Jan. 22 at 9:49 PM
PickAlpha Midday —
Oaktree and Anchorage reportedly built positions in First Brands’
$1.1B DIP loan as the company warns it may run out of cash by month-end without additional financing. The DIP is trading at distressed levels, signaling markets are pricing in a near-inevitable new-money injection that could sit even higher in the capital stack. A key sticking point is ballooning advisory fees, which creditors see as eroding recoveries.
Tickers:
$BN,
$ARES,
$HYG
Here’s what matters: Our view is this is a classic “new-money controls the restructuring” setup — when the DIP itself trades distressed and liquidity is days/weeks away, negotiations shift from valuation to priority and covenants. If fresh super-senior money gets approved, existing DIP holders can benefit (better control + repayment priority). If talks stall, the path quickly becomes asset sales/shutdown risk, which usually hits recoveries across the stack and widens risk premia in lower-quality credit.
