Rut bingo...correct 100% but...at 25c its at worst a trade...look back at the last 5 years u can see this had to file But..there's trades in there and tis is one as the distressed community piles into this one...
Sd,, your posts are pretty accurate..Cap ex for the next 6 months will be higher than your estimate by about 25 mill, but come for a ride on the debt...at 25c there's little risk..make sure u buy the debt flat..no accrued... Company can't wait to burn through all of their line before restructuring..so this announcement gives them 3 months for a turn in prices before they have to file it...so bonds either get all the equity or a sharp price increase..either way its a do..the common is sitting on tenter hooks..
PVA, COmstock, Energy 21,, NOG, WTI and on and on, and finally GDP, but they just got 118 mill so look for the 2017 putables
The 7 7/8 have the highest claim by about 2 1/2 %. They may as I read it try an exchange, 2017 for 2019 second liens, but suicide and waste of money, doesn't fix the problem. I think they default on the Sept payment, go into the 30 days grace try to negotiate a swap and then file in Oct 2 as a pre-pack.
I see the line addressing certain maturities...stupid,, the hold out crowd will torture them to death. Never works or should i say saw it work once, with Globalstar.
No common is toast, no chance an exchange offer works anymore, they had that shot 7-8 months ago with a second lien swap and as Terry said, not gonna be the first to do it, only thing to do now is equitize the bonds, cut cost and cap-ex, shift to gas more cause its moving in the right direction. Do a bondholder rights offering for about 50 mill or sell excess assets. I'd prefer a small rights offering to recap this thing...
The weird thing is or maybe not, I reported they were talking to advisors 3-4 weeks ago. Lazard isn't really my first choice if they want to restructure. Sounds like 363 to me.
Yeah, pretty sad, been clear as day for a year. Bonds collapsing together now spread down to 10 points. With short paper yielding 75%. It will be the usual suspects as advisors.
Gassy, they need money and fast, so if you can figure out a way for them to pay the Sept payment, the Dec payment the cap-ex of 30 million /quarter than please call them.
Flea,, Basically yes,, with the bonds now offered as low as $23 you can take the total amount of bond debt multiply it by 23 and that gives you the equity value. The bank line is around 265 million, probably higher since they probably burned another 14-20 million last quarter. Total enterprise value is the value of the debt X's 23 plus the bank line. Forget the common for now,with the bonds offered at a 77% discount market values it at zero except a few hangers on, hoping for a miracle. A miracle flea for the common is a grandslam for the bonds so I wish them well. The legal fees which will be substantial comes out of our hide, and will be about 10 million, my guess. These guys have been reported and I don't know for sure to have hired or are hiring advisors.
Flea, I replied to you a few days ago. Doesn't matter how many shares,, the value is the value at the end of the day. 50million shares at 2 is the same as 100 million at 1 etc etc.. Has to be done through a pre-pack chapter 11.
Bonds are trading at 25c on the dollar there's 875 million of debt so at 25c its 218 million of value plus 263 for the bank line, so right now you create the company for 481 million. The common doesn't count now, because for the common to have any value the bonds need to be paid at par or 1.1 billion of enterprise value, the common is 600 million out of the money at the moment or at least that's how the market is scoring it. So when they equitize the bonds, all the bond debt will become the NEW equity, which I have said is valued at 218 million today. At $48 wti and 2.776 nat gas I believe the company can do if this was static about 132 million of ebitda, so right now you can buy Swift at an enterprise value of about 3 1/2 x ebitda through the debt, BUT thats not the whole story because at these pricing levels the company will continue to bleed, AND that's without paying the existing bond debt, which will not earn interest anymore because it will turn into the new common. So, I believe the first lien debt will actually be upwards of 350 after continued burn, prior to new wells coming on line. So now your creating swift at 350 plus 218 or 568 enterprise value or a little over 5x's ebitda. Going forward the new equity will trade close to the comps of other E & P stocks whatever that may be at the time. Right now this is just a snapshot and depending on the underlying commodity will either rise or fall. Leverage to price is enormous as SD has stated before, for example in 2 years if WT is 70 and Nat Gas 3.25, Swift will probably do more like 400 mill of ebitda and if the company is restructured prior to that the old bonds will be worth close to 200 and 8x return. What I do worry about is that a Judge may not confirm a plan unless the bleed is covered by additional equity and the new common is split with new money coming in to cover the next 1-2 years of losses if O & G stays here. Then its a new calculation depending and a big risk for the bondholders.
Out of my EXXI long ago for reasons I can go into later. The more i play with the Swift numbers the more I'm a little concerned that the bondholders may end up with about 75% of newco and not the whole company if prices don't stabilize. Debt financing will be very expensive to fund losses so a small piece of new equity may need to be raised until they can get to free cash flow. So I'm going to buy at 25 or below which is now likely. In a distressed scenario the odds of the next event being negative are much higher than not. I'll keep you posted.
Yeah, agreed..been buying lightly at 30 and below...bunches of the 2020 traded at 25 and the '22 as low as 18...we need a pre-pack, a free fall bankruptcy would be value destructive. Usually prices bottom within 3 months of a filing as all the funds are done selling....I'd rather the equity have value and we all livehappily ever after, but reality is interfering...I think the bonds bottom at 15 worst case unless we get a new value plan..but I some how doubt that...If wti trades to 40 all bets are off..and nat gas at 2 so hold on to your seat..