"Bear in mind a lot of the long term debt will be secured against assets and will be repaid when they are sold and also I suspect most of the long term debt is at relatively cheap rates."
That is the problem. Presumably ALL (or nearly all) the long term debt will be secured against specific assets. Or to put it another way, most of the value of assets will be matched against debt.
Unless Allco can sell assets above book value (which is a big ask in this environment), they will need to sell a whopping amount of assets to meet bank requirements. And if any assets sell below book value ... well it wouldn't take much to deeply into Allco's remaining value.
In that sense, you are right that the trigger event has put Allco under enormous pressure.
We come back to what is the banks' interest. If it is their interest for Allco to survive (and I feel it is), then Allco will probably survive, if not, then I expect Allco will not survive. (But hopefully it will pay enough coupons to cover our investment before it goes under!)
On that cheerful note, Here's to November.
(Holding AFGHA not AFG)
AFG Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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