DealZone

DealZone Daily

British Petroleum is bidding on a package of Devon Energy assets that the US energy company put up for sale late last year, sources familiar with the matter told Reuters. The company is looking at Devon’s position offshore Brazil, as well as Gulf of Mexico and Canadian assets, one source said. There could be around six other bidders as well as the British oil major. Read the story here.

And in news reported by other media on Thursday:

Dubai World will present its first concrete proposals to local banks on Thursday on restructuring $22 billion of debt, The National newspaper reported, citing unnamed sources. The state-owned conglomerate has requested meetings with Emirates NBD and Abu Dhabi Commercial Bank to present its proposals.

Battered car-makers rounding blind corner

AUTOSHOW/(Update: This piece was written, as several commenters have pointed out, before GM clinched a sale of Saab to Spyker on January 26.)

By Quentin Carruthers

(Acquisitions Monthly) Automakers face a demand slump in Europe and the longer-term challenge of addressing climate change. Both pressures are expected to lead to further restructuring, consolidation and M&A activity.

The North American International Auto Show, held each January in Detroit, Michigan, is just coming to an end. Detroit is the hometown of America’s “Big Three” automobile makers – Ford, General Motors, and Chrysler – and the show constitutes one of the most important events in the industry’s calendar.

Noted: 5-year funk means no office firesales

 	 REUTERS/Toby MelvilleDespite a looming wave of defaults, sell-offs of European offices at knock-down prices are unlikely, because commercial property prices are likely to tread water for years, rating agency Moody’s says.

in a report on the region’s commercial mortgage-backed bond market, Moody’s said it expects more loan defaults, but doesn’t think commercial property values will “materially recover” for the next five years. (Reuters report here.)

This means that special servicers — the administrators responsible for deciding the future of bust securitisations — “will not pursue immediate sale of the properties … but rather continue to collect the rental cash flows where possible and dispose of the properties under more favourable conditions, which may reduce ultimate losses,” the agency said.

Lenders quiet on Yell support

For Yell, the publisher of Britain’s Yellow Pages directories, there is a world of difference between 90 and 95 percent.

The lower figure is the amount of lenders backing its debt financing plan, the higher figure is the amount it needs. If it falls short of its target this evening, the company may need to go to the court to push through a deal.

(News story here.)

The proposals are vital to the heavily indebted company’s short-term future, allowing it to rejig its capital structure and tap equity investors for up to 500 million pounds.

Die Hard (with a vengeance)

Actor Bruce WillisAmerican actor Bruce Willis is probably best known as the all-action hero in the Die Hard films, fighting evil-doers against all the odds.

But in France, Willis looks to be a new shareholder in French vodka maker Belvedere, maker of Poland’s Sobieski vodka. Earlier this year Willis signed a multi-year deal to promote Sobieski.

Like Willis, Belvedere is no stranger to battles, having been through a two-year-long court fight with its bondholders. The bondholders — many of whom are hedge funds — want to be repaid and would accept a forced sale of the company to get their cash back. Belvedere disagrees and has proposed a debt restructuring plan that would see them paid back over years.

Icahn takes a shot at CIT “Tammany Hall” financing

As if CIT didn’t have enough problems digging itself out of a credit morass, now it has Carl Icahn to contend with. Troubled by what he sees as sweetheart deals between CIT and its largest creditors, at the expense of the little-guy bondholder, Icahn has offered to underwrite the $6 billion the small-business lender says it needs to survive. Icahn’s offer sent CIT shares soaring by double digits … to well above a dollar.

In a letter to CIT’s board, Icahn said certain large bondholders are being offered an opportunity to purchase secured loans at prices well below their fair market value.

In the end, Icahn underwriting offer may serve more as a publicity stunt than a White Knight vanguard attempt to save CIT, which is busy searching for a new CEO — presumably, a restructuring artist.

Under pressure

 	 REUTERS/Yiorgos KarahalisRestructuring a company’s finances usually means someone takes a loss.

But who should take that loss is often a difficult and nerve-jangling process. Brinkmanship is the usual tactic with hard deadlines often the only way to draw situations to a close. Clever application of legal strategies usually helps also.

All of these factors are at play in the upcoming restructuring of Wind Hellas. The big Greek mobile operator has 3.2 billion euros of debt but is running out of cash to pay its interest bills.

Of the company’s lenders, those at the bottom of the pile — the subordinated bondholders, owed 1.17 billion euros — are under most pressure.

Diamonds in the rough

Diamond pictureSomewhere out there are ailing companies in need of a turnaround specialist. These experts — also known as company doctors — parachute into troubled businesses to turn their business around.

Funds, such as Oaktree Capital, HIG Capital and Apollo Management, specialise in buying up companies in distress (either through buying equity or debt) and turning them round.

And this should be a great time for these investors — banks are loaded with stakes in troubled companies and unwieldy corporates may want to spin off unwanted businesses.

from Commentaries:

Ukraine’s Naftogaz leaves Eurobond holders with little choice

UKRAINE-RUSSIA/NAFTOGAZThe repayment date for Ukrainian state energy group Naftogaz's $500 million Eurobond came and went on Wednesday, but all bondholders got was a coupon payment.

Talks to restructure the five-year bond have resulted in Naftogaz presenting its solution to the problem -- swapping the old 8.125 percent bonds for new five-year ones which pay a slightly higher coupon of 9.5 percent and come with a government guarantee.

Given the way Naftogaz has approached its obligations to the Eurobond holders, it's hard to see what comfort "an irrevocable and unconditional sovereign guarantee from the Government of Ukraine" will give them.

from Summit Notebook:

Zombie companies

In zombie films, the dead walk the earth and slowly annihilate the living. Such a frightening prospect may be in store for Europe, the Reuters Restructuring Summit was told.

Banks are one of the big problems, speakers said, as they are unwilling to take the size of write-downs necessary to cut firms' debts down to a manageable size.

Firms owned by private equity, particularly the number two or three in their sector, are particularly at risk of becoming zombie companies because of their high debt levels and the lack of interest in such firms from equity investors, Simon Parry-Wingfield of Morgan Stanley said.