They may get some cash after paying of Creditors and Bond Holders , if any left. US Steel did walk away with a good chunk of cash.
No matter how good the Operating Results may be, They are just worried about that the company will
generate only $390 EBITDA in 2015 Not sufficient to meet all the obligation. They need atleast $600mil per WS. I think a bunch of analysts like Nathan Littlewood of CS and Ben Levisohn of Barrons simply dislike CLF and LG.
LG said He will sell the Bankrupt BL mine and pay off creditors from what ever he can get out of it. If any extra cash is left, like USS had, may be used to pay down debt .
From what he said in CC, both MET coal mines in US and AP assets will likely be sold in 2015 and
proceeds will be used to pay down as much debt as possible. I think 2 MET mines may bring in $400 mil and AP assets may bring minimum $400 mil. Together, $800 mil will reduce the $2.6 B debt down to $1.8 B which can be manageable with EBITDA of $500 mil.
There may be further reduction in CAPEX and S,G & A expenses. Also dividend on preferred shares may be eliminated . If all this is done and if they expand USIO business and IO prices go up even to $75/ton, CLF should be in a great shape and stock will advance in upper teens..IMO.
but why? I think 2014 was a transition year for CLF and LG.. He has now cleaned the slate with taking all the charges. He still will need $600mil-$700 EBITDA to pay down debt, interest, S,G &A expenses and still have some Money left like $200-$300 mil or @1.2 to 2.0 E/sh operating profit.
Also hope that LG brings a conclusion to BL mine and sells AP assets and Pinnacle and Oak Grove MET Mines ... with all concentration only on USIO markets
CLF's sales from USIO operations are expected to be 22mil in 2015
Their APIO sales are expected to be 11mil in 2015.. that still amounts to 33% dependence on SB IO pricing..unless it is sold in 2015
Their MET COal(NACOAL) volume is expected to be 5.5 mil from 2 mines... Pinnacle and Oak Glove in 2015.. unless sold.
US IO production cost is to be $55-$60/ton and cost of goods sold is $60-$65/ton. I think this is too high with Oil at such a low price.
AP IO production to total 11 mil..51% Lump and 49% Fine with ave. cost of $40-$45 in 2015
NACOAL volume 5.5 mil and revenue per ton of $70-$75
I think these costs can be further lowered . Q-4 CAPEX was cut by half and cost of good sold was lowered by 9% to $1.1 B in Q-4. I think LG can do better on decreasing US IO pellet cost from $59.06 to at least down to $55.
CLF took ECan related assets mining impairment charges of( minus) - $9 25/sh. W/o that the
Operating profit was $1.00 share or $166 mil on sales on a revenue of $1.28B up from est. of $1.21B but down 15% from year ago QTR..
I don't think they can earn$5/sh unless they sell off AP assets and improving production cost of USIO.
With beating Q-4 E. est by over 700%.. unless LG turns off analysts with his abrasive Style during the CC
tomorrow.. Good Show LG on earnings and now be nice to Analysts . Don't let them rattle you. Keep calm.
Lets get to $ 20 first.. hopefully after the end of Q-2, 2015 earnings report.
LG and CLF beat Q-4 est by $0.86 even in a very low price IO environment.. fantastic.!!. worse is over for CLF now.. should easily see over $8 to morrow.. Big loss ($1.25B) is related to Charges .