Thanks for the suggestion. If Avi dislikes it IOC, it's probably worth checking out. He started shorting NHLD right before they put up blowout earnings and the price jumped.
Yes, the issue pref-c can be called at par starting in Nov 2017. It can be called at par sooner if there is a change of control. The upside is also capped (as Rocky noted) even if those 2 conditions are not met. It's an income issue that was structured to ensure that mill can potentially sell the company without sharing gains with preferred holders.
You guys are right, but perhaps I have too much time on my hands when trading is slow. This leads me to waste time lampooning the shorts (paid third world posters or whatever the heck they are).
Agree with you Robert. Might see an eventual settlement (after PR loses at the trial I think) for 150 - 200 mil with 50 mil in cash and the rest payable over a few years. The asset sales of profitable mainland assets would add to capital and shrink the balance sheet. The NPA sale shrinks the balance sheet but burns capital.
Note that even when they get tier1 back in compliance they would STILL need regulatory approval to pay a dividend or buyback stock. This bank is just not going to pay a dividend or buyback shares in the next couple of years. Just being realistic. Only scenario where dividends get paid is if a stronger bank acquires Doral. In that case the preferred issues get assumed by the acquiring bank and preferred dividends would get resumed right away.
Chip, sorry I won't be on the call. LTS had a very strong report and I don't think there is any question that NHLD has things on track operationally. As for selling the company, I think they've made it clear that they prefer to stay independent. Going to take a very high offer for them to sell. With so many of their small peers getting taken out, they have less competition. Obviously they plan to get the stock listed. I think they have a reasonable long term strategy even though they probably aren't going to be bought out next couple of years - although you never know. If I had to bet on a micro cap to get bought out in the next couple of years it would be Petronova.
So what does this mean? A change of Control happens if Mill is acquired. Mill-pc is convertible into 2.5 shares of common. However if there is a sudden buyout at say $15 / share the company can call miill-pc at par $25 (it's now trading above par) thus depriving mill-pc holders of the opportunity to take part in the price increase above $10 due to a buyout.
How many other preferred convertible issues have that type of covenant? It's very rare and I've traded many of them. Have forgotten more about pref stocks than Verado will ever know. Panick Report covers distressed pref issues. Why would Mill get a "change of control" covenant for a pref convertible issue. Simple. They were planning to eventually sell the company and don't want the preferred stock to be an impediment to that. Pref convertible stock does NOT participate in the upside from a buyout. This was verified by Rocky (who doubted my interpretation and called Mill's lawyer to confirm it).
From page 1 of the Mill-pc prospectus:
The Series C Preferred Stock will not be redeemable before November 1, 2017, except as described below upon the occurrence of a Change of Control (as defined herein) or upon a Market Trigger (as defined herein). On or after November 1, 2017 we may, at our option, redeem any or all of the shares of the Series C Preferred Stock at $25.00 per share plus any accumulated and unpaid dividends to, but not including, the redemption date. In addition, upon the occurrence of a Change of Control, we may, at our option, redeem any or all of the shares of Series C Preferred Stock within 120 days after the first date on which such Change of Control occurred at $25.00 per share plus any accumulated and unpaid dividends to, but not including, the redemption date. The Series C Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless we repurchase, redeem or convert it into our common stock in connection with a Change of Control or a Marke
Congrats to the longs on the big move today. Just to interject a little reality though, they are not going to buyback shares, buyback preferred shares or pay a dividend any time soon because:
- they have not settled yet with PR
- if they do settle if won't be all in cash. Some type of payment plan for most of it.
- They are undercapitalized and also need additional capital to cover the loss on the pending NPA sale.
- They can't buy back shares or pay a dividend because the FDIC consent order specifically bars that.
- They can't pay a dividend or buyback common shares until they pay the preferred dividend including the deferred dividends on DORLL.
None of the above prevents them from swapping common for preferred though, although even that probably won't happen until they take care of other issues.
I must be in the minority, but I still don't see a pre-trial settlement as likely. I'm guessing the 2 sides are still about 150 mil apart in how they see things.
