WAIR 8½ 11/15/24 & WAIR 9 11/15/2026

Wesco Aircraft

Credit, Industrial/Transportation


Publicly traded companies mentioned herein: 

Highlights

The presenter is short Wesco Aircraft’s 8.5% 2024 and 9% 2026 bonds. Wesco is a distributor of nuts, bolts, and other low value-add products across the aerospace industry; it is effectively an outsourced inventory management provider for aerospace companies that manufacture jets and don’t want to manage the large levels of inventories themselves. After burning significant cash during the pandemic, Wesco’s capital structure now includes $2B of secured debt, $500MM of unsecured debt, and cash EBITDA of $40MM that is not showing signs of a positive turnaround. Despite the near-term liquidity issue coming from a May coupon that would completely deplete the company’s liquidity, the secured bonds are trading in the high-90s, potentially because investors feel that Wesco’s sponsor can intervene and provide support. However, the presenter expects the company to file for bankruptcy as this May coupon comes due, and his analysis leads him to expect recovery around 50 cents on the dollar. 

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Idea Discussion

Commentor 1 - 2 weeks ago

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