London Financial Times reports they buy a big chunk of a new issue to purchase Spanish Real Estate. This is only occurring with the understanding that the secondary markets are in the process of recovering. This stock is positioned to benefit from all secondary market improvements in a major way, with Spain certainly, but also with the rest of Europe and South America to follow. Soros & Paulson are not fools.
Your TBV calc is based on who's appraisal of hard assets? With high asset values and high debt your numbers could easily be off by large numbers, especially with the low cost of funds these days, and high replacement costs of these assets. Turning a corner with this company is the real issue here, and if paying off debt is being achieved, then free cash flow will come.
You can see why the hedge fund bought into this at the bottom.. there are many weak hands holding shares here. Is this refi funding unexpected?
The essential carve out of APLP cash flow after expenses is 50% toward payment of principal. Granted this is a balance sheet improvement, it will restrict cash flow to div. The question is just how much free cash flow do they see after this refi? There is a lot of cageyness about the actual interest rate to be paid. There are 3 factors, but what is the number? Is this an improvement in interest rate or not? Refi mainly 5.5-5.9% notes. The rates can be min of 4.75%, but what "prime rate" are they going by? Canadian "business" prime rate is 3% + 3.75 is 6.75% not an improvement, but there are conversions to $US involved as well.. so it is complicated. Would like an answer on that in the CC. What is the actual rate? What is the free cash flow? Other questions??
You got one more day till earnings release. End of business 2/27. Conf call the following day.
The shorts are powerful and can through a 100k block on the sale said, but with the avalanche of 100k buyers with 2-10k shares.. they cannot control the market on this much longer.
With 200M shorts as of 1/31 there is a lot of buying out there. Not to mention a company that beats est on earnings and pays a decent div.
Sentiment: Strong Buy
It was perceived that the long term debt and high employee salary/retirement expenses would drag the co down, meaning a 2nd reduction of div. Now with reduction on personnel and control of expenses .. and improvement of business marketing and management there looks to be a brighter longer term future for the co. Probably the unseen and not yet experienced benefit is glimpsed now in the refi of the Cisco debt at a very very low rate. If FTR gets that bene on the ATT deal they will have some serious .. "runway".. or margin.
Sentiment: Strong Buy
That most certainly could only help ... if FTR wanted to refi some of its long term debt. They certainly will be thinking about it and the debt for the ATT deal. Should be some more margin on that deal now.
Did you read about the refi of 8B of Cisco debt at 1.1-3.625%? Rates should be good for an A rated portfolio of AT.
In the same boat as you. Have spoken to Amada, rep of mngmt, and refi now has to be done in a very std, above board way, with a pre-announcement and then offering follow through. The stock has an unfortunate div reduction history and bitter following. I think most of those holders have dumped and purged themselves.
But .. if one thing is shown by the recent stock price history ... this stock is not a slug and will have dramatic moves... both down and up. The initial announcement of refi was severe - ie downward, and the thought/action of a hedge fund or other entity accumulating at sellers expense has moved the stock up. The announcement at the year end financial disclosures on 2/27 will drive this stock batty as well... that we should reasonably expect. This will not be a slug, so bookend your options, or hold your stock, or take your short positions cause there will be fireworks soon. Slug for the next 2/3 weeks... NO way.
Another thing... management announced a huge refi at 600m + 200M credit, intended to cover most of the outstanding bond debt. They would be successful just with a refi of the Palmer notes.. No? 190M unsecured rated A bond at 9%. Why should we care if they don't refi the other notes at 5 and 6 % Must have something to do with the credit facility, but after Palmer notes are out of the way, then the credit facility can be dealt with in an easier fashion? No?
You've got that one .. WRONG. Just ask Blackrock and why they have millions more shares... probably bought your shorts! Talk about new money.. say goodbye to your old money.