it 24.50 with commission. 1000 / 24.50 = 40.81 bonds. 30k bonds would put you WAY over 1k USD at risk.

      • financialfreedomsloth April 30, 2017, 12:25 pm

        That would be bad, haha! I meant 30 bonds for a total value of 30K! That should limit my risk to less than 1000 USD. I think I better call the helpdesk before putting in this order, before I indeed buy bonds with a value of 30 million! The trader workstation really could use a better user interface …

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