agreed if u sell u collect capital loss which gets carried over to offset capital gains...where those gains come from, u'll have to tell me... @vip is assuming u get 6bn right now amortized over 15 years which is incorrect
prelude to a sale of all non USIO assets...they'll get btw 1-1.5bn leaving ~1.5-2bn in net debt, int costs 100mn/annum - ebitda of 400ish on USIO alone for '15 and leverage in the high 3s and interest coverage at 4. This will satisfy the banks along with dividend elimination. Earnings will be ~50c once the decks are cleared. Things will get tougher in '16 if IO prices don't recover as, by then, all USIO prices will reset down. So i don't see it trading at a premium multiple maybe 8-10x....so $4-5 seems more likely (-50%) than $18 (+50%)
@vip - u do NOT get a tax writeoff of $6bn. The net tax impact is 2bn. Of which 1bn will remain on books as an asset - if that is amortized or held till sale, i do not know.....so your 400mn / year is false
they just told us assets are worth 27c on the dollar...at least they are honest, i give them that
i think he means net its zero - iow, any asset sales will 1-1 pay off debt with no accretion to equity holders. What remains, with its earnings potential, will determine the stock's value. If all goes right, you'll be left with a company that can generate 50c/share at current IO prices.
can't wait to hear from you when they cut the distribution mikey...but don't worry I won't call u a craven idiot or dummy....im a decent guy
pumping scandal you ask? Yes, it was discovered that companies were paying, via a "marketing intermediary" to write positive articles about them and to falsely state they had no interest/other payments. It was to the point where the companies themselves edited the articles. Look it up. Adam Galanz was one of those writers faithfully pumping CLMT in the spring until the scandal was revealed - since then he's disappeared....
so it ain't just the shorties folks!
its needed because they are going to be selling assets at distressed prices over the next 3 months and they are setting the stages.
they already told us that they broke the debt to cap covenant with writedown and will have to negotiate new credit line. Also, they will violate their interest coverage. At 170+mn interest/annum, they need 600+ebitda which aint happening in today's world. So this write down is a prelude to dividend elimination and sales of all but USIO to reduce interest cost. Then banks will give them a waiver. What's left is probably 50c in earnings at 80 IO with a cleaner balance sheet..
and don't forget they also have interest rate coverage at 3.5 x so at 170/annum interest payments that implies minimum 600mn ebitda which aint happening anytime soon. SO they have to sell $$losing ops to trade for cov changes
i still don't get that when they stated that $6bn writedown was after tax. You are assuming its before tax. I see equity at BV at zip
book value zero but valued on cashflow/earnings. Like being underwater on a house (on paper) but still earning rents - if price never recovers net of depreciation then u lose someday
thanks...now my head is really spinning...they are definitely clearing the deck...big haircut to assets...implies a div cut for sure. why the bankers gave the go ahead on buybacks, i have no idea (set the noose?)....looks to me like they are going to sell off (in some manner) non-perf. assets (BL, coal...) at written down price to pay down debt betting on USIO ... equity has zero book but stock will trade on projected earnings/CF.
surf - the writedown was after tax so actual writedown to assets was $8+bn (2+bn tax asset created). so net only 2.5bn in value according to your numbers - not enuf to cover debt. they are now at the mercy of whoever is going to provide liquidity financing.
they are at the mercy of the bankers. my guess is they are going to arrange some PE financing, which will be secured top of the stack. they will take their chunk of flesh. you get whats leftover.
surf - the 6bn is the writedown after tax. the likely tax impact is 2bn, 1 of which offsets their tax defered liability. So net only 1bn over 15 years so ~65mn/annum