Mr. Gonclaves is only throwing $55 million at this, that still leaves $110 million left from the tax refund or we may see further bond purchases with asset sales. Anyway this bond purchase tells us that CLF is fine with their current cash standing.
According to their last 10Q, the interest rate is 3.95% with an annual effective rate of 6.22%. There currently is a outstanding balance at face value of $434 million.
Last time he did this was ahead of announcing an asset sale. We could be hearing something from the met coal area.
guess we are not going to see a huge stock buyback, since they are buying $100 million in bonds, we may see a $100 million stock buy back.
Look at the entire picture, current assets minus current liabilities at the beginning of the year was $490.3 million, at the end of Q2 it was $623.8 million. You just can't pull out one line item as the funds tend to flow between all the line items. Bottom line number indicates they are moving in the right direction.
Q2 vs Q1 US imports, again from AISI.
Hot rolled sheets was down 15.4%.
Hot rolled bars was up 7.3%.
I don't know if this was enough to impact the price of hot rolled steel or if it was a demand issue. Something is strange here, could be steel companies dumping supplies to get better prices on pellets or trying to gain more support for tariffs.
From AISI, US Import data:
"In June, the largest volumes of finished steel imports from offshore were from South Korea (311,000 NT, down 13% vs. May final), China (190,000 NT, down 37%), Japan (181,000 NT, down 3%), Germany (147,000 NT, up 12%) and Turkey (142,000 NT, down 36%). For six months of 2015, the largest offshore suppliers were South Korea (3,056,000 NT, up 17%), Turkey (1,589,000 NT, up 65%), China (1,521,000 NT, no change), Japan (1,229,000 NT, up 24%) and Germany (821,000 NT, up 41%). Below are charts on estimated steel import market share in recent months and on finished steel imports from offshore by country."
China is not the problem based on data for the first 6 months.
It was out of the cash gain, yes money came into the company, from a gain in discontinued operations. Many times these gains are offset by charges they took (double entry accounting). Those charges can impact specific parts of accounting while the gain gives you the bottom line profit number. You can't judge the company's performance by pulling out one specific item.
I have looked into some of these numbers and found where the interest was impacted. Then because of the price of some steel products, some of their contracts are tied to those prices which accounted for a $9 per ton hit on revenues.
It is all in the notes in the 10Q… Everything is there that shows what impacted gross margins including the $30 million extra interest charges they had to pay when they bought back some bonds.
Interest charges going forward is not going to be as high because of the one time charge they took in Q2 because of purchase of some bonds. Q3 and Q4 will not have inventory builds, the opposite will happen as they sell off at least half of their inventories. Their gross margins in Q2 was greatly impacted by these one time interest charges and the surprise build in inventories and you really need to factor those into your model going forward.
That would cost them $70 million and they would hold 22 million shares, I say go for broke and spend $150 million and hold 45 million shares. When the stock hits $10, take the $450 million and buy back $900 million in bonds. They would record $300 million in income from the stock and $400 million in income from buying bonds at a discount to face value.
Shorting has been engineered by large hedge funds, not by the bashers on this posting forum. A short squeeze will be engineered by new large holders of CLF stock and a buyback by the company is just a part of this plan. The company is not going bankrupt so there is very little left to make on the downside. With the huge short interest, these funds know they have a huge quick upside potential.
I am watching volume patterns in the last hour.
Glad you responded, can you tell me if the majority of homes you deliver to are custom pre sales or are they specs. What I am finding is most banks don't lend on specs and builders need to turn to private money at higher interest rates.
He can't do anything until tomorrow so today's price action means very little other than the major buyers are waiting.
The credit line is secured by items like inventories, so he can borrow against it as long as the security is there. Because of CLF's positive equity in short term assets, he is free to borrow any amount now then replace it with the tax refund and inventory sales.