Yes, but the 2017 paper will if they get an exchange offer done be senior to the longer paper...that's the problem and why the longer paper is in the teens...Swift may try that for the 2017
We have 1/2 a billion at the moment of coverage, probably after next quarter 400 mill, Exxi has first and second liens ahead of the 20c bonds. Size bids on all 3 issues...
I'll take a break for the next 2-3 weeks, traveling, back in Sept.
Well exactly,, assets have to be on the table, but doesn't really seem like Terry has interest, but who knows we will find out in the next 30-45 days. Never attended Yale..
While possible they can get a secured deal, but for how much,, SFY continues to bleed? Most likely any money coming in will be as a JV or asset sale. Remember lending to a clearly insolvent entity is dangerous outside of a Judge's blessing. But lets say they got a 500mm line, takes out the current line leaving them with 225 of liquidity. There's not one bank in the Country that will allow them to buy back debt with that money. Why that's growth capital to protect the bank asset value. Buying subordinated debt does no good for a Senior lender, only deteriorates their cash collateral and asset value. I'm involved in a company now has debt coming do in 2018, they are trying to replace their current line which expires in 2107, best they can do with sub debt coming due is a 2x ebitda line. And YES they are free cash flow positive, big time. So forget about Swift, and buying common never.
Anyone think with China devaluing the Yuan, that 1.2 billion Chinese will buy Gold to protect themselves. Physical is seeing bids.
Not just relegated to O & G, when its obvious that management is the problem the bondholders always bring in new blood, and the new Board if this files, will be changed almost in its entirety, no way around that, all I'm saying is with this situation Terry and management will claim they blew up because of commodity price and nothing more. They do need adult supervision via someone who can hedge production, and that will be the new CFO. My background is corporate restructurings or I should say was, not from the legal side but the finance side. Good company bad balance sheet, usually works out.
Shaef, here's a few answers,, the newco equity IF we restructure, will go to the bonds, and any new money. The bank line will stay in place. Current common probably will get warrants struck at 110% of the value of the bank line and bonds combined at par. or about 1.3 billion. That would represent maybe 10% of newco at that level. Current management would get 1-3% of newco, either in new stock grants or options struck at some level to be determined. So, how does Able get to equity of newco of 500 million. Well its aggressive at the moment, but the bonds currently sell at 25c on the dollar or about 215 million of value. That is the current value the market is assigning to the newco equity. There will be little other impaired claims pool, I suspect all vendors will be considered critical and get paid 100%. So, distressed guys buying at 25c or 215 mill aren't buying it there because they think terminal value is 215. They are always looking for a double, because the risk is so high. So, approx 425-450 as Swift exits chapter 11, hence his big valuation to terry and management. 5% will never happen but 1-3 in one form or other likely...
The 2017 premium is for the possibility they will be offered a new 2nd lien bond in exchange for the debt. The Lazard press release address's that, saying they need to deal with certain maturities. All 3 are pari passu and trade based on current claim which includes accrued. As far as buying more, there's asset coverage at 25c and I see large distressed buy interest at this price point. That could change in a heartbeat and will if the underlying commodities drift lower.
SD, Despite what people may think...I would be thrilled if the company made it through and the common had value. Restructurings bring loads of risk. And I would be more than happy to sit here quietly and collect interest and give the ups to the shareholders.
Able,, the bondholders would then get the other 95%, or some portion minus the new money, which will have significant value in 2017 or later. I said this months ago, Terry and mangement will be enticed by the debt holders with newco equity. But first they need one more writedown, to blow out any equity value to prevent a equity committee. They got it down to 24 mill of equity on the balance sheet which will be gone by the end of Q3. The script has been the same for decades, generations. A quick reinflation of WTI & Nat Gas will change that..so stay tuned..Its all in flux
Rage,, the first lien doesn't allow bond repurchases. I'd be willing to bet the new 640 wouldn't allow it either. Now if they could do an asset sale, pay off the first, get enough liquidity to buy in the debt woudl be nice..But capex is 100 mill per year+, can they generate that after an asset sale, is the question. I think we see an initial attempt at 2017 bond swap into 2019 second that comes due before the 2020 and 2022 paper and after the current bank line. Problem is the holdout crowd.
Ya gotta remember I'm a bond holder, I want this to survive.
Claim, is par plus accrued. If they make the Sept payment the claims will change. 7 7/8 will have the least claim. We are talking pennies, but if you look at how the bonds are trading, the 7 7/8 are offered 3 points less than the 8.87, another telling sign they are trading on claim now not ability to pay. But who know Comstock insiders bought stock with the bonds at 35 today...under 100k so tiny but maybe there's hope there...I did watch insiders buy stock one day before a chapter 11 filing in my career. Haven't seen Terry et al give us a clue by buying anything..