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Headline from Dow Jones:

"Fitch: iStar Facing Inevitable Default; IDR Downgraded To 'C'

Link to Fitch press release:

http://www.marketwatch.com/story/fitch-istar-facing-inevitab...


Good luck to anyone holding istar common or preferreds . . . .

Thanks,

Yodaorange
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Yodaorange wrote <<"Fitch: iStar Facing Inevitable Default; IDR Downgraded To 'C'
>> Looks bad ... but does default mean a wipeout? If the default is due to a liquidity problem... i.e. if they have debt coming due next year and they don't pay it, then they default, and presumably all their assets enter BK. Now if the assets don't cover their debts then shareholders are in trouble. If they do cover debts and there is something left over then shareholders get something.

Anyway, today Sept 29, SFI closed up a penny; in after hours trading it is down 3 cents. So I assume some people are betting SFI can work something out or that in case of default there will be something left over.

But as Yoda said,

<<Good luck to anyone holding istar common or preferreds . . . .>> .

Comments, corrections, bricks welcome

klee12
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From what I understand iStar has two options.
1. effect a cde (coercive debt agreement) which Fitch regards as a default, but it's atually a negotiation with bondholders about changing the terms of the debt. If this happens, then I assume the maturing $2.5 billion due this time next year will be restructured and potentially there will be repayment?
2. If the CDE doesn't work, it's likely to be a pre-packaged bankruptcy. If this happens, I'm not sure about the chances of repayment.

Over 50% of the loan portfolio consists of non-performing or 'watch list' loans, backed by condos and land. So I would assume unless things pick up rapidly in these two areas the chances of them getting money to repay debt is slim.

Plus, I think iStar's total debt is around $8 billion.

I don't know enough about bankruptcy workouts to advise on who is likely to get what. But it seems pretty bad on the surface.
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<< I don't know enough about bankruptcy workouts to advise on who is likely to get what. But it seems pretty bad on the surface. >>

Are there any publicly-traded bankruptcy law firms? If so that's who's gonna' get most of the money. Then find out who the lead attorneys are. Buy up their mortgages. Those suckers are going to get paid for sure.
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