Arch consensus is minus 33 cents; the high is minus 23 cents, and the low is minus 45 cents a share. I think I'll wait.....but thanks for the chuckle. I'm holding onto some 2016 bonds, though.
Back of the envelope calcs: $600,000,000 in debt at .0875% coupon is $52,500,000 a year in interest payments to bondholders. Prepayment penalty is 104 plus change which equates to a one time charge this year of $24,000,000 on just the premium. They are better ahead to pay it off and save 156,000,000 in interest payments. Significant drawdown in liquidity, but absorbable, I figure.
I did the same--sold at 11.03 and waiting for a pullback to come back in heavily. Made nearly $4,000 this month with that trade, in cash, so I'm done until August....
What is important to understand is that in a rising interest rate environment, Prospect makes money because the Prospect debt is issued at fixed rates while the capital that it provides companies are tied to Libor, so if interest rates rise, Libor rises, hence Prospect's income rises. Great stuff.
Certain objectionable poster parasites are best ignored; collect the monthly dividend and enjoy the ride.
Arch is not going to roll over and die, but there are stiff headwinds. I think their strategy is conservative and I like that they are conserving liquidity and keeping capex in line. The debt is substantial, but not so substantial that the banks wouldn't agree to modify the existing covenants and extend liquidity. That is a positive. However, the banks made sure that the monies are repaid before the 2019 debt comes due. Will Arch rollover the 2016 debt? I don't see how they could without being downgraded to CCC or lower. I think they will retire the expensive 2016 debt despite the drawdown in liquidity. It certainly would bode well as far as the rating companies are concerned, and they would still have plenty of cash, as far as I can tell. Arch is committed to survival, of that I have no doubt. But the forces arrayed against them seem substantial. I wish them the best.
I think there is a better than even chance that the 2016 bonds are called--perhaps as early as this month. Note that there is a premium attached to the bonds being called: 8/1/13 at 104.375; 8/1/14 at 102.188; 8/1/15 at 100. If the the bonds are called between 8/1/13 and 8/1/14 the premium would cost the company about an extra 26 million dollars. There is $600,000,000 in par debt on the notes. So it would cost the company 626 million dollars plus the accrued 8.75% interest. I am very confident that the debt will be called at premium--so much, in fact, that while I have little confidence in the stock, I previously have traded the 8.75% bonds and done very well. I just scooped up a few bonds this morning because they are selling under par. I got them at 99.5.
I don't know.......I gotta say I thought it was a bargain at 7.70 and a steal at 5.50, but well, I was wrong.....
on Jade posts. Sure, I'll give up a few laughs, but I won't have to read the unrelenting and banal blather. Life is good. Just think, no more scrolling through tiresome, valueless, "pumper" posts. Presto! He's disappeared...faded to obscurity.....
I think it is positive in the sense that it increases the company's liquidity. Note that the bonds of which I spoke are due in July 2016--the company will have to come up with about 600 million dollars to retire the debt. It would be unwise for it to issue new debt, because at the current amounts of leverage, Arch most likely would be downgraded to CCC, were it to rollover the debt.
I sold the 8.75% bonds earlier this year. With interest and capital gains, made a nice five figures. I lost three figures on the stock.
Join the club. I lost money on the stock, but gained it previously 30 fold on the bonds, so overall I'm ahead nicely. Have no position in ACI at the moment, but if it drops below 3, might reconsider a small position....
What is it to you whether anyone buys or sells? No one owes you an explanation. Take it for what it is: an opinion--nothing more. Kripes.