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Currently reading Liar's Poker by Michael Lewis. I'm about 1/3rd through it. It is an interesting read about the rise and fall of Solomon Brothers and Lewis' first hand accounts of the bond markets in the 1980's. I highly recommend it.
I have been following FUN for several months but never took a position. I wanted to put on a trade similar to the GGP option play but the bid for FUN and the option strike prices didn't present a trade I was willing to enter into. Looking at the chart prior to the announcement of the takeover attempt, I was somewhat concerned about the downside risk in the event that the bid fell apart but the market perceived the "falling apart" as a positive, implying that it believes the value is in excess of the prior bid of $11.50.
I am not sure what will result from the hearings that will be conducted by Senate Permanent Subcommittee on Investigations this coming Tuesday and Friday. But I am keenly interested in those proceedings. You may have seen this already but here is an article about those upcoming hearings.
http://seattle.bizjournals.com/seattle/blog/2010/04/follow_wamu_story_on_capitol_hill.html
WAMUQ, WAMPQ, WAMKQ Valuation:
I know there are a fair number of folks who follow the WAMU saga. Although I have been involved in the case from day-one, I have remained relatively quiet because of the uncertainty and futility of speculation. Some folks hold themselves out as experts on WAMU, but at the end of the day, the Judge, the attorneys, the FDIC, Debtors, Creditors, JPM, and the Senate will all have something to say and very little has been stipulated and agreed upon at this point.
The valuation linked below was predicated on the recently proposed settlement and plan of reorganization but both the settlement and resultant POR seem to be off the table for now. As such, the valuation itself may be futile if not obsolete. In the event the deal is put back on the table, even if the distributions change, it may be of value to some to have access to it to see how the changing distributions effect the payout.
Bear in mind, there are a number of uncertainties and other various blanks left to be filled in. Even when the settlement deal was on the table and purportedly agreed upon by the debtors, JPM and the FDIC there was still uncertainty and a wide range of opinions on the ultimate distribution to the preferreds. Based on the settlement deal I had the WAHUQ being made whole, the WAMPQ-WAMKQ receiving 2.5% of face and the WAMUQ receiving no distribution.
At this point, I am long WAMPQ and WAHUQ, but I have nowhere near the position size I once had.
http://www.scribd.com/doc/29377151/WAMUQ-Valuation-03-16-10
GGP Option play:
I am by no means an options expert but a friend passed this idea along to me recently and I put the trade on about a week ago. Although this trade is not nearly as attractive at the curent "net debit" it does represent a different type of trade idea than you might typically see suggested on IHUB. Since it does involve a company in bankruptcy it does meet the definition of a "BAD" trade idea.
Here are the details.
General Growth Partners (GGP) has a firm and binding bid of $15 per share by a stalking horse bidder to purchase the company out of bankruptcy. The offer remains in effect until December 31, 2010. It is expected that there will be competing bids, but the $15 is guaranteed. At the time I put on the trade, the stock traded around $16 but it is now at 16.74. Just think, back in February and March 2009 you could have gotten all of that you wanted for under $0.50!
In a simultaneous transaction, I bought the stock at $15.92 and sold the $15 strike October 2010 covered calls for $2.63 so I have an average cost of $13.29 and I am guaranteed to receive $15 in the auction process. If the stock stays above $15 into the october expiration, my stock will be called away. In either event, I will make a guaranteed return of 12.87% in 6 to 7 months or sooner if someone decides to exercise their "in the money" option before expiration. If they call it early, I will put the trade on again if conditions remain the same. If the covered calls expire and the stock is below $15 then I keep the stock and can either hold it until the auction is complete or I can sell more covered calls and repeat the process.
RGCIQ Case Summary
http://www.scribd.com/doc/29352290/Regent-Communications-Inc-Case-Summary
The court hearing to decide whether to confirm the Plan of Reorganization or approve the equity committee was held on April 9, 2010. Judge Gross will render his decision on Monday, April 12, 2010.
