What you will get is a sizeable distribution cut or even an outright elimination - the company doesn't get rewarded for its high payout ratio so why should they go on like this ? It would be much more appropriate to cancel the distributions and focus on debt repayments as long as the capital markets remain unavailable. They also have VERY elevated counterparty risk with 5 containerships currently at a sky high TC rate chartered to virtually bankrupt HMM. This will be $1 in no time just like NMM.
Questions about gross margins, pricing pressure, new customer growth decreasing - and management treating analysts like vultures on the call. Expect price targets lowered and perhaps even some downgrades. BAD CALL.
Right - management is really #$%$ off on the call about many tough analyst questions - it will be a field day for IMPV shorts tomorrow
quite similar to last year Q1 guidance is weak with eps under pressure. Full year FY16 revenue guidance is above consensus but eps is below. Product revenue growth has also weakened while subscription is up.
Overall this is not enough to satisfy sky-high expectations - expect a tough call
Put a small short position to work at $4 in after hours. Management will need a BIG conference call to avoid the news getting sold tomorrow.
Despite the large upside revenue guidance gross margins are projected to come down leading to net income to be also lower. Expect analysts to ask questions about the issue on the call. Stock looks pretty expensive...
317.6 mln shares outstanding currently
28.7 mln shares to be issued in connection with the new second lien term loan
39.8 mln shares to be issued in connection with the debt exchange
Today's capital measures together add up to 68.5 mln shares / 317.6 mln = 21.5% dilution
As expected the shares are getting killed this morning as positive debt exchange news are easily getting trumped by one of the worst ever seen second lien debt deals. With the company exchanging more than 12.5% of their equity to redeem just 6% of their debt I wouldn't assign to much value to the current equity anymore.
As expected the shares going down fast now as the new second lien debt terms are FAR worse than even the seemingly unsurpassable Goldman Sachs loan conditions.
1) Debt exchange
This is positive as the company was able to extinguish $738 in debt for just $225 mln in new debt and $227 mln in new SUNE common stock (at $5.70). The debt discount amounts to roughly 40%. But the new senior convertible notes have a much shorter maturity than some of the notes they were exchanged for and might have a higher coupon, too.
2) New $725 second lien term loans
The term loan conditions themselves already look like desperation as the annual interest rate was disclosed at LIBOR plus 10% but in addition the new lenders were also gifted 28.7 mln new SUNE shares for a calculated origination fee of $163.6 mln (at $5.70 per SUNE share) or roughly 22.5%. The new facilities will add approximately $555 mln in additional liquidity after accounting for the payback of the onerous Goldman Sachs loans.
While adding some additional short term liquidity the terms of the new loan package are among the most distressed I have ever seen for a company of the size of SUNE so this is highly negative.
Total dilution for SUNE shareholders amounts to more than 20%.
The debt exchange is a huge positive as the company managed to negotiate some nice discounts but the new second lien term loan amounts to a shame.
At current share prices the company is paying more than $160 mln in as an origination fee for the new $725 second lien loans to the lenders, amounting to 22.5%. Add the LIBOR + 10% interest rate and I haven't seen a more distressed debt issuance outside the OTC in many years.
would short the shares as investors seemingly don't get the story once again here
I would expect them to sell new shares at-the-market today to buy more time but I would take every bet that there won't be an additional agreement with AMGN as Amgen already got everything the company had to offere for a tiny $15 mln payment.
This would be much needed fresh money of course and there's no incentive for Amgen to buy the shares at all given that they already got their licenses for a mere $15 mln...
Sure. Look at the SEC filing. Amgen doesn't even intend to buy the company. The best outcome would be a 20% equity stake...this wold take the company through another two quarters roughly...