Friday, September 11, 2009

Ambassadors International taps the SYA market (AMIE)

AlphaNinja - For those not in the know, "SYA" financing is my highly technical term for last resort "Save Your A$$" financing. While I make light of it, it can literally save stockholders from a wipeout. The stock is up 75%, or sixty pennies.

Ambassadors International (AMIE), a student travel operator, is at the end of their ropes. They're burning cash and need to get out from under the strangling debtload they took on. They've done so, but it's been incredibly expensive and dilutive for existing shareholders. That said, at least management has made an effort to stave of bankruptcy. Shares are up huge today on over 1million in volume, 10times the average daily shares traded already this morning.

Today's release:

SEATTLE, Sept. 11 /PRNewswire-FirstCall/ -- Ambassadors International, Inc. (Nasdaq: AMIE - News) today announced a restructuring plan to reduce its outstanding debt by up to $70.5 million. The restructuring plan involves:

A planned exchange offer for up to all of the Company's $97.0 million of outstanding 3.75% convertible senior notes due 2027 ("Convert Notes").

Assuming 100% of the holders of the Convert Notes accept the offer and elect to exchange their Convert Notes, the proposed exchange consideration to be offered will be comprised of:
$26.5 million aggregate principal amount of newly issued 10% senior secured notes due 2012 ("New Notes") on which interest will be paid in kind (or in cash at the Company's election); and
approximately 22.3 million shares of newly issued common stock, which will represent approximately 66.67% of the Company's outstanding common stock, immediately following the exchange offer.

Holders of approximately 59.5% of the aggregate principal amount of the Convert Notes have entered into separate exchange offer commitment and support agreements with the Company pursuant to which the definitive terms of the exchange offer will be agreed and such holders have agreed to exchange their Convert Notes for the newly issued New Notes and shares of common stock in the exchange offer.

One reason for the concern for shareholder value is the heavy stock ownership by insiders.

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