Welcome Message:
Welcome to the BAD board; Otherwise known as the Bankrupt and Distressed Research and Due Diligence board. The intent here is to share BAD research and trading ideas about companies currently in bankruptcy as well as those that may soon get there. The objective is to pool our collective resources, research, links, stories, etc. to become better investors and traders. On the BAD board it is understood that the market is comprised of long-term holders, swing traders, day traders, shorts, fundamentalists, chart technicians, etc. If you are always a “net long” and cannot stomach the opinions of those who do not agree with you, this may not be the place for you. All I ask is that the members come in with an open mind and a willingness to learn, help others who are trying to learn, challenge the opinions of others, and be challenged by others and do it in a professional manner.
It is my intent that this board would be operated a bit differently from other IHUB boards. Typically, a board dedicated to one individual stock is not very welcoming to anyone other than longs and pumpers. Because this board is not affiliated with any one individual security we can talk about the truth, whether it is good or bad news for a particular stock.
Disclaimer:
The content provided on this board is for informational and educational purposes only and any opinions expressed are that of the individual posters and do not constitute a recommendation or an offer to buy or sell any security. Each investor should perform their own due diligence and is encouraged to contact a financial advisor before making any investment decisions.
Best wishes to all.
Monthly Share Volume Report March 2010
TRXAQ
http://www.otcbb.com/asp/tradeact_mv.asp?SearchBy=issue&Issue=trxaq&SortBy=volume&Month=3-1-2010
TRXBQ
http://www.otcbb.com/asp/tradeact_mv.asp?SearchBy=issue&Issue=TRXBQ&SortBy=volume&Month=3-1-2010&IMAGE1.x=18&IMAGE1.y=6
It is interesting to note the spike in trading volume for CRT Capital in the TRXAQ shares during March.
January 2010 - 2500 shares
February 2010 - 10,670
March 2010 - 308,265 shares (10% of shares traded in March)
When considering that CRTC did not register any trading activity in TRXAQ during 2009, these March 2010 trades would seem to be purchases, not sales. This would be further supported by their recent company note on Tronox in which they stated that "Equity may be becoming relevant in this case."
RGCIQ Case Summary 04.02.10
http://www.scribd.com/doc/29352290
RGCIQ Regent Communications Inc. Case Summary 04.02.10
http://www.scribd.com/doc/29352290
At $107.5 the bonds would appear to be trading at par plus accrued interest at a rate of 5.65%. If they traded at par plus accrued interest at the full contractual rate they would be around $112-$113.
It is uncertain exactly which rate will be applied in this or any case. It will come down to negotiations between all parties in interest. if they can't agree then Jude Gropper will get involved in the rate setting process. It is clear that some pendency rate will be applied because the debtors are solvent. In cases where the debtor is insolvent there is precedent for disallowing pendency interest. However, we are dealing with a solvent debtor.
Within the Second District of New York there is plenty of recent case law to look to in determining a general range for the pendency interest. Courts have recently argued that the statutory interest rate is too low and the default rate stated within contracts is generally too high. I would expect the applicable rate in this case will be somewhere between the contract rate (9.5%) and half the contract rate. In my own recent estimations I have been using the Fed's discount rate plus 500 basis points. Right now that would be 5.75%
Thanks Cork. For those interested in TRXAQ and TRXBQ you can view the blog here...
http://tronoxequity.blogspot.com/
and download the February 2010 MOR spread here...
http://www.scribd.com/doc/28780118/Tronox-MOR-Spread-February-2010
There is a motion on the table to extend exclusivity to July 12 ,2010. I would not be surprised to see the company emerge from BK during the 3rd Qtr 2010. With the equity committee in place and EBITDA projections in the $160 to $175 range based on recent MORs, equity has a very good chance of seeing a meaningful recovery.