Exactly Sam. People state unproven rumors as if they were facts. It is a fact that there was an attempt by management to pass an excessive options comp plan. It's reasonable to conclude that DV was involved in that. It would be fair to conclude he departed partly on account of that.
It's also a fact that the new Mill comp plan penalizes management including SB if they fail to make enough cuts. It's a fact that Mill has higher overhead than some peers and is moving rapidly to bring it inline.
If you read the SEC filings, you didn't understand the implications of what you were reading Verado. Try reading the covenants for the Mill-pc preferred convertible issue. The issue may be called at par in the event of a change of control. I've traded dozens of pref convertible issues and would be hard pressed to find one single other issue with similar covenants. The preferred was clearly structured with a sale of the company in mind. Clearly that was management's intent. No other reason for putting a wacky, non-standard covenant like that in there.
The shorts really are shameless. NHLD upgraded to a larger more respectable auditor in preparation for getting the stock listed. Shorts still trying to claim that switching accountants is a red flag. I took profits on NHLD (many know I was very bullish when this was a 20 - 30 cent stock and sold around 50 cents) and am posting because Avi's lies here and on other boards are offensive.
Brawley did a good job on the conf calls. He has a very strong credible personal relationship with Apollo and other creditors. They are making progress resolving the control weakness issue he inherited. The tax credits are happening on time and the process is more transparent than it was. The Keybank loan closed along with the Apollo modifications. The company's liquidity has been very good. Acquisitions have been closing smoothly. The preferred stock is trading well over par. What exactly else were you expecting from the CFO? Seems to me he has done everything a CEO is supposed to do. Other than his initial presentation (which I didn't like) he has done fine.
Maybe CMS had evidence of something. I've hear stuff from other sources. Since they haven't disclosed it though, I'm calling it BS. I'm sure no one believes that Mill is run by choir boys. Wish the overly conservative choir boys running Tag Oil would spend some time at Mill headquarters and learn how to take out a bank credit line or sell some preferred stock to finance growth.
I was a huge fan of NHLD when it was trading in the 20 - 30 cent range. Took profits above 50 cents. Just posting there to counter some of your lies. As for the BPZ debt maturity due in March, they've already handled most of it. It was a 200+ mil bond issue that is now down to 60 mil. They have more than 60 mil in cash, but I expect we will see them continue to swap the 2015's for longer term debt as they have been doing.
Trading the Mill issues has been very profitable and fun. If nothing else DV created a lot of volatility. I'll trade his next company any day. Frankly I don't think the long term investors have a legitimate complaint either. Try looking at Mill's stock performance over DV's full tenure, instead of cherry picking dates (perhaps based on when you bought shares). Same thing for SB. If he leaves and is involved in another venture, I'd trade it any day.
Obviously Mill has gotten more serious about cost cutting. I thought DV deserved a lot of credit for the rapid growth and acquisitions at Mill. If not for the options fiasco, I think he's still be employed. Some may have noticed that Mill management bonuses are now tied to cost cutting. It's a dog eat dog world.
Picked up more shares this morning. There is no doubt that Mill has the assets and infrastructure. Give this a week or so and I think we'll see institutional investors endorsing the efforts to cut costs. Argument was that Mill was top heavy with management. The company is growing rapidly and overhead (hate to put it that way) was just cut. I've done very well trading Mill, Mill call options, Mill-pc and Mill-pd. Thanks DV for your role in that! I'd love to trade the next stock he's involved with.
Forget the conversion on DORLL since you would need to adjust that for the 1:20 reverse split (might even need to be adjusted for 2 reverse splits). The convert is "busted". The issue is of value because it's par 250 and (unlike the others) is cumulative so that it's trading with deferred dividends for a few years. The coupon is lower than the other issues, but if they do a swap offer that would most likely be based on par value. For example if the bank eventually offers 1.5 shares of common (just to take a wild guess at a number) for DORLO and DORLN then they would offer 15 shares for DORLL and 3 shares for DORLP.