Sarepta - The real possibility can pull the plug citing Financial and Legal issues.
DMD Kids MOM's will be parading Washington DC, that is a certainty.
@7-8 cents it is not going to be that bad unless you are going in for Prefered units.
I posted the calculations as below:
Assume they write off - 550 MLN (I can think of it if they were to write off 50% 2020/22 Bonds) which will work out to 2.5 $ per Unit.
Once they do the restructuring, the stock will jump back to $3 minimum.
You have $3-.08 = 2.92 Gross profit.
If you get a Codi, based on your Tax situation, you will be hit with a 30%-50% tax (maximum), you will have to pay btw .90 cents and 1.50 per Unit.
Still that will leave you with a profit btw 2.02 to 1.42 based on your Tax bracket.
There is no point in selling at these prices, JMHO!
I'm in the same boat, even if someone offers a 200/300 MLN less than its BV, they should be able to grab the Company when in reorg.
If the Creditors Vote and if they get their Full Value, then a deal could be done.
Just look at my post, @7 cents you are not losing much. Wait it out, unless you are trying to convert to Prefered units.
With CODI issue and being the risk at the Bottom of the PIT, I see the Risk/reward favors Prefereds.
If Common units gets 1 cents, preferreds will get atleast 50% of its FV (which is 12.5$).
I'm not saying folks should sell Common Units at these prices unless you make a profit in your trades.
I'm looking at around 500-550 MLN CODI coming to Common Units, per unit it could be a max of $3.
If you were to get $3 as CODI, what would be the tax impact?
The Stock will go to $3 easy after reorg. So I think there is a value there.
Current price $.08
Tax to be paid on CODI $3? Is this 30% or 40% or 50% = max of $1.50
Total cost = 1.60 after paying taxes
Expected price $3 after Reorg (it could be higher), you are looking @$1.40 min. profit for each share.
I don't know much about the taxation on Gains for MLP (K-1s).
JW is having a very serious deliberations with all of the stake holders, including those in the panel, individually so that she could arrive at a very comprehensive analysis.
The vote is not 13-0 it was 7-6 with one vote towards non-approval. Some of them later stated the "DRUG WORKS" and WORKS WELL.
I hold a very small position, but when there is no other alternative, she has to approve the Drug, there are no other options.
The company can pull the Plug on the Compassionate usage, she is very well aware of it too, she doesn't want to be Root cause if death were to occur. She needs to be on the sides of DMD kids MOMs and don't want to be seen as one person who caused immense harm to these Kids.
It is very difficult situation, but approving the Drug even if helps 1 Kid to live a decent life, then it is worth it.
Remember it is not a 13-0 Vote a 7-6 Narrow vote and some of them did not understand the questionnaire and NO ONE is a DMD expert.
The approval is long over due and it could come anytime now, even Monday morning.
Where are you seeing this 1.02 BLN? I'm not seeing it anywhere.
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The commencement of the Chapter 11 Cases constitutes an event of default that accelerated the Debtors’ obligations under the following debt documents (the “Debt Documents”). Any efforts to enforce such obligations under the Debt Documents are automatically stayed as a result of the filing of the Petitions and the holders’ rights of enforcement in respect of the Debt Documents are subject to the applicable provisions of the Bankruptcy Code.
$1.197 billion in unpaid principal and approximately $45.3 million of undrawn letters of credit, plus interest, fees, and other expenses arising under or in connection with that certain Third Amended and Restated Credit Agreement, dated as of November 19, 2014, as amended, by and among Breitburn Operating LP (“BOLP”), as borrower, the Partnership, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent;
This is what they file when filing for Ch 11 reorg.
If there are expected news to go around without a CODI, the Management wouldn't have sold out their entire holdings.
I'm expecting a 50% hair cut 2020/22 Bonds and that is going to directly into Common Unit holders. For 1150 BLN a 50% is 575 MLN $ CODI income.
As for as write off, they took a 2.5 BLN write off and further write downs is not possible JMHO, even if any it will be very little.
You buy it @6 cents - It has a BV of $3, upon reorganization the Common UNits will fetch $3, however you might have to pay Tax for this gain.
That is why the stock is where it is. You need to calculate how much CODI tax you will be paying Versus the Common Unit price once the Reorg is complete.
It is a very complex stuff and that is why people are not taking a risk. Common Units won't be wiped out, however unless the Reorg is complete and details are disclosed you won't know. Unless you are a risk taker, it is not worth it.
