BGG - Briggs & Stratton: Chapter 11 Is Increasingly More Likely But Senior Notes Should Be The Fulcrum Security
Thesis Summary
Briggs & Stratton (BGG) skipped the interest payment on the 6.875% senior notes on June 15 and approved cash retention bonus to the executive senior management team. This is a common set up for a Chapter 11 filing. Unless the company can execute on a major assets sale in the next 30 days, I believe the company is better off negotiating restructuring terms with the bondholder group in order to execute a consensual bankruptcy proceeding.
The senior notes should be the fulcrum security and thus receive the majority of the equity.