India supplies most of its iron ore from domestic sources. Like the US, the quality of the ore is low so they have to pelletize it. It is difficult for the Australian miners to provide the Indian market with pellets when you add the processing and transportation cost. I still believe the reason for RIO, BHP and VALE flooding the Chinese market with low cost fines is to maintain the Chinese dominance in steel and slow the move to pellets.
They are not offering a hair cut, they are purchasing them at the current market rate. They did the same thing using their short term credit line to purchase bonds ahead of closing on the Logan County coal mine in order to capture the lowest prices. I believe they are doing the same ahead of the sale of the Bloom Lake property and need a much bigger credit line because the Bloom Lake property will net much more than the coal mine.
I day trade 2000 share blocks and 5 cents net me $90 which is enough for a bottle of great bourbon and three lap dances. Or in my case, a beer while my cat sleeps in my lap.
While I hold a few blocks long in CLF, I enjoy day trading this stock because of the low downside risk.
using short term lending to buy back bonds ahead of getting the cash from the sale. Keep an eye on Quebec for news releases on Bloom Lake.
If you buy a 2040 bond in the open market, you hold it like a stock certificate and there is nothing stopping you from selling it back into the open market. So when the new bonds come due and they are running low on cash, they could simply sell those 2040 bonds back into the market, hopefully for more than they paid for them.
Highest interest rate, largest spread on face to current market value. When they buy these bonds, they can hold them and can sell them back into the market if needed. I have found no reference to them retiring these bonds after the purchase them.
The buyback table is in their press release plus:
"The Senior Secured Notes will be unconditionally and irrevocably guaranteed by subsidiaries which directly or indirectly own substantially all of our domestic assets. The Senior Secured Notes will be secured by (1) second liens on substantially all of our assets and the assets of the subsidiary guarantors, except for the "ABL Collateral," which consists of accounts receivable, inventory and other assets securing our proposed new asset-based lending facility (the "ABL Facility"), and (2) third liens on the ABL Collateral. Accordingly, any Existing Notes that remain outstanding after the Exchange Offers will be structurally subordinated to the subsidiary guarantees of the Senior Secured Notes and will be effectively subordinated to the Senior Secured Notes to the extent of the collateral for the Senior Secured Notes. The Existing Notes are unsecured and are not guaranteed by any subsidiaries."
I do too, but the lease option allows them to collect payments that could offset their interest payments. I am just puzzled why they did not disclose the security offered here!
And finally, it could be secured by Bloom Lake and they don't intend on selling it for up to 5 years, allowing for the recovery of iron ore prices and therefore the price of the mine. CLF owns the mine and Bloom Lake Partnership leases it and when the Bankruptcy is final, CLF will still own the mine and may just lease it to a new operator that buys out the leases in bankruptcy.
It also could be telegraphing that they expect to get $750 million out of Bloom Lake and this money will allow them to buy back bonds at a discount rather than wait until they get the cash and the price of those bonds would go up rapidly. The security could be Bloom Lake based on an offer that is on the table and they don't want to announce it yet as that too would cause the price of these bonds to go up.
They do it to buy the old bonds at $780 and issue new ones for $1000, netting out $220 up front. The net cost is the difference in interest which in the case of the 2040 bond is around 1 percent or about $10 a year. Multiply that out by 5 years, that is a cost of $50 which gives them a net savings of $170 per $1000.
Those are short sellers that are trying to get the price to drop by increasing the number of sell trades, but that standing buy at $6.78 to too large.
There is a limit order to buy shares at $6.78, most likely someone covering their short position. They are absorbing all sell generated action 10 to 1 over buying action.
Those were all those rich white folk that would follow Tiger all over the course. What I remember about the Charlotte area was all the rich redd neckks that were tied to NASCAR.
A short attack is conducted in the media using misinformation to create fear in the market, the only way to fight this is to use company performance and hit it the media every day. CLF's management old and new just does not get it and it is so simple to fix.