I don't care what happens to the common in the short/mid term, I only care that they can survive during these times, I know in October credit lines are being
reviewed by the banks, I was/am under the impression that TOO had strong banking relationships. Correct me if I'm wrong. I only bought the preferreds so as long as they can stay liquid and survive I'm okay.
Thanks that is interesting. I highly doubt that TOO want to suspend the dividend for common shareholders, so I would imagine that wont be the case on the preferred side. Also their common stock is not priced for bankruptcy or anything like that, I feel that their solvency is pretty good.
What am I missing for why the preferreds are so cheap? TOO-PA is trading at $17.63, a 29% upside if called, and a dividend yield yearly of 10.28%. They are also cumulative. Isn't the company cash flow positive and can easily service their debt? I am confused why it's so discounted.
Jackmaster, that didn't tell me much more than I already know. I'm looking to find out more about their debt, how much, what type of debt, their maturities, if there are any covenant ratio restrictions etc to see if the preferreds will be safe in a prolonged environment where oil is priced low and production and energy activity slow. Not saying that will happen, just want to be sure they can weather the storm in the worst of circumstances
Earnings and cash flow are good. Even though they state they dont have direct commodity price exposure, isnt their business still tied to the energy field.....meaning business can slow if energy field is slowing due to commodity pricing?
Regardless, my main question is their debt structure and when the debt matures. Also, what are their covenant ratios and how bad would things have to get before the ratios could be an issue. In an environment that is uncertain, financing/re-financing can be tough. I think this company is pretty solid on an operational side, but I dont know much about the debt levels.
The preferred's are priced way under par right now, and the preferreds are only based on whether investors believe the company has the ability to continue to fund the dividend. If the company has great cash flow and good earnings, why isn't this priced near par? Why does investor sentiment appear to show that there may be a #$%$" in the armor. Thanks for your thoughts everyone.