There was one contract that was adjusted as well as one customer that was transferred from Wabush to the US operations that has a lower contract price. Going forward into 2015, no contracts are up for adjustments.
They are based on an annual average which for 2014 it was $97. You really need to understand contracts and CLF does not disclose these contracts. However they do provide us the impact of changes in spot prices on their total revenue per division. They have already came out and said their will be no change in US iron ore pricing.
No, you really miss the whole structure. CLF, the parent company, owns 83% of BL with no liens against it. It is then assigned to the BL Subsidiary. In the sale of the asset, the parent CLF and Wuhan are first in line to split the sale and any money that is left over will be split with the non secured creditors. No different than a foreclosed house in bankruptcy. As a contractor that provided a service under a contract, I don't get a single cent until after the secured holders are paid.
The rail contract is under the BL subsidiary, the only tie to the parent company is the secured claim the parent company has against the subsidiary. In any sale, secured debt will be paid from the proceeds first and the non secured debt will be paid next. The rail contract is not secured, no one would attach a service contract to the asset.
On the rail contract, the new owner of BL will enter into a new contract and the contract with CLF will be canceled. The other alternative is for CLF to bankrupt BL and RIO will not receive a dime as most unsecured claims will get. RIO will be glad to take the new contract and move forward and able to keep the BL rail spur available to move ore in the future.
I am not an investment banker, but I do know the difference between secured and unsecured debt. There is absolutely no way anyone can attach asset sales if they are NOT secured by the asset. The transportation contract is not secured by the mine, long term debt is not secured by the mine.
LG has been doing this a couple times a week on the progress of BL ahead of earnings.
Shorts attack this stock in the first hour of trading, they are interested long term on covering and use the low buying volume to push it down. Buyers will be back in control by 10:30.
Nothing is different. The price of oil is down and HK still makes the same profit and will continue to do so through 2016 no matter where oil goes from here. Based on earnings, HK should be selling for over $6.
"China’s stocks rose, narrowing this week’s losses, after a manufacturing gauge unexpectedly climbed.
Jiangxi Copper Co. and PetroChina Co. advanced more than 1 percent. The preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was at 49.8 in January, exceeding the median estimate of 49.5 in a Bloomberg survey."
They exceeded estimates and the Asian markets, including Australia and the iron ore miners are up.
Same as yesterday, CLF up big and the market was flat. Maybe we will get the buying kick in as we move into the close.
In HK's structure, it is an inside Guarantor. They could be buying bonds at a discount using cash and low interest line of credit and taking 9% interest rate bonds out of the general public. If they need cash, they can sell those bonds back into the market.
I show $79,212,000 interest expense and a $40,907,000 interest income for a net expense of $38,450,000. The interest income comes from a Guarantor Subsidiary. I can't find any information on this, are they carrying some of their own debt?