Always know where the debt trades before you buy a low priced common. Its investing 101. Not sure what trading platform you use, but look up the PVa 7 1/4 '19. Traded last at 37c on the dollar over 40% yield to maturity and a current yield in the 20's....
Ben,, forget the shorts, look at the finances, which is why people are short, the bonds yield over 40% now...does that sound like a stabile company to u
Jim correct, the debt inthe 30's is the play until it moves back up to the 65-70 range then you can consider the common again. The bond risk is that a second comes in and primes us, which is beginning to look more and more unlikely. So many seconds have been blown up this past 2 months can't see anyone taking another stab. So I see a pre-pack as likely
Jeffries has a strong restructuring group dude..Bonds are in the 30's. They are there to fix the problem, which management screwed up 3-4 months ago.
TC...As i have stated before at this point with the company so distressed an asset sale outside of chapter 11 puts the sale at risk, because a sale within 6 months of a bankruptcy can be clawed back as a fraudulent conveyance. So as a buyer why take any risk..say I'll be the stalking horse bidder. When they didn't sell along with Goodrich, Pva etc etc and hired Lazard, I figured writing was on the wall...these guys have had too many opportunities to bail and create liquidity and just diddled. There's a good shot at a chapter 11 liquidation now.
I wish I was on the Board a year ago..I'd have had this nailed down, buttoned up and we'd be laughing now instead of crying
Yeah, don't know either...what they have been waiting for...I show them cash flowing here with no interest expense by mid 2016 if they increase Fasken..They may simply be deer in the headlights.
Jim they are in the 30's and its over. No way any bank allows their new money to take out anything below them in the capital structure Never will happen ever. This will be fixed in 11
Gotta say, these guys are inept. Notice how deals even in this environment are getting done, Not at great prices, but prices that make SFY worth more, and they always seem to want more than they can get. Everyone wants what they can't have but time is ticking and pricing is getting worse... If these guys make it through time for new management, if they don't and it files, time for new management. We need decisive action not stuff like we aren't going to be the "first"...serious problem here in the ability to make a decision.
Part of this is all of the E & P companies debt is imploding, so if its in a high yield bond portfolio the mutual funds just punt everything. The only buyer are distressed guys and there's so much stuff to look at they take their time. In the case of SFY, they hired advisors to advise them on strategic alternatives, including capturing the debt discount. Hiring advisors in the bond world is code for a likely chapter filing, which is why SFY debt has been hit the worst. They will look at everything, but there's 1.2 billion of debt and that's a tough hill to climb at todays commodity prices. Not knowing how long Nat Gas and Wti will sit at these prices, I would advise them to file it take the 65 mill of int expense off the table and use it to drill OG, or bulk up on Fasken, otherwise if prices don't recover they will have burned the cash and will file anyway and who knows if any financing will be available. There's been some very nasty new Dodd-Frank, OCC, Volker laws that are biting into bank lending for small companies. I'm worried they created another debt crisis.
Looking at your numbers on relative value and comp sales...Maybe SFY should liquidate. Maybe the best path to value short and medium term. I'm involved in some of the other names you mentioned and I do concur with the prices..Let see what they come back with in a month or 2..
Well you nailed it really,, you won't find any that are cash flow positive, they have all lived off of the cheap Fed money, so when debt financing ended, its over. If SFY can shift more toward NAt Gas would be better as long a prices don't drop anymore from here. Its possible SFY is lean enough that once debt service ends they can drop that money into some of their higher return projects. 5 years from now, fast forward with massive capacity taken out prices will be significantly higher
Texas is far better than Marcellus, alot of it is regulatory and North easterners stupidity on pipeline safety. Its so bad in parts of the East that no new gas lines to homes are allowed, because of lack of supply, all cause they are crazy. Bonds are discounting a chapter 11 filing now..and possible new money taking away equity recovery from the debt.
That's truly ignorant Gassy, We get to foreclose on everything, and get paid after the banks and before the common. The bonds are not riskless was be facicous but they are structurally senior to the common which is a monster hail Mary now. They will try an exchange for the 2017 debt into new bonds along with some equity as a tease. There's 100 million shares eligible to be paid to the bond holders, so expect some nice dilution if they are sucessful in the exchange, if the exchange fails its a prepack and new money and bonds take out the rake and collect 100% of newco equity. Just the way it works Gass Man. Once in my life I crammed down the senior lender,its a famous case. Can you guess it?
Mr. Swanson, you are fighting the tape..Bonds have 80% yields now..Why cause they are riskless...Not saying sell your stock its way too late...but please don't add...any more cash should go into the debt...and i gotta say..I'm a little nauseous myself buying the debt at 26 c..feels like death
You really believe the borrowing base will not be cut in Nov? cutting off liquidity. With prices here they can handle half the debt they have to be cash flow breakeven. There's only one way to cut the debt...
You sound like the clowns on the SWIFT board. As the company falls into the abyss. No cash and 1.3 billion of debt AND they said they are looking to layer more debt in, which I doubt, but anyway leaves the common out of the money. This one is toast too, unless we get a giant surge in underlying commodities within next 3 months...