Agreed. Cut the dividend or eliminate it will make the shares go higher right away. They must refinance the debt. The recent news of pulling that deal chopped at least $3-$4 off the share price since. Funds do not want this name on their Q2 statements but you may see buying in a few days to start the new quarter.
Price action this week seems to indicate last Friday's drop was the bottom. Then you get hit AH yesterday with S and P credit downgrade and Merril Lynch lowering price target to 10 bucks. Day traders and flippers have moved into the name this week. Lots of folks looking for 40 cents on 500 shares. Had to punch out a few Walter trades myself and the last I had heard of the name was when the Najarians were yelling buy at $80.
The interest coverage ratio provided in the term loan provisions is 1.5 in the June quarter. Look at EBITDA and compare it to interest expense. It is very very tight. The coverage ratio declines to 1.25 in the following two quarters if memory serves and then starts to increase. It is a fair statement to say that they did anticipate pressure on the covenants back in March but they didn't expect this much.
Will the banks put them into bankruptcy? I think not but I really have no idea what their situation is. I do know enough to say that management hasn't been very transparent when it comes to the coverage calculation. Go to the last quarterly conference call, there was at least one question asked and they weren't very helpful, once again, if memory serves.
I don't think there is a good hedging strategy. Puts are too expensive. Just keep your potential loss within a range you can live with.
A new longterm war in middle east is cooking which makes the world economy more dis stable... It is the dummest we could do. .... In hope to take over and privetise their industry spacially the oil.
Are the Britain and China and ... seating and watch doing nothing ? They do what they did in Iraq ! Just poor Iraqis that they have lost all what they had. Worst of all they are in debt too !
Bankruptcy is off the table for the next 2 years. And if things are getting better, as is the word coming from the FED, than I would expect the demand for MET COAL to increase in the greatest economy on Earth. Also, don't think for a second that China is a dying story....that's laughable!!! Buy WLT, buy the industrials, and buy companies that will perform when rates are rising...aka, banks.