London-based Cross Asset Management, which is run by Roddy Campbell and manages $400 million, benefited in January from its position in U.K.-based distressed name MyTravel, according to LMW sister publication Alternative Investment News.
The firm's event-driven Cross Europe Fund was able to take advantage of a debt-for-equity swap, said Campbell. Typically long/short funds are able to take advantage of debt-for-equity swaps, but in this case the complicated capital structure of the company was a deterrent, said Campbell. "You needed to be a distressed fund prepared to take the equity risk...to really get it," he added.
The restructuring, which was at times highly contentious, involved £800 million of debt, including $100 million of U.S. private placement notes, a £210 million Orlando facility together with aircraft lease financing arrangements and £216 million of convertible bonds.
Lenders led by The Royal Bank of Scotland took an 88% share of the company's equity after overcoming objections from bondholders. Cross bought My Travel bank debt at 82 in December. It is now valued at an equivalent of approximately 180. The position accounts for around 5% of the $180 million fund's total exposure, he added.