Objections Mount to Alpha's $692 Million Bankruptcy Loan
You can view this as a casino bet but much of the market is a gamble to different degrees. This happens to be one where the payoff can be very high.
At time of bankruptcy, the book value on ANRs balance sheet was $2.6 billion. So, basically if they were able to sell all all of their assets as valued on the balance sheet and pay their debts, there would be $2.6 billion left over for shareholders. This amounts to almost $12/share available to common.
The issue of course is that hardly anyone believes that their assets will fetch the amount that they are valued for on the balance sheet. Especially since coal assets have been in steep decline. The upside is that the bankruptcy process could run a year, 18 months or even longer. Who knows what will happen with energy prices over this time. If there were to be any inking of a rebound in energy prices, the stock price would shoot through the roof. In absence of a rebound, there will also be speculators buying in at 3 cents and even higher, betting that there will be a positive outcome for common down the road.
It's a speculative bet and you can determine for yourself if it's a good one or not. At 3 cents there's very little risk at this early stage, in my opinion, as common will trade until after the bankruptcy process is finalized.
here's the key phrase in your comments "When a company files for bankruptcy protection, a federal court oversees its
My point was, basically, that it is out of the company's hands when they file and in the hands of the courts.
company can't just decide to cancel shares, either. That is for the judge to decide.
Alpha Natural Said Filing for Bankruptcy as Soon as Monday
by Jodi Xu Klein and Laura J Keller
July 30, 2015 — 12:37 PM CDT
Updated on July 30, 2015 — 3:11 PM CDT
Alpha Natural Resources Inc. is planning to file for bankruptcy protection in Virginia as soon as Monday as the biggest miner of U.S. coal used in steelmaking struggles amid the worst commodities slump in more than a decade, according to three people with direct knowledge of the matter.
The company’s senior lenders including Citigroup Inc. and Davidson Kempner Capital Management plan to provide a loan to fund the company through bankruptcy, said the people, who asked not to be named because the discussions are private. The company is in talks with the creditors over a plan that would include shutting mines, two of the people said. The conversations continue and the court would have authority over such actions during Chapter 11 proceedings.
Bristol, Virginia-based Alpha Natural would follow rivals Walter Energy Inc., Patriot Coal Corp. and James River Coal Co. in filing for bankruptcy during the past 15 months as met coal prices dropped 72 percent since 2011.
Alpha Natural, despite reporting $1.8 billion in cash and available credit at end of March, hasn’t turned in a profit since 2010, according to data compiled by Bloomberg.
The outlook darkened in May when regulators in Wyoming, where the company has two large mines, told Alpha it no longer had the financial strength to guarantee future clean-up costs. The so-called self-bonding program exempts miners with strong balance sheets from having to set aside cash or other instruments to cover such liabilities. The decision would require the company to post surety bonds or similar instruments to cover $411 million of potential reclamation liabilities.
Alpha Natural won’t repay $109 million of 3.25 percent convertible notes by their Aug. 1 maturity date, the people said.
Representatives of Alpha Natural, Citigroup and Davidson K