Considering the massive decline in CHK's land asset values, as well as the continuing losses from business operations, as well as the forthcoming legal defense expense obligations, there is no question that CHK has been "bankrupt" for some time now.
However. to continue collecting their salaries, management has been doing what it can to avoid having the company actually file for bankruptcy protection from creditors.
Your point is that there would no demand for an issuance of 1 billion or so new CHK shares ?
You could be right about that. I am aware of CHK's debt obligations, and that the company's liabilities are currently greater than its assets, and that this essentially makes the company "bankrupt"" now.
But, I figured some investment banking firms might me able to sell their clients some newly issued $1 CHK shares. The promotion would be that IF nat gas or crude oil ever double from their current prices, CHK then might have assets greater than liabilities, and the company would then have tangible positive value. Just a thought, but I could be wrong that enough investors would willing to pay 41 billion to take that risk.
"Debt issue has been resolved"? Yes, for the next couple of months CHK will not have to file for bankruptcy protection from creditors. But so long as NAT gas remains below $4 (it's less than $2 now), and crude oil prices remain below $50 per barrel (it's about $32 now), CHK is losing many tens of millions of dollars per month.
Add to the company's operational losses the dozen law suits CHK has to defend itself against, on the court calendar for 2016, and it becomes clear CHK that within a year CHK may have to file for bankruptcy protection from creditors.
The above is why I believe CHK management may be considering raising money, like MRO has done today, by doing a secondary offering of shares.. Remember, only if the company keeps its doors open may CHK management continue collecting their salaries.
About 6 months ago I suggested that CHK might raise cash by issuing new stock. Depending on much cash could raise, I expect this offering could allow CHK to keep its doors open (and management to keep collecting their salaries) , for an additional 6 to 18 months.
Based on the risk factors, and the fact that proceeds would be used to pay down debt (rather than build the business) , I expect that strong investor demand (for new CHK shares) would be in the .75 cents to $1 per share range. If CHK issued 1 billion new shares this would essentially triple the existing 600 million share total, raising it to 1.6 billion company shares, and massively dilute the positions of current stockholders.
But, the $700 to $800 of new cash would help the company avoid filing for bankruptcy protection from crediitors for at least 6 months, maybe a year or longer.
Marathon Oil (MRO) ihas done a new stock offering today. I expect in the coming weeks and months more oil companies, to strengthen their balance sheets and delay or avoid BK, will try and offer for sale new shares of stock.
Yes, and there are suppliers all over the world ready to meet any demand for aluminum products.
Alcoa's primary problem is that the company has so much competition that it cannot earn a healthy profit margin .
There is nothing "humble" about the poster here named gettysburgjuly. He has been at this forum pumping AA stock since it was a 50% higher price. Not once has he apologized or even acknowledged how badly he has misled people. Disgraceful behavior , really.
Please consider a reality check. For the 2016 calendar year most all professional analysis expects commodity pricing, including oil, metals etc... to continue the downward trend of 2015.
If you believe "billionaires" don't make mistakes, think again. For example, throughout 2015 several billionaires made significant purchases of oil and gas industry stocks. Most of those company stocks currently trade at prices more than 50% below than what the billionaires investors paid for their shares. And several of the companies will be filing for bankruptcy protection from creditors. I caution you to assume that because "billionaire investor XYZ" has bought shares in your company, it means its stock price will rise. If you want to follow a billionaire's lead then you must buy all the company's the billionaire buys, because 30% to 40% of a billionaire's investments turn bad. If you think billionaire's bat 1000% you are mistaken.
Finally. Alcoa's business operational results are declining. That is, depending on the division, recording either decreasing revenues and, or, shrinking profit margins. This is why major credit rating agencies recently issued warnings about AA debt, possibly initiating a downgrade.
Make no mistake, considering the declining business results, combined with the high level of company debt, and the threat of a company split creating more expenses-costs, AA here is a very speculative , high risk stock.
I think everyone knows why the "long term longs" are buying AA here. Basically, when Boeing or Ford issues a press release , AA longs here think that somehow means AA stock will rise.
But analysts, credit rating agencies etc... realize that Alcoa's business results have been dismal. Whether it me upstream or downstream, no part of Alcoa has any significant sales revenue growth or profits.
And considering the nearly $10 billion of AA financial debt liability the planned "split of the company" just makes matters worse. Depending on how the debt is assigned, it the split happens, it could force one or both into filing bankruptcy protection from creditors.
In recent years, instead of over paying for acquisitions, Klaus Kleinfeld would have better served AA stock holders by selling off assets, paying down debt, perhaps issuing new shares to further strengthen the balance sheet.
Speaking from experience frankfrank?
Your posts are those of someone who knows little about the stock market and even less about business.