There has been a change with Erickson Aviation.
music selection: “Strange Currencies” — R.E.M.
On 7DEC2015, I bought two 8.250 coupon 1MAY2020 maturity bonds from Erickson Aviation. Last November, the company entered bankruptcy with Debtor In Possession financing. I got word from my broker last Wednesday that something was afoot.
On Tuesday, my bonds were removed from my brokerage account and replaced with 2.3254 shares of the newly formed Erickson Aviation (ERICK). It is too soon to try to cash out. When a company exits bankruptcy this way, there is forced selling of the shares. In the same way that many bond funds must sell their bonds when the credit rating changes, many bond funds that were able to hold through bankruptcy are legally prohibited from owning equity shares.
Share prices for ERICK should be greatly depressed from their reasonable market value for several month. In the meantime, the company has shed a great deal of debt and now is likely an attractive acquisition target. My cost basis in the new shares is 521.20 each so it is unlikely I will see full recovery of my investment. But I am going to get something if I’m patient.
Devour your prey raptors!