I've been doing distressed deals in Real Estate purchasing distressed bank notes with success and that has motivated me to look for some of these situations with equities.
I was wondering if anyone with experience in bond purchases could give me some insight as to where to look at these bond issues. Where I could evaluate them in their relation in the capital stack and where to purchase.
Some info about the company:
Anyway, I've been tracking this company for about a year now. It's a gaming company that makes games for WWE12, and UFC which they have contracts for up until 2018. Their most recent quarter they've had the least amount of cash reserves available in their company history and they've also announced a 25% expected drop in revenue for the holiday season due to their false expectations on their release on the uDraw game (for kids) for Xbox and PS3, which was popular for Wii but doesn't appeal to Xbox or PS3 gamers (these gamers are usually teenage or older males). I did a quick calculation and this 25% drop is very likely to cause a liquidty crunch in the company bringing their cash reserves to negative or zero. Their stock price has tanked as a result which would make it very hard for the company to raise any capital through issuing any new securities.
The company realizes they've been making some huge hiccups and they've put more of an emphasis on creating "hit" games instead of churning out titles for their upcoming lineup. It's unfortunate though as the liquidity crunch may make that extremely hard to do without any capital to invest in their upcoming line of games. I'm probably not going to make a move on this as it'd be my first time doing this but I'd like to watch this as it unfolds to gain some real life experience monitoring how it progresses.
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