Just my 2 cents.
Unlike VNR - where the Bank Revolver debt more than the Bond Debt, BBEP is much better off. Not much leveraged with the Bank debt, so WFC redetermination will not affect the existing credit line, may be 5% namesake reduction might happen, which is manageable. With the Ch 11 proceedings and slashing of interest costs Banks will feel more comfort.
I see the following - a 50% reduction in 2020/22 Debt and making it as a Senior Secured Debt. I own 2020/22 notes and will gladly take it. The Bonds will jump to 50 cents on the $ immediately.
Conversion prefereds into Common Units. A total of 1.1 BLN of Debt will be eliminated and 100 MLN of interest costs.
WFC - Credit redetermination is not a major issue here. They have more assets, it is only a Cash flow issue. With the current restructuring if they could reduce a 1-1.5 BLN (125-150 MLN) interest payout, then they should be OK.
The Company's assets are far more valuable in a liquidation scenario.
With 55000 BOE per day production and around 300 MLN BBLS of Proven reserves (Unproven reserves will be much higher too, which could be later explored by the potential acquirer. Mid continent assets are only explored for 44%, rest of them btw 68-90%)
Oil prices are not going to stay low very long. The finance costs are around 200+ MLN $ per annum (interest costs) + Admin costs around 200 + other operational costs could be reduced by another 200 MLN, totally they could eliminate 500-600 MLN $ per annum and make it as profitable.
Moreover they get the secured production assets onshore US, there are not many assets of this size available at or near BV.
Unsure buying an MLP will provide them the Tax benefits, if there is Tax benefit then it will add more value.
600 MLN conversion is not sufficient, another 500-600 MLN which will reduce their interest cost by about $100 MLN. They might allow 2020/22 debt gets cancelled for a Senior Secured Debt @50 cents on the $. I own bonds and will take it, since it is secured and ranks higher. Will trade at par or more.
readin44: I agree with you blame the management, they are crooked. They should layed out a plan well in advance and informed to the shareholders.
One thing which bothers me more is the Insider selling, one can twist whichever way one would like to do.
The Management should be very forthcoming on their intentions, whether they conclude or not, but they should layed out the scope of what they would like to achieve.
They are crooked and left it to "BUYER BEWARE".
Preferred share conversion to equity won't result in CODI.
Only DEBT cancellation (2020/22 Unsecured or Senior Secured Bonds which EIG holds is cancelled then you have the CODI issue.
@2 cents on the $ with current availability Preferred seems to be a much better option JMHO!
Moreover you can't buy BBEP 2020/22 bonds, they are very difficult to get, since there are no bids / asks and very few gets traded.
Once the Preferreds are accumulated you won't get even that too, only 8 MLN to go around and I don't know how many will even part with it.
There are many parties involved here. 2020/22 Unsecured note holders there are many folks.
Are they going to talk to only Institutional holders of these securities and trying to convert theirs?
Don't know, VNR did it for only institutional holders.
The problem is if this has an "Effective date" which could a month prior. The way in which the execs are rushing to get out means there is something serious is expected.
That is why I switched to Preferreds, which is a better option to benefit.
CH 11 securities always risky including preferreds.
Mostly retail buying and not much to go around only 8 MLN shares. It is a safe bet, you don't get hit with CODI.
Sentiment: Strong Buy
They have around $600 Common Equity listed. With the losses they can bring down this by another $300 MLN including for the restructuring charges.
That will leave around $300 MLN Common Equity.
You have 570 MLN Prefered equity. They can't afford to pay interest any more. This will get converted into common equity on a proportionate basis.
1.3 BLN of Unsecured Debt, I'm expecting a 500-650 MLN will be wiped out from here, they might upgrade this to a Senior Secured Debt (VNR did it with 68% - for a senior secured debt). You have 500-600 MLN will come as a CODI (300 MLN will go away due to write offs) and each unit will hit with a $1 or so as CODI.
This is simply my opinion based on the VNR's restructuring.
This will eliminate close to 1.2 BLN of Debt and 100 MLN of interest per annum, which should enable them to weather this storm.
Having invested $375 MLN (incl PIK interest) and not even 12 months elapsed, they are not walking away with this massive investment.
These prefereds are at Par in ranking with the EIG prefereds, there is a greater chance of a payout or a stake in the company.
Aligning with the big players always helps to come out as a winner. They can sell Common Units if they want to, but for B preferred they are privately placed and can't be traded.
We don't need to worry about CODI too!