Dana Corporation (OTC:DCNAQ) said Friday that it has reached an agreement with its unions and secured $750 million to help it exit Chapter 11 bankruptcy. The bankrupt auto parts maker announced that its unions have agreed to back a reorganization plan that includes labor settlements and funding commitments.

The union agreement would replace the company's healthcare and long-term disability obligations for retirees and union employees with trusts to which the company would contribute $700 million in cash and $80 million in stock. This change is expected to save the company more than $100 million per year.

Now that agreements have been reached with its unions, investors are beginning to see the light at the end of the tunnel. Centerbridge Capital Partners and its affiliates have agreed to purchase $500 million in convertible stock and facilitate an additional $250 million in funding from others. Many now believe that the company is on track to have a reorganization plan in place by September and be able to emerge from bankruptcy by the end of the year.

So, what does this mean for shareholders? Well, the fate of existing shareholders remains uncertain. While the company's assets outnumbered its liabilities as it entered bankruptcy (suggesting that common stock still had value), there are costs associated with the reorganization itself that may push down value further. Until these costs are fully detailed, it's hard to say whether or not the current common stock is worth anything.

Investors looking for bankruptcy investing opportunities may find this stock interesting. New stock in a company that has just emerged from bankruptcy is often undervalued. This is simply because the holders of this stock are often debtors that want nothing more to do with the company. Obviously, people are also skeptical as to whether or not the company can turn itself around after having already burned shareholders once. This deep value can translate to healthy profits in the event that the company is successful in turning itself around.

The healthy M&A market for automakers and auto parts makers is also something that is worth noting. Many private equity firms have already taken advantage of companies fresh out of bankruptcy court as their stock is often traded at a substantial discount while most of their large debts have been satisfied. The best examples of these transactions occurred in the airlines industry a few years ago.

Combined, Dana Corporation is definitely a company worth watching as it emerges from bankruptcy. While investment in its bankrupt shares may be a risky bet, investors may find an appetite for newly issued post-bankruptcy shares as they will likely be undervalued.

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NovaStar Financial (NYSE:NFI) shares rose as high as 13 percent yesterday amid rumors that the troubled subprime lender may have found a buyer. The Kansas-based company, which provides loans to borrowers with poor credit, has been searching for a buyer since April without success. Investors are hoping that the troubled company can avoid bankruptcy by finding a buyer willing to take on its debt and reward shareholders with a premium buyout price.

NovaStar is one of many subprime lenders that fell victim to an overzealous public. Subprime lenders were able to make a substantial amount of money by lending money to borrowers with poor credit and charging higher interest rates to make up. However, problems began occurring when many of these borrowers began to default on their loans as their variable rate mortgage payments began to balloon. Unfortunately, many subprime lenders were highly leveraged, which led to a substantial windfall.

So, what are the chances that NovaStar will find a buyer? Well, Accredited Home Lenders (NYSE:LEND) was able to find a private equity fund willing to pay $400 million for the company, but this appears to be the exception amid many bankruptcies including that of New Century. Investors must also not forget the "imminent sale" rumor that surfaced last month leading to a 16 percent run-up that was quickly erased. Of course, the company would also not comment on any rumors.

Overall, investors should remain skeptical and prudent when trying to read this stock. The company may be open to a buyout - which helps - but selling a subprime lending firm in this environment could prove to be difficult without a substantial discount. This is definitely a stock to watch, but maybe not one to buy until more solid information surfaces.

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Cadbury Schweppes (NYSE:CSG) may have a buyer for its Snapple brand after reports surfaced that Coca Cola (NYSE:KO) has approached several private equity firms involved in bidding for Cadbury's drinks business. The confectionery company agreed to sell the division - which includes brands like 7-Up and Dr. Pepper - to private equity firms who are expected to pony up around $15 billion.

Snapple has proven to be a great investment for its owners over the years. Billionaire Nelson Peltz sold the brand to Cadbury for $1.5 billion, which was five-times more than his purchase price of $300 million just three years earlier. Now Coca Cola's interest in the brand could dramatically increase the value of its drinks business being sold to private equity.

Coca Cola confirmed that it was exploring the possibility of either purchasing the Snapple iced-tea brand or creating its own brand from scratch. Since the company cannot make a bid for the entire division due to antitrust regulations, it will be forced to purchase the Snapple division from one of the several private equity firms that are making a bid. The firms expected to be placing bids include Blackstone, KKR and others.

In the end, the Snapple brand is clearly a valuable asset to Cadbury that may end up increasing the value of its drinks portfolio. This makes CSG a stock worth watching as this sale process unfolds.

