To Some, Beker Industries Bonds Are A Way to Profit From the '88 Drought
NEW YORK -- The drought of 1988 has spawned a sophisticated investment strategy on Wall Street.</br></br>Some have found that one of the few pure plays on fertilizers is the revitalized bonds of Beker Industries Corp., a fertilizer company that has been in Chapter 11 bankruptcy proceedings for nearly three years.</br></br>The more than 850% gain in price by these bonds in the past year shows growth unsurpassed by any other company in Chapter 11 difficulty.</br></br>Whether such astronomical price gains will continue, though, isn't clear. To bet on Beker's bonds, investors will have to contend with a number of unknowns, in particular, the earnings potential for a start-up company in a volatile industry.</br></br>Usually, bond prices are more a reflection of interest rates than of a company's earnings. Beker's $65 million of 15 7/8% debentures due 2003, though, are trading like equity because holders will receive common shares in a newly formed company -- Nu-West Industries Inc. -- if Beker's reorganization plan is approved.