It will remain serious and risky even if they issue new equity. They simply are not even close to financial security unless ALL of the BAM debt is converted to equity or they do a massive (like $200 million) equity issuance.
If they hit the high end of their production projections I don't think the share price should hit $1 unless they identify some new resources. If they hit the mid-range of projections, I think $0.4 - $0.5 is reasonable. Obviously they are a long way from even hitting the mid-range so I think owning the shares is risky in the extreme.
I'm not saying palladium prices can't bail them out but production data is what shareholders need. Just do not see what analysts saw in this company just a few months ago. Of course, it is all just a big guess anyway.
I found it hard to believe they couldn't get better financing terms for the earlier deal. Perhaps dragging their feet was part of a strategy to settle the litigation? Ultimately, without being on the inside it is impossible to tell.
They are desperately pushing alternative distribution right now if what I'm seeing in box stores is an indication.
Couldn't believe the CFO sold so many TDS optioned shares that still had so long to expiration. Was not exactly a ringing endorsement of their prospects.
PAL finally released the loan agreement. Just did a very quick reading and two points stood out.
$8.1 million fee. They did in fact pay an $8.1 million commitment fee. That is a very heavy price. Initially I was thinking that this was the method they were using to effectively drive the interest rate up to the 50% plus rate that they would need for bridge financing but after giving it some thought I was wrong. A large portion of the payment is for covenant relief on the original loan.
Loan covenants were eased a great deal. Debt to EBITDA ratio is eliminated through September 2014. I think that means that bankruptcy is pretty much off the table until September/October 2014 when it becomes more possible if the mine isn't improving. It also means that one should not expect a sudden ramp up in production in current quarter or early 2014 as they probably wouldn't have felt the need to pay so much for the covenant relief.
In effect, I think the covenant relief was a bigger part of the deal than the cash. Just guessing there but that is what I think.
I'd agree with most of that. I don't think they are feeling significant pressure from the SEC or NYSE at this point in time. The Bermuda regulators are the ones that will have a real impact.
Do you have any insight on the Bermuda regulators? I don't. My million mile away interpretation is that they are fair regulators (unlike say New York where political influence trumps all). So what would a fair regulator do and how long will the process take? Once again, I don't know.
It was just a movement in sentiment on PAL. PLG actually went down and they are supposedly going to build the first equipment driven mine that won't need those striking workers. Besides, while the Northern strike is interesting, it really won't get going until Anglo gets hit. That will be the real deal with possibility of prices skyrocketing if things get out of hand.
Could also announce a major restructuring where all the debt is converted into equity and shareholders get warrants for the purchase of shares in the new entity. Lots of different possibilities and i doubt today's buyers had any real information on the topic.
They really aren't even close to stopping the cash burn. Shares are the most expensive of all the competitors too. Of course, there is a point where things turn around but I'm sure not aware of anything indicating that they are there.
They have a demonstrated track record of buying business and then losing lots of money on it.
Clearwire was the only success that they have had and that was fairly short-lived.
You are clearly off base here. The goodwill test does not look at market value of shares although it can trigger the requirement for testing at a quarter other than the standard once a year.
Is it conceivable that they have to write down the personal line goodwill? It certainly is but they did just finish testing it in the second quarter. That is some indication (certainly not conclusive proof) that there will not be a write-down.
What page of the Q says the personal line is 101% of book value. I didn't see that.
Also, you are wrong in terms of testing period. Q4 is the testing period using values as of September 30th. I don't know if they will test in third quarter. I can certainly see an argument for it but without more details on how they did their testing in the second quarter, I am unsure.
You should be a little less sure that the third quarter will include a goodwill hit. It is conceivable but on balance it is maybe a 50/50 thing (WAG) unless you are aware of other facts that you have not shared.
You are reading too much into the comment in the Q. Certainly their largest subsidiaries are in danger of rehabilitation unless the Bermuda regulator allows the merger but they also have subs that are in no danger of rehabilitation. They will have to get approval from regulators to pay dividends but that is fairly standard. I do not think these dividends will be enough on a long-term basis but they are important.
Go back and read the Qs from periods prior to the troubles. Approval from regulators is standard language.
I've been over the 10-Q pretty closely. There are certain subsidiaries that cannot upstream dividends but others are o.k. What capacity exists or what the parent looks like I don't know.
If no dividends can be paid, and the parent is cash starved it can certainly lead to a bankruptcy filing. The last 10-K had some parent company information and to be quite frank it looked like there were errors or at a minimum the information was put together poorly. My guess was it was put together poorly. In any event they have had the reverse acquisition that would mean that the old parent company data from the 10-K is out-of-date.
Actually, the true cost was far higher than 19% when you factor in commitment fees. I really don't know for sure what the fee was but the capitalized amendment fee was $8.1 million. Maybe there was another amendment but I don't think so, I think the $8.1 million relates to the $21 million so the effective interest rate was far higher than 19%
Transparency is not their strong suit. I've looked through their regulatory documents and have no idea what the parent's balance sheet looks like. Maybe it is in some of the proxies associated with the Canopius acquisition but I couldn't find them. Can you???
The subordinated debt comes due in 2030s. The convertibles with face of $145 million are due Sept. 2014. I just find it hard to believe they can't refinance that or draw some dividends from some of the subsidiaries.
His posts are more informative than most of TWGP's SEC filings and certainly better than yours.
They have been issuing vague comments about unusual activity in the share price for a couple of years now. It is just "puffing" and should always be ignored. Kind of like your posts and mine as well if the truth be known.
PAL is in the business of selling shares and mining is of lesser importance except to the extent it allows the issuance of funding. Right now they would be wise to at least pretend to be focused on mining.
Without being closer to the process it is impossible to say. I do think the entire process of negotiating the waivers has been fairly easy and the banks legal fees seemed pretty reasonable (very low). The banks have been more accommodative than I would have guessed and I can't quite figure out why.
Is Barclay's and Bank of Montreal just being suckers? I tend to think not but that runs counter to my belief that one cannot trust much of anything coming out of TWGP.