Ya know... i'd like to argue this ... but i can't. Only thing is the price of oil is going no where in the next 9 months. No reason to rush into this - better to pare operating costs and reduce overhead and try and limp thru it. No way banks want to push LInn into 11 since there is no management of the assets once its in. I certainly would do everything to avoid 11 as everyone loses including the banks and creditors. oil will recover... just not next week. I would put the kabash on all unnecessary spending... and extend the balance sheet. Otherwise ... yep ... they are toast. Expect share price to trade in the 30c a share tomorrow.
Because the cratering of the company is commodities priced driven and not company driven a Chapter 11 filing really solves nothing. As an experienced CRO I can attest that the only winners in a filing will be the lawyers and so called "consultants". Secured creditors get whacked, bondholders, unsecured holders and equity holders get nothing. There is no Win here. The best thing to do is to weather the storm. Doing so - thru the cycle - and it will be elongated and painful is the only viable solution. What the industry needs is a government "bail out" - like TARP did for banks.
Exactly, Chapter 11 fixes nothing. There is no win to a filing. Going through an 11 filing is a horrible experience on the people - lots of unknowns. Bigger picture is unless oil trades higher the operating costs are too high. Good thing is if the hedging is true... they should be good for 18 months to repurchase and retire debt at favorable terms.
If true and oil rests at $35 for all of 2017 then the average price for Line is $51 which should be adequate to get us to 2018.
It would appear that 3rd Q CFlow from operations translated into the4th Q would be around $200M It would further seem that Qrtly debt service is around $135M. Since the canceled the divy and hopefully cut operating costs as quickly as possible... the decrease in unhedged sales should equate into the 4th Q of 2015. Next they likely curtailed Capex in a sizeable way.
Looking into the 1st Q i'd project similar results considering further decreases in operating costs, hedges in place, not buying furhter hedges into 2017 as it may not make sense; also capex should also be decreasing. Considering this i'd suggest the outlook for 2016 hedged should be similar. Likely the cash draws were meant to take the cash available prior to some technical loan default - which should be waived by a bank or bondsman.
Ultimately, the goals is to recover 100% on the dollar not fractional so no rush to capsize the boat when everyone is already drowning. Well managed... we should get to next year... i'd be wanting them to be buyers of discounted debt. Perhaps, they are looking at buying up debt privately with an orchestrated effort to retire some? If the debt is trading at 10C on the dollar... the $900M borrowed recently could be used to buy out 1/2 of it or more.
Its a long shot... but who knows. Stranger things have happened.
You can file Chapter 11 anytime you want.
For example... an event occurred or a product was delivered that you knew you couldn't pay for and or created a liability that would never be satisfied many like (john's mansfield) filed chapter 11 ahead of time.
For Linn if they can project no end in sight and they are in default on loan convenants; with no ability to pay or restructure (pay debts off for less than face value) etc. or get additional credit, etc. then, sure they could file tomorrow. But, more than likely, they'll pre-negotiate terms with a lender or such and put in place things in anticipation of filing.
I would believe, that the whole sector is suffering, and with no bottom to oil prices and no ability to do much, no one is going to want the property at any price - in the current circumstances... thus it pays to wait and see.
Would expect some lenders to work with Linn before pulling the plug. No reason not to try.
Reports net income for 2015 of near 10x its market cap in one year.
How often does that happen? A company earning more than 10x its market cap in one year?
Share value should be north of $150 a share.
Please understand what I write and why "misses are not an issue"
Wall Street is all geared up to this EPS line for these leasing companies when they are missing the mark as to what metric is important.
Sure, EPS is important, but its so easily swayed by one time items, or gains on lease terminations, or selling an aircraft, etc. Yes, net profits, converted to cash money is important... but for these leasing companies what is more important to me anyway is
Continuing - scheduled revenue.
Yep, what are their leased revenues and cash flows. Are the fleet fully leased? Are they clients paying and are the lease term long term in nature.
Are they using the proceeds to pay down debt and acquire new planes to continue the leasing efforts or are they using one time gimmicks to "make" numbers.
I look at AER and i see a company with many planes on long term leases to a myriad of companies geographically diverse. I look at continuing revenues from leasing activities and watch A/R.
Figure this back into share count and multiples and this company should easily support a $60 - 70 share price. Look at the cash on hand and the cash flow from operations. Pretty impressive.
If the FBI wants to "crack" a cell phone - then have at it.
Better yet, since Apple has cash. And cash is an asset of the Treasury. The Fhfa should be appointed Condservator and 79.9% of apple stock given to the govenrment as a warrant. Further, they should be made to take the federal "management" bailout - since obviously they are in crisis. Its clearly an exigent circumstance.
Obviously, apple should help to the extent possible without causing an issue. But otherwise, no.
The 10% interest rate is usurious and should be stricken by any competent judge. Tarp funds were at around 3%.
Current fed funds rate is near 0% and these idiots charge the GSE's 10% ...
They are naively stupid.
Gonna bite them in the hind quarter- really hard.
That's because it mistakenly consider those felonious warrants to be "as if issued". The market cap on the commons are each 1/5th of what yachoo thinks.
This "Win" for FHFA and not having to pay out the FCA $$ should have ruinous affects on the other pending litigation as this wowfully undermines the other positions and defines the GSE's as "Private" companies. Thus most of the picking and choosing the defense du jor by the federal government will be stopped.
Its going to be very interesting to see how the government later spins these findings. Its really the affect of undermining the decision in Lambreadth 15 months ago.
Ya know - this judge is full of double talk.
That's like saying... lady - i get it your pregnant and for the purposes of getting free materninty coverage you get it - but you can also have free drinks too. Cause for the purposes of maternity care - you are pregnant and for the purposes of it being ladies night - well you qualify for that too.
Wow, I see you signed that contract - did you seek legal counsel Mr. Attorney? No. For the purposes of that document I did not. Aren't you an attorney? Well sure. But at the time I signed the contract; well I wasn't acting as an attorney? Oh, so you can pick and chose when you turn it off? How do people know when you are acting as an attorney or not?
Women was directing traffic at school. She was hired by the private school to help abate traffic. Some other lady - who had to pee - parked her car and went to take care of her problem. When the lady got out she was arrested by the traffic person for "disobeying" a lawful order?
So, was the private school paying a citizen to direct traffic or a cop? Which are they? Why is a cop always a cop and the GSE's either one or the other ?
See... if Mel Brooks (watt) got into a fight at a bar. The other person would be arrested for hitting a public servant.... But, what if he were at a ball game with his kid? As a dad? Same crime? See, its either yes or no, not both.
I think either you are or you aren't you are never both - and you can't pick and choose and be all willy nilly.
Couple of things if you read it.
1. It clearly states that state law carries the day and they entity is subject to it. -
2. It indicates that the motion was due to statute of limitations
3. It incorrectly calls FHFA as a "receiver" when they are a "Conservator".
There are others.
But, this is by no means a bad thing.