U-Haul parent sees boost from Chapter 11

Wall Street apparently is pleased that Amerco, parent of Phoenix-based U-Haul International, has filed for Chapter 11 bankruptcy protection.

The company’s stock, traded on the Nasdaq, jumped 71.5 percent Monday to close at $7 a share, up from $4.08 per share. Volume also increased to more than 3.4 million shares, up from 1.6 million shares Friday.

Monday was the first day the market could react to the news because it was announced after the close of markets Friday.

"This is the first time I’ve ever seen a company file for bankruptcy and the stock go up (71.5 percent)," said Joe Blankenship, director of research at Valleybased Peacock, Hislop, Staley & Given. "Normally when somebody files bankruptcy, it typically means the stock is not worth much."

The stock’s 52-week high was $15.42, while the 52-week low was $1.36 a share.

Amerco had been having serious problems securing emergency financing. Its financial difficulties started last October when it missed a $100 million bond payment after reassuring investors that it had enough cash to meet its obligations.

"They filed for reorganization, which is a better sign than filing for complete bankruptcy," said J. Phillip Oelze, managing director of investments and branch manager of US Bancorp Piper Jaffray in Scottsdale. "That’s probably a reason. At least they have some time to work out their lending package, to refinance, and that’s a plus."

Roth Capital Partners, which tracks Amerco, upped Amerco’s stock from "buy" to "strong buy" Monday, saying that although the company declared bankruptcy, there is no asset liquidation involved and there will be no effect on current shareholders’ equity.

"Nobody knows who Roth Capital really is, but most people are just saying hey, an analyst said buy it," Oelze said. "You get a comment by Roth Capital saying it’s a strong buy and worth more money than it’s selling for, and the stock moves up."

Joe Shoen, Amerco’s chairman and spokesman, wasn’t available for comment Monday.

Amerco said it plans to fully repay its creditors according to a reorganization plan and without diluting shareholder value. It said it has obtained from Wells Fargo Foothill a $300 million loan known as "debtor-in-possession financing facility," and another loan of $650 million, technically known as "bankruptcy emergence facility."

"The biggest cloud over this company over the last several months is the fact that they’ve announced twice that they were on the verge of securing a refinancing and did not," Blankenship said. "The financing that they were talking about is now in place so you have the certainty of that versus the uncertainty . . . around promises that have been made and not kept."

Investors’ confidence improved, in part, because the Chapter 11 buys Amerco some more time to work though its problems, Oelze said.

"I think that the price of the shares is going to be somewhat static for awhile," he said. "They’re going to be moving up and down for a bit, ebb and flow with information as it seems to tumble out of the company and from other analysts who may be yea or nay on the stock. But the market does see a brief reprieve here and that’s what it’s responding to."

Blankenship expects the stock to climb a little further, but not jump as it did Monday.

The book value of the stock was about $25 a share, he said.

"It will trade at some percentage of book value, but probably not at full book value," he said. "I think it will take several months to get everything agreed upon to emerge from bankruptcy. Their assets are secure so there’s a lot more certainty. I don’t expect a lot more volatility in the stock."