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Kohlberg Kravis Roberts & Co. released the preliminary prospectus for its initial public offering yesterday stating that the company would seek to raise $1.25 billion and use the proceeds to expand its business, make additional capital commitments to its funds and for general corporate purposes. Interestingly, none of KKR's owners appear to be liquidating their stake, in stark contrast to Blackstone's use of its IPO proceeds.

The most interesting part of the filing, however, was a new strategy KKR hinted towards that would end its dependence on third party capital from investment banks like Goldman Sachs and Morgan Stanley. The firm has shelled out billions of dollars to these banks in fees over the years in exchange for help placing more than $350 billion in debt used to finance its leveraged buyouts.

KKR is seeking to avoid these fees by constructing its own in-house syndication desk - similar to the ones that brokerages and banks maintain. The firm also plans to deploy an in-house proprietary trading team that would enable it to deploy capital behind the firm's insights into companies and markets that would have gone unutilized in the past.

The move will not only allow KKR to hand debt placements on its own (a great boost to its LBO division) but will also lead to more syndication fees and trading profits. The new strategy will also enable the firm to pursue opportunities in any credit market while their $5 billion publicly trading equity fund gives the firm an unlimited source of equity funding.

Unlike Blackstone, KKR's IPO is not simply a liquidation for the company's owners. Rather, KKR appears to be using the money to setup a new division that will be able to save it billions of dollars in fees while allowing it to tap into other potential revenue generating activities. The firm plans to IPO in the fourth quarter of 2007 under the ticker "KKR" - it's definitely one to watch!

Chapman Capital sent a letter to American Community Property Trust (AMEX:APO) today demanding that the company re-evaluate the activist hedge fund's $25/share liquidation proposal. The hedge fund, which specializes in small cap restructurings and turnarounds, has been fighting for a liquidation since REITs went out of favor causing substantial discounts to net asset values. Chapman is hoping that it can talk some sense into the resistant controlling Wilson family and unlock significant value for shareholders through a liquidation at roughly a 25% premium.

In a heated letter to ACPT today, Mr. Chapman commented, "The management team in place is implementing a long-term strategy that IS NOT WORKING. If you understood, even slightly, that your job is not to develop real estate but to build shareholder value in the public markets through real-estate related development, this would be patently obvious to you. Instead, your response, like all those that preceded it, confirms every fear I have about the Wilson family's role in the tragic underperformance of this asset-rich enterprise. Like TrizecHahn and others in the 'Old Economy', selling assets to the private market rather than waiting for the public market to realize the estimated $25/share in intrinsic value is the only viable option. Thus, on behalf of the public shareholders of ACPT, I demand that you begin an orderly liquidation of the company immediately."

Many shareholders have been disappointed with the trust's performance during the past year and are ready for change. Unfortunately, the Wilson family holds a controlling stake in the company and has openly stated that it would not support a liquidation. Usually this would eliminate any possibility of returns; however, Chapman Capital has a lot of experience in these situations and may be able to force change. If successful, the resulting liquidation would result in around 25% return to shareholders based on today's market price. This makes APO a stock worth watching!

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Wendy's International (NYSE:WEN) shares moved up $1.63, or 3.64%, to $38.75 today after Nelson Peltz disclosed a 9.8% stake and identified Triarc as a "natural, strategic buyer" for the struggling restaurant chain. Many investors are hoping that Nelson Peltz will be able to use his weight on the board to pursue the best value for shareholders.

Nelson Peltz is a successful activist investor that was responsible for Wendy's earlier decisions to spin-off its Tim Horton subsidiary and sell off its Baja Fresh chain to an investment group. These efforts provided healthy returns to shareholders in the past and many are hoping that the activist investor's new push to remove substantial barriers for a sale of the entire company will yield similar results.

Nelson Peltz expressed his concern today over Wendy's restrictive one-year standstill clause that drew criticism from Triarc. The activist investor believes that the company has a strong bias against Triarc but should work to include them in the sale process despite these differences - as the board has a fudiciary to shareholders to pursue the greatest value.

While there are no official bids for the company yet, clearly we have two parties that may be interested in putting a bid together. Nelson Peltz request that the standstill clause be removed (which should be followed given his board presence) which should pave the way to more bids from a wider audience. Whether or not these bids materialize at a substantial premium remains to be seen; however, WEN is definitely a stock worth watching in the meantime.

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FairPoint Communications (NYSE:FRP) is one step closer to its purchase of Verizon's (NYSE:VZ) land lines businesses in Vermont, New Hampshire and Maine. The $2.47 billion deal will provide FairPoint with 1.48 million access lines - more than eight times the company's current 248,000 lines. The telecommunications company hopes that this deal will give them a larger footprint in key markets; however, many investors are concerned that the transaction will put the company in a weak financial position.

The majority of the concerns over the deal stemmed from unions representing the bulk of Verizon's workers in the three states who are worried that the $1.7 billion in debt assumed may hinder promised investments and endanger the workers' pensions and benefits. Meanwhile, other shareholders are worried that the large acquisition will necessitate additional infrastructure spending that will significantly impair the company's financial condition.