Skadden Arps Submits Reply in Support of its Application as Counsel to the Chemtura Equity Committee
http://chemturaresearch.blogspot.com/2010/03/skadden-arps-submits-reply-in-support.html
Blog post is delayed by a day, but I have been busy lately. As always, I encourage everyone to read the entire filing. There are many other points made in addition to the ones highlighted in the post.
Folks, that right there is pure bankruptcy court docket gold. Worth every penny spent to produce it and every minute spent reading it. If seeing the heavyweights of the legal world square off doesn't excite you then you probably lead a more exciting life than I do, lol. If you like seeing one advocate impale another on its opponents previous arguments as well as with other arguments noticably absent from an otherwise empty fact set, then the document Wall linked to may be worth your time.
Tronox MOR Spread February 2010
Gross Profit of 19.74% and Operating Margin of 15.98% are both post-petition highs.
http://tronoxequity.blogspot.com/2010/03/tronox-mor-spread-february-2010.html
If those claims were perceived by the market as legitimate then the 2016 Bonds would not be trading nearly 500 basis points higher than par + accrued and unpaid interest, at the contractual rate, compounded monthly, prorated out to the end of September 2010.
The 2009's are trading right at par + accrued and unpaid interest, at the contractual rate, compounded monthly, prorated out to the end of September 2010.
Now if were talking statutory rate of interest (which could be the ultimate payout) then both of the bonds mentioned above trade at a premium to their value if compounded monthly from the petition date and prorated out to the end of September 2010.
...and they say that the postpetition equity/debt holders are the vultures.
Tronox Feb 2010 MOR
http://tronoxequity.blogspot.com/2010/03/tronox-february-2010-monthly-operating.html
Gross margin = $10.5 MM
Operating Income = $8.5MM
Assuming $6MM for Depreciation & Amortization then EBITDA = $14.5MM
LMA EBITDA = $174MM
Thanks. I don't get to follow the action too much intraday so I don't have pinksheet level 2 quotes right now.
CRTC is CRT Capital. They issued a professional report on Tronox Bonds on March 2, 2010. Within the report they stated that "Equity may be becoming relevant in this case". They also mentioned that the Debtors had been working with the EC to incorporate the equity into the existing plan framework. If you are seeing CRTC on the BID then that may tell you something.
Anyone involved in WAMU circles may possibly be aware that CRTC has been covering the WAMU saga on a very in-depth level. They have also issued some professional research reports for WAMU as well. In their latest report they projected a reorg value for the WAMU preferreds at 4% of face value. Prior during and after that report they had been seen swallowing preferred shares at the BID in the 5% to 6% recovery range. I think you can draw your own conclusions as to why they would take this approach.
The tie in betweer CRT Capital, WAMU and Tronox is that if they are saying "relevant" with their mouth they may be betting "meaningful recovery" with their wallets. We shall see in about 2 weeks when the OTCBB share volume report for March is released.
GLTA.
Not exactly. See this link. While it mat may not be exact it should be in the ballpark. The variable in the calculation is entity value which will largely be driven by the claims register at this point but to some extent by earnings and cash flows durng the remainder of the bk case.
Chemtura Case Update 03.19.10
http://chemturaresearch.blogspot.com/2010/03/chemtura-bankruptcy-case-update-031910.html
In looking to the case docket and court transcripts the focus of the case is now on the EPA issues, the Diacetyl claimants and any related insurance coverage that may be applied. Essentially, the focus is on vetting the claims register. One of the issues playing out in court right now is how much information will Chemtura be able to extract from industry competitors as well as the plaintiffs and their attorneys without breaching the confidentiality of past settlements regarding Diacetyl claims. It looks like the Judge has the Debtors and other related parties headed in the right direction with regard to a mutual resolution of this process. It will take time to get the information, process it and apply potential damage awards based on relevant factors to ultimately arrive at a value for this particular unsecured creditor claims pool. With equity as the fulcrum security and the party in interest that will ultimately bear the cost of administering these chapter 11 cases, equity holders will be keenly interested in the ultimate resolution of these claims.
