The whole sector is calling for a bottom, money rotation into raw materials and steel is where the next phase of this cycle is headed. thats why volume has been up lately.
It looks like its about preserving the ( NOL) net operating losses already on its books, IRS tax code says a company can only retain them if there is no change in control ( shareholders) are the true owners of the company , the others are bond or debt holders not owners. Many chapter 11 cases keep shareholders in tact with a low percentage of new equity as to avoid change of NOL tax credits.
contracts can be broken,stalled,delayed, renegotiated etc. its never a done deal till the money is in hand. If all they have is huge debt and contracts for a product thats getting killed in price.
Mechel Steel to benefit from 2 Bil euro contract to build them in Russia instead of France.
All this could be a negotiating tactic, filling BK , what do you gain? Equity is worth 14 mil at this point, You can buy back the due Aug debt of 109 mil on the market for 25 mil, I think its tied to the WY Bond issue. What happens to that and the operations there if they file?
heck it may even trade higher, looking at already filed coal companies which sport a higher valuation and stock price.
It will get a "Q" thats all ANRZQ and continue to trade until case is settled., then it will take 6-8 months of court proceedings to sort out the problems. Looks like a Shareholders class action lawsuit will happen against management for fraud because of 120 mil spent less than a month ago. Im sure they have insurance to cover the loss, wonder how much , probably like1 50 mil. So it could take 1 year or more for shareholders to like .60 cents from litigation insurance payout. Equity committee will need to be requested from court, could get new equity in NEWCO. Long road ahead.
Market rebounds for Iron Ore, talking heads are turning positive on sector. ANRZ is wild card here if they can curtail short term issues. could see .25 today as sector finds buyers and short are closing out positions before they get run over.
At this point when equity has a value of 14 mil, it would be cheaper and faster to just convert debt into equity at a price based on last 20 days of trading say .25 and move on, then to go through the costly process of chapt 11. debt/equity owners will see a instant gain as stock recovers to 2 plus dollars. It wouldn't work as well if stock was worth 120 mil and trading at .50 ,but at .05 the conversion looks good.
amazing how shares trade at .06 and they might not even file for bankruptcy. equity is valued at 12 mil at this price.