I agree that the company is not doing well. If they don't defer the next preferred dividend, they probably will defer the one after that. No position here, but just saying that it wouldn't shock me if Geisler dug deep and paid the dividend even though he probably shouldn't.
I've been negative on the MILL preferred issues lately in the Panick Report since the requirement to raise 10 mil was disclosed (no position in the MILL issues personally). I say 2/3 chance they defer the next dividend and 1/3 they pay it. Shorts are way too comfortable here though. Geisler may just be crazy enough to pay it and flirt with the loan covenant violations. Any other CEO and I would say 90% chance of deferral. Given all the shorting, the preferred could pop to 15 if it they surprise people and pay it. I wouldn't own it, but would want to be short either.
The CFO "resigned" at PRGN. The CFO "resigned" at TEU. The 2 companies are related. The same guy took over both positions. What a coincidence - LOL.
I'm very pleased to see Guidi fire the other guys and take charge. He's a big shareholder. The other guys didn't exactly do a great job on the East Coast. It's a cost cutting move. Guidi wants better talent (and plenty is now available) before doing any more deep wells. Sounds like a good move to me.
Also MILL is not the only company in the world that can sell natural gas at favorable rates, so it's tough to argue that's sufficient reason to own the MILL issues. For example, other companies such as TAT, TAOIF, FXEN and EWPMF (upon completion of pipeline in May) can also sell natural gas at very favorable prices.
The state can't produce more natural gas by regulating the price to keep it low. If they don't produce enough natural gas then, the alternative is more expensive LNG. Mill has a good market for natural gas. The problem is that it may not be enough.
Disc: No position in the MILL issues.
No company is going to disclose in advance what companies they might be interested in acquiring. Gran Tierra says they are interested in more Putumayo expansion. Vetra is out partner in Putumayo and lost a bidding war for Suroco with Petroamerica. Parex is our operating partner at Las Maracas and some other properties. Those would be 3 at the top of my list.
Most buyouts like the Suroco deal happen at around 3X - 4X operating cash flow. PTAXF is trading at around 1X cash flow. Probably would be bought out for around 30 cents if there is a deal, although I think management wants to stay independent.
PA, no preferred stock is always senior to the common in a liquidation (not that it often matters). MILL-PC / MILL-PD are no exception and are of course senior to the MILL common. Here's from the prospectus"
The Series C Preferred Stock will rank, with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up:
(A) senior to all classes or series of our common stock and to all other equity securities issued by us other than equity securities referred to in clauses (B) and (C) below;
(B) junior to the Series B Preferred Stock and all equity securities we issue which do not have dividend rights and which have terms specifically providing that those equity securities rank senior to the Series C Preferred Stock with respect to rights to the distribution of our assets upon liquidation, dissolution or winding up (please see the section entitled “—Voting Rights” below);
(C) on parity with all other equity securities issued by us with terms specifically providing that those equity securities rank on parity with the Series C Preferred Stock with respect to rights to the distribution of our assets upon liquidation, dissolution or winding up; and
GDP was able to sell 2nd lien debt since (other than their bank line) most of their debt was unsecured. Apollo and Keybank are unlikely to allow MILL to sell more secured debt. Also GDP took advantage of the spike in their common to sell common stock earlier this year. MILL did sell some preferred, but lost the opportunity to sell common.
An exchange offer for MILL-PC / MILL-PD for common after they defer the preferred might help buy them some time. If they get rid of the preferred overhang they have a shot to raise capital by selling common. No one is going to buy MILL common with all that preferred stock ahead of it (not to mention the debt) and it would be almost unethical to sell preferred at such a large discount to par.
Disc: No position in the MILL issues. Long GDPAN and the GDP Bonds.
I took profits on the issue awhile back, but glanced at the Q4 report and they did well. A deferral is unlikely given they are well capitalized, profitable and growing their balance sheet to increase profitability further. They are mostly in real estate related loans. As for trading at 27, that's a bit of a stretch since the issue can be called at par.
A regulatory Consent Order is theoretically supposed to be about helping a bank to recover. The reality is far different. Why was DRL unable to sell their profitable US mainland operations? Why were they unable to raise capital? I've seen this movie before with other banks. Unfortunately the regulators make the problem worse. I believe that they prevented a US mainland asset sale by refusing to give the buyer a release from cross liens.
Wouldn't it be in the best interest of regulators to encourage an asset sale? They blew 750 mil in "expenses" when DRL was seized. Sadly the regulators are a bunch of Vogon Trolls. They just don't care since it's other people's money. I'm sure they enjoyed the Beach on their Puerto Rican vacation last weekend.
How exactly do the regulatory "doctors" bleed the patient? They limit profitable business lines. They hinder asset sales and capital raises. They burden the bank with huge regulatory compliance expenses. Our banking system is truly in the dark ages.
The best way for a bank to survive once the regulators target them is to get out of the banking world altogether. This is what BBX did with great success. They sold all their bank branches and became an unregulated specialty lender. The stock has soared since then as they dealt with bad assets in an orderly fashion without the regulatory boot on their neck.
There is also holding company debt ahead of the preferred stock, not to mention the 750 mil that in "expenses" that the FDIC is claiming. Preferred appears worthless to me.
The Puerto Rican Govt development bonds I track are now at 55 cents on the dollar to yield 19%. The chickens may come home to roost for PR and their attacks on DRL. Shareholders may recall how the left wing Governor called DRL the "millionaires bank". Muni bondholders may be the next group of "millionaires" under attack.
I think you might get a chance to sell for at least 50 cents. Many shorts are looking to cover. There could be speculation about the holding company still recovering assets from the PR tax litigation through further appeals. The share count is very low. Those are all good reasons for day traders to play with the common.
It's my belief that even if DRL (holding co will file for bankruptcy) eventually gets some of the claimed tax rebate it won't matter for equity holders due to the 750 mil claim by the FDIC. I'm not a bankruptcy judge or lawyer though. The court might see things differently and could conceivably decide shareholders are entitled to some part of any eventual recovery that is made. I seriously doubt it, but might be enough of a possibility for the day traders to have some fun.
Boston, there is no case since it's nearly impossible to sue the government even if they have misbehaved (hard to prove here, although I think it's true). For example, take all the Tea Party groups that were unfairly targeted by the IRS. That harassment went on for years and is rather obvious. Everyone (regardless of their politics) should be appalled by this. The odds of those groups ever collecting a dime in damages are low.
The whole process is awful. The FDIC always claims huge expenses by giving sweetheart deals to the buyers (who are essentially paid to take the assets). I believe that DRL had a buyer for their profitable US mainland branches and the regulators fouled that up by refusing to give them a cross lien waiver. The FDIC doesn't help troubled banks with their "consent" orders. They bleed them and prevent them from taking steps to raise capital. Sad but true
The tax case is moot for shareholders at this point. Even if the holding company retains the tax case against PR (which I think they do) and eventually wins on appeal for 250 mil, there are still debt holders and an FDIC lien for 750 mil in "expenses" ahead of equity holders.
The common and preferred stock will get delisted but trade for awhile and day traders could play with them. Ultimately, I would expect those shares to be eventually cancelled with 0 value. The FDIC has estimated their "costs" as 750 million. That's a lien against holding company assets ahead of equity holders. Debt holders might eventually get some recovery. No chance for the common or preferred shares to get any recovery other than from the shorts covering.