HCHC - HC2 Holdings Inc.: Asset Rich But Cash Poor

• HC2 Holdings 11.5% First Lien Notes is going current end of 2020 and will likely need to tap high yield market to refinance the bond.
• While HCHC made progress reducing the amounts on the 11.5% notes, there is still a sizable ~$342.4 million outstanding, plus $55 million of convertible bonds outstanding.
• Most of HCHC's subsidiaries are not generating meaningful cash flow, and the couple that are cash flow positive don't have enough debt capacity to absorb the holdco debt.
• The proceeds of the recently announced rights issuance are to fund general corporate expenses, which won't be used to delever the balance sheet.
• I think HCHC will have a tough time refinancing the remaining balance of the 11.5% notes.

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