They might settle for a small amount with no admission of guilt just to get the suit behind them but they did NOTHING wrong including mislabeling. Their never was an issue except for Tilson and the Tree Huggers 60 Minutes hired to "investigate" LL intentionally using results of the wrong test that don't correlate to the CARB standard to suggest LL's guilt. In regard to the research note, I read it and it was much more innocuous than the headline implies. He suggests a bad outcome for the MDL is low but enough to keep him on the sidelines. With all the regulators giving the thumbs up what are the plaintiffs in the case going to hang their hat on?
BTW does anyone else find it amusing that China fights PCAOB compliance tooth and nail because it would help out the Chiscams defrauding U.S. investors (and cost China billions in capital inflows) but they're all over these scams when they want to switch over to Chinese investors.
The fifth version of an FL Mobile sale was never going to happen anyway, this is just the excuse.
Well let me please retort, you don't have a clue what "90% of the people believe or don't believe to who the f ock are you to be speaking for them?
In regard to listening to the cc, once again NQ is a near complete fraud making managements discussion of their fictitious financials a bunch of lies. Why would I waste my time listening to management lying to shareholders?
Besides the fact todays posts are the first in a year or more on this m.b, if people believe 90% of what I post I must be doing pretty well. I think I'll keep posting.
Why would I waste my time listening to fraud trying to talk their way around their fraud?
So revenues are down because they sold Nationsky and don't have that revenue source anymore, So I guess they're sitting on lots of new cash with which they can invest in their current business or buy new ones... but wait cash is way down...so that must mean they already deployed a ton of money to increase revenues so revenues should be up.. but wait?
I bailed at $1 a month or so ago and almost got out at $1.40 but got too cute trying to hold out for a little more. I rolled the remnants into RRC and just cashed out a 45% gain the other day. I still need a multi bagger just to break even though. Not that I bet it all on UPL.
They aren't remotely close to fixing debt covenants and it's too late anyway, they already filed chapter 11. The current asset values are based on $2.00 gas. There's an argument this is too low but they're orders of magnitude away from the value of the assets offsetting the debt. Debt holders get paid before shareholders.
I may play a dead cat bounce trade but there's little chance current shareholders are left with anything when the restructuring is done and I won't be holding for the outcome. Current debt holders will own at least most of the company, most likely all of it and will probably do very well once the nat gas industry rationalizes. IMO that's why they were so eager to pull the plug. It's Watford's fault for over leveraging and not acting to delever soon enough and my fault I lost most of this investment for not understanding this one well enough.
I took out a small stake in UPL a few years ago and increased it as UPL plummeted over the last year. Selling natural gas is a real business a good producer should be able to make money over the long run and according to conservative sources like Mornigstar this was supposed to be a good low cost producer. Of course M*'s fair value has gone from $40's to $1 last check, they probably drop coverage soon if they didn't already. Here are the warning signs "I" missed.
1. I saw the huge debt and huge debt with no cash and thought it was a worry but M* and some other reputable fairly conservative analyst thought it was manageable so I told myself it was O.K. "I" was wrong.
2. Less than a year ago an analyst brought up the debt covenants on a cc and Watford emphatically stated they could handle the issue by simply moving debt from the operating company to the parent company. Watford belittled the analyst for asking the question and I cheered Watford on assuming he must know what he's talking about to be so confident he has the issue under control. "I" was wrong to discount the analyst and believe Watford.
3. This fall Watford claimed there was an asset sale in the works that would solve their covenant problems and implied it was all but done. I loaded up at the time thinking Watford had the covenant problem resolved. "I" was wrong.
4. There were plenty of warnings that El Nino would result in a warm winter and drive gas prices sub $2. I figured low rig counts would drive production down to offset warm weather if they were right. "I" was wrong.
5. I've seen lots of other companies get into debt covenant problems work something out to modify the covenants and assumed UPL could do the same. "I" was wrong.
6. I knew UPL has to asses the value of their assets each year and the value would take a big hit after gas prices plummeted in 2015 and chose to believe they could handle this. I was wrong.
The same warnings were there for all investors.
