Some pretty good news is already here. Iron ore prices are 40% higher than this time last year when the stock was trading above $18. All else being equal, the stock should trade 40% higher, or about above $25 (JPM PT). But, things aren't equal. They have cut billions from expenses. The Real has depreciated. They strongly beat last quarter estimates and even though this quarter should be better, the estimates are lower than last quarter, so they should blow the numbers away again. Perhaps China and emerging markets don't look as robust as this time last year, but China is coming back while Europe and the US appear stronger. So, if great news is coming soon, it would be a nice addition. Personally, I think they increase the dividend in 2014 back to the $6B they were paying out before they cut it to $4B and/or they institute a very large stock buyback to go along with their strong operating performance. GLTA
Get it when you don't need it because you can't get it when you do need it and at this nose bleed valuation it makes all the sense in the world to accept some modest dilution and build a fortress balance sheet.
As I recall, Sept. 30th is the Record Date for the transaction which merely establishes the shareholders eligible to vote on the merger, so they know who to send the proxies out to. But, I missed the significance of the 25th. Is that the date by which if they don't have the S-4 cleared by the SEC that they are going to have to extend the Record Date? Thanks.
I would guess Barry and Kaiser are now in the waiting mode. On the substantive issues of whether LINE's distribution and ability to grow through acquisitions are in jeopardy, it would appear from the S-4 filing (and the additional acquisition announcement) that neither are in jeopardy. In fact, it would appear the ability to cover the distribution is enhanced by the new language and the newly announced acquisition. So, while Barry and Kaiser could perhaps pound their chests about being right on a few of the finer technical accounting points, on the substantive issues that shareholders care about and that will effect LINE valuation, they appear to have been dead wrong at the moment. Only time will tell as this entire saga plays out.
Yes, it's very good for LINE shareholders.
If the SEC clears the S-4, this should be a catalyst for LINE stock. The completion of the deal should be a catalyst both because it would be accretive and, at minimum, secure the distribution. And, if management were to stick to its original plan of increasing the distribution from $2.90 to $3.08 per unit upon completion of the deal, it would be another catalyst.
IMO, if the SEC clears the S-4, the deal will get done and these catalysts will all fall in line. It may still happen at the 1.25X since LINE stock should rise with the S-4 clearance and BRY may actually fall towards the expected deal value per unit. Also, BRY has a nearly $2 per share break-up fee they would owe if the deal failed because their shareholders didn't approve it ($84 million that they do not have without borrowing it). But, if it gets done at a ratio somewhat higher, it's doesn't change the ultimate value of the combination materially IMO.
My comment was intended to be hypothetical (i.e. what if there were a $6 spread at the time BRY shareholders vote). In reality, if the SEC clears the deal, the spread should close, LINE/LNCO should rise and BRY should fall to the extent they don't to approximate the deal price. Also, BRY owes $80M+ in a break-up fee, cash they do not have on hand, if shareholders fail to support the deal. So, the actual deal with a $6 spread, recognizing the break-up fee, may only need to be 1.4X, not 1.5X, anyway. The point was that in that circumstance LINE/LNCO could raise the offer without a material effect on the new combination.