Graham, here's the article I said I'd do yesterday (sorry!)From...

Graham, here's the article I said I'd do yesterday (sorry!)

From AFR June 21:

http://tools.afr.com/viewer.aspx?ATL://6016f5d2-9ada-11e0-a4ca-e87506850bee§ion=tools

"Next Distressed Targets in sight"

Players in the distressed-debt market are turning their attention to publicly listed companies for their next deals, according to market participants surveyed by the AFR Dealbook. Brisconnections, PPX, BOL, ELD, GNS and NUF are amongst the companies that debt traders are watching as they approach financial deadlines amongst difficult market conditions. (A few other private and companies in administration mentioned).

Usually, debt traders have dealt with unlisted private equity companies, but they have been emboldened by trades in listed groups such as Centro and Alinta Energy, which have lead to profitable deals for debt holders.

The new targets have emerged from concerns about GFC2, and whether Australia's multi-speed economy can survive it.

The distressed debt universe in Australia is a part of the alternative investments space, where traders, credit funds, the special situations desks of investment banks, hedge funds, and turnaround-focussed private equity firms play [my thoughts- I reckon the latter is like Lazard's deal with HST]. The local debt market has deep pocketed overseas investors, and there's about $A9.4b funds under management to be put to work.

The debt people can use secondary debt opportunities, mezzanine finance, or convertible securities that can go into a company.

companies under the spotlight might be those who are struggling to pay debt that was acquired during the last period of prosperity, or have unsustainable capital structures and are required to contribute more equity or call in an alternative funding source. A source said the obvious one is Brisonnections, but others could get debt refinancing from senior banks.

The loca debt market has thrived over the past couple of years, as credit dried up. They might use"own to loan" strategies [my thoughts- sounds like Lazard/HST again].

These debt investors comb the markets for companies in need of fresh capital injections. Depending on the level of distress for companies, they will be offered expensive lifelines from these debt investors, or the company might find themselves fielding offers from investment banks and hedge funds who want to snap their loans at deep discounts to gain control of any restructuring process [again, Lazard and HST, it seems].

Article says the distressed debt is expensive, and is used for when credit dries up.
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Upon rereading, Graham, it just looks like a bunch of financial ambulance chasers. Having said that, PPX doesn't seem to be doing well on its own, if share price is indicative of success. Maybe the company dsoes need a financial nanny after all.

Cheers.