LOL, I doubt it gets that low, that fast. In fact it may bounce at $1 to $1.25 and head higher, back towards $2, first.
$2/divided by .025 = $80/share post dilution (equivalency test of sorts), which, if enough debt is converted to common stock, might make the company profitable this year, and worth $80 / share post dilution. I think the 1st quarter P/L statement coming out very soon will be the next major mover. If it shows a break even or profit I think we will go back to $2 or higher. If it is a big loss on recent fuel cost spikes, etc, then it gets hammered way under a $1.
Looking at the 10-K for year end, they show 2.59 billion dollars in assets, and 2.78 billion dollars in liabilities, with a common stock equity of minus 188 million dollars. With 47.5 million shares, -188/47.5= -3.96/share equity value, so technically, I guess, 2.5% of XX? real equity is a gift to existing common stock holders today. But in realty, many stocks have had negative stock holders equity for years and maintained a respectable stock price, and market cap based on turn around potential value, etc.
47.5 million shares/ .025 = 1.9 billion shares. Now if 1 billion dollars in liabilities (about 40%) is converted to common stock, and interest on that 1 billion dollars is eliminated, and the last PR says 100 million in new cash will be added, 1,100 million - 188 million, would leave 912 million in new stock holders equity. 912 million in equity/1.9 billion shares = .48/share equity (book value) after said dilution of 97.5%. If all the debt was converted to common, it would be over $1/share book value.
So, not a bad deal for current bag holders going from a -$3.96/share book value today to a $0.50 to $1/share book value, if that is the way the deals play out (the basic assumption being conversion of 40% of the current debt into the 97.5% new shares). Notice I said IF!!!!!
Anyway, that makes for a positive common stock holders equity gain of about $4.50/share this summer.
Keep in mind most companies sell for multiples of book value, and when they turn a profit they can sell for huge multiples above book value, so book value is a bottom fishers number.
Personally I hope the shorts get greedy and add to their shorts, as they are already up over 22% of the float and over 20% of the OS. If they add, and wait too long to cover, while volume drops and the price hits rock bottom, it will make for quite a short covering, bottom buyer rally later on.
The numbers I used, were from Fidelity, which are from the YRCW 10-K for 2010.
So the big questions now, are how much debt is being converted to common, and what will the 1st quarter P/L statement show, profit, break even or loss?
One item I do not understand, is the 68 million dollar drop in common stock equity, and the 23 million dollar net income (after taxes), both in the last quarter of 2010? Most of it (all but 5 million) looks like a 86 million dollar tax credit in the fourth quarter?
