the 2020 bonds -- although figuratively classified as debt/top position in the capital structure totum pole ----- reality is they are rated CCC- with an RR of 6. what this essentially means is yes, the preferred divi could in theory be suspended. there could in theory be an equity raise all while the bond holders would still require their interest payments.
BUT the credit rating and RR rating of the bonds is in the end, essentially not much better than putting money in the preferreds or equity in the first place. in other words if a binary worst case event happened like some on here want you to believe, there really would no comfort either on equity or even debt side.
so the very fact that the MHR bonds with a 5 year duration til redemption are actually trading at 91-92 cents on the dollar, close to par value, amidst all of this confusion and hyperbole is a very bullish fact. i am really getting close to nibbling some preferreds here and stock as well.
i know been there. incredible relentless selling day after day. clearly the 5/6 filed blurb pasted below is not a revelation to you. do you have a take in terms of the bottom line here and how this lands?
i realize the relationships of these business gets intricate in terms of who is holding what and who is not liable for this or that. is the main problem here that more of this will follow or is it similar to the dynamics in 2008/2009 where you could have a legit liquidity problem?
its really baffling because i recall during that time frame this stock was trading for pennies and yet managed to pull through but here we are in 2015.
On May 6, 2015, The Phoenix Companies, Inc. ("Phoenix") confirmed that its wholly-owned direct and indirect subsidiaries, Phoenix Life Insurance Company and PHL Variable Insurance Company, as the obligors of the settlement described in Phoenix's Current Report on Form 8-K filed on May 1, 2015, will be solely responsible for, and will pay, the settlement obligation. The settlement is not an obligation of the holding company.
there are quite a few folks on here that have an extensive amount of experience and acumen when it comes to knowledge of MHR. i am by no means one of them.
however as someone who has followed developments along the way, i was surprised to hear about this upcoming required aggregate cash raise. is there a specific logistical reason? is it natural gas prices or just a bank lender looking to maintain a capital equity/lending margin?
of the three outcomes, lets evaluate:
they have been talking about JV's forever now. i would be surprised to this wind down in 30 days at this time.
selling stock at these levels would be an inferior outcome at best. the only way i could see it being beneficial is if
you found a buyer to pay a big premium vs. current market price. when you are trying to buy 20M shares of something you can forget about current market price because buying that kind of size would drive it up.
my guess would be an asset sale(s) worst case have to sell a little piece of Eureka.
best wishes to all. btw the 2020 bonds is not flinching an inch. looking solid at 90 cents on the dollar. i should just buy this and stop playing games with the preferreds.
last panic time hype a couple months or so ago, preferreds were taken down to all time new lows. C shares low teens and eve D shares hit $19's for a brief moment. meanwhile the bond were also trading all time lows at $70's handle.
now fast forward, here we have panic V2.0 today. the bonds are holding firm and asking right around 90 cents on the dollar or $90 with a very tight spread with bids in $89.50 range.
but the preferreds are this time around heading in a different direction. based on historical price action on these preferreds there is usually a full 3 trading time frame that takes place as volume ramps up.
what is going on the current investigation? could this cause a similar delay in preferred payments like it did in the past when they had the accounting transition or is this just some other warranted fear? as someone pointed out, even if they do an equity offering, that does not impact the preferreds necessarily in a negative way.
bottom line is, if there was really legit throwing in the towel panic right now, no way bonds would be trading where they are right now with 5+ years til redemption.
well over a year ago i started tracking on this board the bond price action and stated that this would be a leading indicator for the equity side and things to come. once the bonds lost their footing below $90 and a large holder(s) dumped a massive quantity of the bonds the price never recovered. its too bad no one engaged that thread for discussion.
so here we are now at the present. there is only 1 float of secured senior bonds (current debt holders in play) if you are still bullish on the prospects here, these SARA 2016 bonds with cusip = 803521AF0 can be bought for 22 cents on the dollar.
i believe if there was potential left, this would be the best avenue to go. if they have to get rid of or pay off these debt holders they will have to do it at a much higher price then the currrent 22 cents on the dollar.
the other thread vanished. is there a link for this filing out yet?
when you have folks hitting bidders on put options, whoever is filling or selling those contracts is betting the stock price will not fall beyond that strike price point. said another way; if you have someone bidding size at .60 for $5 strike and someone comes in and fills that, they are STO or selling to open. this would be a bullish strategy.
if you are long the stock at these price levels, you would want to see this kind of price action in the mid teen strikes. there are so many ways to play this event because of the premium. i probably have three different independent strats i will put on here when all is said and done.
remember the most critical piece of information which i do not read many folks talking about is the actual fill price not the volume. the may put volume appears to be big in the lower single digit strikes but allot of these orders are filling on the bid which is actually a bullish strategy. you really have to dig in. for some of the strikes that have tighter nickel or dime spreads the analysis is not that difficult to perform. but for some of the other strikes you have to figure if its less than the half way mark its also bullish.
i can not recall off hand in over ten years of trading derivatives having witnessed IV levels like this for OTM calls and puts so deep.
price action is perplexing. there has been allot of options put activity but at least all of the orders with any size have filled on bid price or in between which means the trade is not bearish.
ask has had allot of size and chasing down price though. volume ramping as well and was up yesterday. i don't like this kind of price action quite honestly.
has anyone been tempted to sell any May put options? i don't think i have ever witnessed IV and premium to this extreme. with the data being reported in late April -- is this a binary type event all or none?
i.e. stock price shoots up to $70-$100 or down to $5? has anyone done probabilities of worst case scenario for price and best case scenario? what is the total downside damage potential here? the upside is very clear at this point.
also amazed folks are loading $40 call strikes @ $8+. incredible speculation.
Greetings. Great board here with allot astute posters and contributions. My apologies as I am completely behind on this story and catching up. Quick question:
Is there a definitive date on the CLDN "news" release upcoming this spring or is it a pure guess i.e. could be sometime in April or May? I am trying to compute probabilities if the news/results will be released before or after April 17th.
Thanks for any input.
anyone think about loading 2040 bonds at $65 handle and try to redeem them all for a flip? decent $50 early tender premium on the table.
also noticed a slight downtick on the other floats. 2020's now asking $70.50 handle. in the last two weeks were asking $72.50+
there is one other component of this development which is great from a strategy standpoint. by them putting this out in the format of a voluntary tender offer at slight premium to current market prices. it is a win win for everyone. here is why.....
say they took the proceeds of the $750M and just actually went into the OTC with a bond broker buying these bonds up in size. what would happen is the price would quickly move against them by going higher. there is no way you are going to go into the bond networks with hundreds and hundreds of millions of dollars to deploy without price popping in reaction to the change in demand.
it will be interesting to see how many folks tender. the reason they are giving priority to the longer term bonds is because technically it has the highest coupon rate and trades at the biggest discount. so the net savings on the principal debt side and the interest obligation side will reap the biggest here.
regardless give major kudos for management in doing this because i have seen time and time again companies come under distress and they do nothing. sit on their hands while their equity gets sucked into oblivion and debt sits there. these guys are moving and taking action all the while not impacting the common equity side.