Given I have no skin in the game and the low value of the NOL's to the debt ensures debt holders aren't going give up half the company to preserve the NOL's even if you are right, I'm not going to waste time following every referenced section in the code you referenced to try to thoroughly understand how NOL's can be transferred.
That said I've seen this issue come up with other companies who's shareholders thought they were going to reap a windfall from all of the losses their worthless company generated over the years. My understanding is that regulation limits the NOL carryover based on proportion of the acquired assets to the new company not on who owns stock in the new company.
I don't think UPL is worthless in fact it's value is probably why debt holders are so quick to pull the plug. I didn't mean to suggest UPL is worthless in the paragraph above however IMO anyone holding right now is making a mistake if they think the NOL's are going to save them. As did the investors in the worthless companies thinking the NOL's had value to them.
Getting a judge or debt holders in a settlement to agree to an asset value orders of magnitude higher than the current value is the only thing that's going to leave current shareholders with anything in the restructuring.
I've skimmed links to the code you referenced and don't have time to read thoroughly however they refer to acquisitions as expected have special rules for reorganizations and I've seen this issue come up in the past and have a clue about what the intent is.
The intent is not to have the IRS subvert the legal hierarchy of claim on assets and put shareholders in front of debt holders it's to ensure a company does not acquire another company solely for it's NOL's. Add to this:
"The total U.S. federal tax net operating loss of $913.4 million will be carried forward to offset taxable income generated in future years, and if unutilized, will expire between 2033 and 2035."
This offsets taxes if/when UPL is ever profitable again and can use the offsets. That's about $300M/ tax savings over multiple years vs. $3.9M debt. Even if the IRS was giving shareholders leverage over debt holders (which they're not) by holding the NOL's hostage to a min. 50% existing shareholder stake, what are the chances debt holders decide half the company is worth less than $300M over multiple years if/ when UPL is profitable again?
I believe this only pertains to a possible merger of UPL's assets with another company. To protect the tax benefit from the net operating losses UPL's assets probably have to be at least 50% of the merged company assets. The IRS doesn't care about who currently owns or may own shares in UPL in the future. They do have an interest in making sure regulations like NOL carry forwards are not abused. IE making sure a business isn't bought solely for it's NOL tax benefits.
I'm have no expertize in BK litigation however the assets and liability numbers being bantied about right now are based on the value of the assets at trough gas strip prices. IE: the value of the assets at trough gas prices is about half of the debt which suggests debt holders will own everything in the restructuring. Obviously the assets were valued higher than the debt when the assets were purchased (not too long ago from what I remember). The one hope I see for current shareholders is they can argue current gas prices are abnormal and asset values too low and for a valuation higher than the debt. I no longer have skin in the UPL game and would not bet on it, but that's the one hope left for anyone determined to ride this to the end.
From today's 10Q:
In addition, we have substantial unpaid principal maturities and interest payments that are past due, and we have substantial additional principal maturities and interest payments coming due in the near future. We do not have sufficient liquidity to pay our unpaid and near-term principal maturities and interest payments without raising additional capital. We do not have sufficient liquidity to pay our indebtedness if it is accelerated and becomes immediately due and payable without raising additional capital...
On April 1, 2016, we elected to defer making an interest payment of approximately $26.0 million due April 1, 2016 with respect to our 6.125% Senior Notes due 2024 (the "2024 Notes"). The indenture governing the 2024 Notes provides a 30-day grace period for us to make this interest payment. We do not expect to make this interest payment before the end of the grace period under the indenture governing the 2024 Notes. If we do not make this interest payment before the end of the grace period, this will become an event of default under the indenture governing the 2024 Notes and may result in the acceleration of all of our indebtedness, including the 2024 Notes. Due to our current financial constraints, including the likelihood of the occurrence of events of default under our debt agreements, there is a substantial risk that it may be necessary for us to seek protection from our creditors under Chapter 11 or the Canadian Bankruptcy and Insolvency Act, or an involuntary petition for bankruptcy may be filed against us in the U.S. or in Canada.
The current management team would be more than happy to keep running the company for the new owners if the new owners want to keep them on. The debt holders are going to trade in for equity it's only a matter of whether they get the whole company or just about the whole company. IE: shareholders will either be completely wiped out or just about completely wiped out when the debt gets restructured.