Fondos.Net - Vulture Investors Circle Caving Companies
Vulture Investors Circle Caving Companies
Vulture bonds or vulture trading consists of dealing in
companies that are in or near default or bankruptcy. While the
companies are weakening and are sliding farther and farther into debt
without a hope of every paying it off, vulture investors can gain
high-yielding stocks, such as those from defunct telecom companies, for
very little cash.
Vulture investors stake their claim in this risky area in hopes that a
failing company with high debt and the likelihood of filing of filing
for bankruptcy will restructure the company instead of liquidating its
assets. Stockholders in the defunct company receive stock in the new
company, and vulture investors who poured money into the failing
company by buying stocks when they were pennies on the dollar can enjoy
a monumental return if the restructures company soars back into profit.
Large telecom companies like WorldCom are prime bait for vulture
investment firms, since the company has languished in the gutters since
the discovery of major accounting fraud. The company is undergoing
restructuring since fling for bankruptcy, and stocks have begun to rise
slowly but steadily, leading to a potential big payoff for involved
vulture investment agencies.
Vulture investors and funds are not limited solely to drain-circling
companies - they sometimes play a part in the debt restructuring of
entire countries that are struggling economically. The latest example
is that of Argentina, in which several vulture funds bought out nearly
all of the South American country’s public debt and attempted to cash
in when the country entered and economic crisis in 2001. The
economically strapped country has no hope of paying off the bonds now
being called in by the vulture funds. Some vulture funds are seeking
legal recourse and are winning judgments authorizing them to seize the
country’s assets as early as October. One New York vulture fund won a
judgment for as much as 700 million dollars. International investors
are finding legal ways to recoup some of the losses, including seizing
property and appropriating assets abroad, such as Argentine embassies.
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