I didn't get the impression you were picking on me. It is a good question you asked, but the people who really will decide are the big boys who hold millions of these notes.
I know about as much as Jon Snow.
I grew up in Georgia, so Waffle House is like mana. Scattered, smothered covered, chunked. I plan to hit about 5 of them as we drive from Seattle to the Florida Keys this summer/fall (going to go along the Great Lakes this summer since the south is too Yahoodamn hot until November).
Well, if someone paid par, they bought them over a year ago, right? So they have about 88% of their original money at risk. The stock market has done nothing since then, so it isn't like they missed out on big gains there.
I think you would find a lot of takers for the extension if the alternative was equity or liquidation. It really depends on what metal looks like.
Do we have until mid 2017? It is sounding like some decision will be made this year.
If metals are much better in mid 2017 (like $3 copper, $10 moly) then yes, I would accept an extension to 2021. I would actually take 11% just so they can have some spare money to build out the break room (the gold plated pool tables will need polishing by then).
The reason I would like the bonds cashed out (at 100% of par) vs extending the debt to 2021 or beyond is the huge return on investment. I started buying them in the 90% of par range (doh!) but I bought 2019 bonds as low as 22% of par. Getting 100% for all of them plus a few years of the 12.5% coupon would make up entirely for the fiasco of the stock and option trading I did in the past.
I no longer think they will get cashed out at 100% though. I am resigned to getting about 2 more payments then being forced into some sort of debt for equity deal (or the box of Endako junk parts). I have kind of roped off that portion of my portfolio with a sign saying "here there be dragons"
They are notes, not bonds.
My choice would be a,c,b,d
a,d,c,b if I can have the container tied to Perron's foot as I take him on a picnic to Crater lake, OR.
The banks will Yahoorape them on the fees though if they have to do all of these things. I remember on the T-meds they paid quite a bit to the bank to do the offering.
Why in the world would you sell at $85. They make $12 a share a year. Their credit rating is so high they could get a 3% loan and buy back half the outstanding shares.
A bit more than $85m of room to make a deal, unless you are saying a deal will not happen until they drop below $100m in cash?
With about $550m of outstanding unsecured, they should be able to offer something in the 15% par range cash plus some unsecured new debt expiring in 2025 at 8%. Or equity or a mix of both.
Really nothing left for common stock though. The note holders would demand a reverse split before equity deal, at least on the order of 20 for 1.
Yes, I do not know who is buying the bonds at 42% of par. I had thought along with a lot of people here that it was TC buying.
Maybe some people have run the numbers and figure they will get a decent chunk of the company post reorg. I have no clue anymore.
At 18% of par for the 2019 six months ago it was a no-brainer. Someone who bought then is already only in it at 11.375% since they just got a 6.25% payment May 4. This November they will only have 5.125% at risk, with the potential for a 2000% return from that point if TC makes it to 2019.
See why I like the bonds?
I meant if the notes go down and the stock still has value, I would recommend an exchange. 40s is too high for the 2018 or 2019 to be buying in. I liked them at lot better in the teens.
Really the common stock isn't worth much. You get the impression from the CC that they are all out of ideas and just pinning things on hope. Debt for equity or even complete default and bankruptcy is the outcome here if metal does not improve significantly (and I mean stuff like $3 copper, $10 moly).
Well, one negative right now is I don't think you can raise $600M in preferred shares because of the much lower price of copper than when I posted. I was figuring they would have EBITA of $160M when really they are only making about $100M now.
You are going to have to give a lot more meat to preferred holders with today's metal prices. This kind of means common stock gets nothing. It would be nice though to offer the preferred shares to common holders in a rights offering.
I don't know why someone gave you a thumbs down. I mentioned this same idea about a year ago? Here it is:
"lightdoesnotage • Jan 22, 2015 11:21 AM
Time to get rid of the debt. Here is how to do it.
Offer $600M of preferred shares. These shares would pay a dividend equal to 25% of EBITA. Give existing shareholders rights to buy into this offering.
Debt fully retiring using the $600M plus cash on hand. Small revolver could be opened for operating costs...interest rate would be super low with no debt.
So then EBITA is $160M, debt payment zero, preferred shareholders get a $40M dividend payment (7%!) and existing shareholders get a smaller 2% dividend.
Greedy bondholders get nothing after 2017"
I like gold mining. Pretty much that. It was the reason I bought into Claude. I am a sucker for the possibility of owning a good gold mine.
And I enjoy the banter when it does not get too political. I don't even know who I am going to vote for this year. I can't vote Hillary and I can't vote Trump.
Swap your shares for debt the next time you can get $0.50 USD and the debt is 14% of par (or lower). These two events may not coincide.
Still a heck of a gamble, but at least you will not have to worry as much about a massive dilution. The unsecured notes *might* get something at the end of this mess.
What a train wreck. To think I have been messing with this company since 2012!
Well that sounds depressing. It sounds like the common stock has zero value and the unsecured bonds very little value.
As they edge down in cash, I might try to unload a few of my 2019 if they are in the mid 40s. I don't want to get stuck with stock in TC since Perron will probably stay on running THAT into the ground too.
The 2019 has traded today in pretty good volume (500k for 42 and 50k for 39) which is higher than I thought it would be. Not much trade on the 2018 although it has a bit higher price.
Their plan is hope. Hope for some angel investment bank, or hope for metal pricing to save them.
Their short term plan is to hoard as much cash as possible to make sure they can make payroll as long as possible, in addition to making interest payments on the notes. I would not be greatly surprised to see some bonuses paid out this year due to the great safety record.
I now expect the Nov 2016 note payment to be made, along with the May 2017 payment. A bankruptcy or re-org filing some time in late 2017, possibly missing the Nov 2017 payment on the 2019.
I don't have time to mess with TC today...packing up for our trip across the country to sail in the Florida Keys. Going to do Alaska next year (or the year after if we really like the Keys).
That is kind of grasping at short straws, suggesting manipulated accounting. They have just gotten big, and big ships turn slow.
The above is the best post probably in years. This is likely exactly how things are playing out. Management just hired the consultants so they could not be accused of being complacent. They have no real plan except hope on metal. They do plan to collect paychecks for as long as possible, which means you don't buy debt, you hoard cash for payroll.