Throughout the Chrysler case, the Indiana Pension Funds have asserted that they hold $42 million of the senior debt. But in their application last night (at page 6), asking the Supreme Court for a stay, they assert they hold $100 million of the senior debt.
Have they been buying debt? To what end?
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5 responses to “What’s Going On?”
Good question.
If you look at White & Case’s 2019 filing (docket 1308), they state:
“As of the date hereof, each of the Indiana Pensioners is a holder, or investment advisor to a holder, of the Senior Debt. White & Case has been advised by the Indiana Pensioners that, as of the date hereof, they collectively are the beneficial owner of, or the holder or manager of, various accounts with investment authority, contractual authority or voting authority for more than $42,502,733 principal amount of the Senior Debt.”
In the Supreme Court filing they state:
“The First Lien Lenders are owed $6.9 billion (“First Lien Debt”), of which the Indiana Pensioners hold $100 million, all of which is secured by a first lien on substantially all of Chrysler’s assets (the “Collateral”).”
Perhaps they are buying more loans for less than $0.29 in the market. I have no idea what the pricing is in the loan market, but it should be below the anticipated recovery (given time and some degree of uncertainty).
$100m = face value (par)
$42m = price paid bought at 42, when already trading as distressed.
According to Chrysler, the Indiana funds purchased senior debt with “a face value of $42.3 million, the purchase price was approximately $17 million.”
http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/www/story/05-25-2009/0005032000&EDATE=
Oppenheimer’s holdings, together with Indiana, would add up to roughly $100 million. Any reason they would be commingled?
White & Case told the Court, in the 2019 filing I quoted from, that the Pensioners “are the beneficial owner of, or the holder or manager of, various accounts with investment authority, contractual authority or voting authority for more than $42,502,733 principal amount of the Senior Debt.”
Again, they are specifying the “principal amount” (or face value) of the debt, not the cost (which is closer to $20 million).
It IS possible that somebody made a mistake in the 2019 motion and they are now correcting it (I guess) and they had purchased $100 million face for $42.5 million (but that means that all the filings and reporting on the matter were incorrect).
I found this quote “The court filing follows a May 18 announcement by Treasurer Mourdock that curtails portfolios under his control from making additional investments in secured corporate debt of businesses that are receiving or will be receiving federal bailout money.” on this site “http://www.insideindianabusiness.com/newsitem.asp?ID=35716.” According to “Inside Indiana Business,” Mourdock’s announcement would preclude them from purchasing additional debt!