Naysayers convinced ACAS will be squashed in a forced liquidation have suffered another setback as ACAS' creditors – the bulk of whom are unsecured – entered into another "lock-up" agreement with management to ensure another two months in which creditors won't shoot their leg off by declaring an acceleration that would take ACAS into bankruptcy court where the acceleration demand would remain a nullity while ACAS as debtor-in-possession maintained interest payments (at non-default rates).
The new agreement, announced March 30, 2010 and extends détente until May 31, 2010.
While ACAS' interest coverage remains high and its NAV continues to increase, delay favors shareholders by placing ACAS in an increasingly favorable position from which to negotiate amendment to its credit agreements. Considering that ACAS' cash position appears likely to approximate its unsecured debt later this year, the question for ACAS is on what terms credit will normalize and not whether ACAS will survive. Hopefully, ACAS will reach a position from which to obtain an agreement that allows it to make modest borrowings at reasonable rates. Of course, its current cash position makes one wonder whether ACAS could do its business without leverage – though of course leverage is a miracle-worker on the way up.
It's just on the way down that debt is a four-letter word :-)