When the industry is in stress people tend to hunker down. There are two investment banker dreams that they might be able to do:
Purchase $175 million in unsecured notes at a huge discount. It is looking more doable with the collapse in bond prices.
Alumina refining in America is ripe for consolidation. Glencore closed their aluminum smelter so they really don't want alumina refining. Century indicated they wanted to expand further up to secure supplies and all are connected to Noranda's bauxite mine as that is their supply source. None of this will happen soon but a bump in aluminum prices and odds increase exponentially.
LME continues down.
Bond holders are getting killed. I guess they thought BOD was just going to issue equity. Why they'd think that is beyond me but I guess I was a little bit worried about that.
In meantime, LME is down again. That isn't good news for anyone.
Probably adds a couple of million in cash per quarter but that is just a wild guess. Will add a fair amount to sales growth. Business isn't just about home runs, have to hit a bunch of singles.
Agree on equity/debt. All things considered I would prefer Apollo even though I will say I don't trust them.
Rolling mills and Gramercy did well. Not got my arms around primary.
Those were "old and cold" estimates. Creates a negative headline and that moves share prices but the news was pretty good. Will turn unless call is really bad for some reason point or LME declines.
If they do a straight equity offering without redeeming some portion of the unsecured notes at a discount the result would probably be litigation.
If they do nothing but talk about the Core program savings tomorrow shareholders will have every right to be disgusted.
Just remember that it is the equivalent of an option. It can go to zero although it would take awhile to get there.
Published an article on Seeking Alpha. Should be available on "free site" later today.
Also published a long paper on my Seeking Alpha Instablog. Search for Jeff Boyd and you should find it.
Padilla was boxed in by liquidity and political pressures. All he really wants is some cash at a rate that gives them some hope.
The NPP is the group that really baffles me. They have done nothing indicating a sincere belief the obligations should be paid.
He was a sharp guy but really not up to the task. Need systems/finance people more than engineers.
Yea I'm smart but it doesn't matter as anyone who says they current value of the shares is $2, $0.50, etc. is lying to you. It is a great big guess.
I could make probability based guesses and even then I'll get things wrong by a huge amount. Would have told you that there was no way they would enthusiastically embrace a reverse stock split. Would have told you that there was no way eliminating the dividend was necessary given the asset backed lending available.
The new financing is largely noise as they didn't provide enough details and it is a very small part of the overall capital. What is the borrowing rate, what portion of the plant assets (and value) are secured by loan? Does term loan get first mortgage on the plant? All of those things have to be considered. It makes me angry when companies make incomplete disclosures but there is no doubt those stupid press releases drive the share price.
I have an opinions but have not pulled them together to make a fully coherent guess at fair value. Call it a "wimp out" if you like but that is where I'm at.