FairPoint executives addressed these concerns on Thursday by reassuring investors that the existing $1.2 billion revenue stream from Verizon's operations in these states will support operations, capital improvements, dividends and interest on debt. Management also predicts that the transaction will be immediately accreditive to the company's earnings. Many large investment banks have also offered opinions on the transaction that is being spearheaded by Morgan Stanley.

Overall, the transaction should significantly increase FairPoint's footprint in the Eastern United States while increasing the company's revenues. Management's estimates also suggest that the transaction will leave the company in a strong financial position. Plans do not always turn out perfect, however, so investors should pay close attention to the company's costs through the process. In the end, this is a big move by the company that could either reward shareholders with a much larger entity or hurt them with excessive debt.

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Angelica Corporation (NYSE:AGL) shares rose $0.94, or 4.46%, to $22.03 today after Pirate Capital disclosed a 9.8% stake and urged the company to hire an investment banker to explore strategic alternatives. The activist hedge fund insisted that the company's failure to improve operating results has eroded shareholder value and demanded that the company explore how to unlock this value.

Pirate Capital's letter to the Board of Directors indicated a disappointment in management's ability to improve operating results. The company painted a picture of a turnaround by projecting a 7 to 10 percent increase in organic growth in April 2006; however, actual numbers for subsequent quarters turned out to be 0.2%, 0.6% and 0.7%. This prompted the activist hedge fund to recommend that the company hire an investment banker to explore ways in which value could be unlocked through a sale of the company, an asset sale or other extraordinary transactions.

Pirate Capital is well known in the markets as one of the premier activist hedge funds, but experienced some problems late last year when lackluster returns led to a pullout by many of its investments. Regardless, the hedge fund is now back on its feet and working to re-establish its trackrecord by focusing on niche activist opportunities in the marketplace. The strong M&A environment along with optimism amongst shareholders may help them with their push to put AGL up for sale without a fight. However, Pirate Capital said it would nominate its own slate of directors at the company's next annual meeting if necessary.

Overall, Angelica Corporation is an under-performing stock trading at a discount to its peers. Pirate Capital, a well-known activist, is acting as a catalyst to help push the company to explore strategic alternatives. If they eventually comply, shareholders could see significant upside from any sale, asset sale or other extraordinary strategic transactions. This makes AGL a stock worth watching!

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KVH Industries Inc. (NYSE:KVHI) shares moved up $0.24, or 2.82%, to $8.76 today after Roumell Asset Management disclosed an 8.31% stake in the company and urged the company to explore a share buyback. The activist hedge fund insists that the company remains extremely undervalued and that the company (along with other investors) should consider investment.

Roumell Asset Management encouraged the company to weigh any acquisition opportunities against the compelling investment opportunity present in buying their own shares at its current levels. After all, a staggering 40% of the company's market cap is in cash while the enterprise value to sales ratio is less than 1x. Meanwhile, they are generating plenty of cash flow on strong business and defense programs only provide more reason for optimism.

Overall, the company is clearly undervalued and that is ample reason for the company to explore buying its own shares as opposed to an overpriced acquisition. Meanwhile, the company is definitely one to watch for other investors looking for undervalued opportunities. Combined, these factors make KVHI a stock worth watching!

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Fair Isaac Corporation (NYSE:FIC) shares rose $2.58, or 6.9%, to $39.96 today after Sandell Asset Management disclosed a 5% stake in the company and expressed concerns over the company's restructuring plans. The activist hedge fund insisted that the company may be better off exploring a possible sale or conducting a leveraged recapitalization.

Sandell Asset Management said they were encouraged by management's plan to improve operating and financial results but questioned the board's decision to opt for a turnaround instead of trying to sell the company to a strategic or financial buyer. The hedge fund noted that such extensive turnarounds tended to be fraught with risk and they feel strongly that such actions may be best undertaken as part of a larger organization or in a private ownership context.

As a result, Sandell Asset Management made several recommendations to Fair Isaac going forward in order to help them more quickly and safely unlock shareholder value. The hedge fund first recommended that the company attempt to sell itself as a whole, but if it was unsuccessful it could separate its three divisions and attempt selling them separately. And if those efforts are unsuccessful, the hedge fund recommended a leveraged recapitalization as a public company. Finally, Sandell requested that the company to be aggressive with its existing share repurchase program and extend the program when appropriate.

Overall, these efforts would unlock significant value if the company agrees to follow through with them. Unfortunately, the board seems bent on attempting to turn the company around, which can be a very risky procedure. While some turnarounds are successful, we know that almost every sale of a company comes at a premium! This makes FIC a stock worth watching!

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