Another big issue that could materialize is centered on whether the bonds are equitized or reinstated. If one looks to recent case history within the Southern District of New York a valid argument could be raised for reinstatement because Skadden Arps (counsel to the Equity Committee) recently played a role in the reinstatement of billions of dollars worth of bonds in the Charter Communications case. The decision of Judge Peck to allow reinstatement came as a surprise and likely borders on landmark status which may open the door for potential reinstatement of Chemtura’s 2016 and 2026 bonds as secured debt of the reorganized Chemtura. The reinstatement issue is something I wrote about several months back after drawing the Skadden-Charter connection. This was further confirmed as a possibility when Knight Capital initiated coverage on Chemtura in January 2010. they cited reinstatement as a potential risk for purchasers of the 2016 and 2026 bonds. Given that the 2009 bonds have matured, reinstatement of those debentures is not an option.
Switching gears, entity value going forward will likely be based upon some blend of trailing 12 months EBITDA, 2010 actual EBITDA and possibly adjusted some for 2011E EBITDA, multiplied by some EBITDA multiple which will be tied to and discounted somewhat off of industry average and then adjusted again for whatever the company's leverage is post emergence. The likely range for the EBITDA multiple is 6.5 to 7. Last time I calculated the average EBITDA multiple of Chemtura's peer group (as defined by the Board of Directors in its 2008 10-K) I arrived at a multiple of 7.6 times but that was in December 2009. The sector has since been on fire and the U.S Specialty Chemical index is now approaching a 5-year high set back in the summer of 2008. One of the relevant comps for Chemtura is Huntsman (HUN). Jefferies and Company’s recent analyst report on HUN issued March 15, 2010 noted that it was currently trading at 8.7 times 2010E EBITDA. In setting their price target for HUN, Jefferies contemplated applying a multiple of 7.2 times 2011E EBITDA. They noted the multiple was a discount to peer group due to HUN's leverage.
Chemtura’s Exclusive Filing Period for submission of its plan of reorganization was recently extended through and including June 11, 2010 and the Exclusive Solicitation Period has been extended through and including August 10, 2010. If the remainder of the case proceeds as smoothly as the past 12 months have, this could set the stage for emergence by the end of the 3rd quarter of 2010.
IIRC, Cloud was Polyurethane Dispersions. We know this because someone was asleep at the wheel and filed Lazards unredacted or "uncoded" reimbursement application on a friday night. The original version used the term "PUD" which was replaced the next business day with "Cloud". Some sneaky person must have tipped off ICIS chemical because they ran a small article soon after which referenced the potential sale of this division.
I wouldn't worry about it anymore. Highly doubtful that they would delay emergence over the sale of that division. The added cost of case administration would far outweigh the economic benefit of shedding those assets on a pre emergence timeframe. If they want to sell it or any other division they will liklely do so post emergence, on their own time, on their own terms and when market conditions are right. That's no longer the focus here, IMO. We are now down to vetting the claims register.
In trying to determine the float, I charted the 13f-hr, 13D and 13D/A filings going back to 2007 for TRXAQ and TRXBQ and I came up with 28% in the hands of institutions, other long-term holders I am aware of and equity committee members. I only know what 3 of the 4 equity members hold as the other 4 positions have not been made public, to my knowledge. I couldn't find any 2019(a) filings related to equity holders so SEC filed docs is all I have to go on. While a large holding is not always required to sit on an EC it is safe to assume that the position size is probably larger than the average holder.
That number grows to 31% if you include the 1,334,626 shares that RLR capital distributed to outside investors on the eve of its appointment to the EC. Likely the distribution was made because they didn't want to be permanently long with that position size after going over the wall. RLR retained 50,699 shares. They filed their original 13D as of 12/31/07 showing total holdings of 1,435,800 shares. I have no idea who the distribution was made to exactly or if those holders are still long, but it is an interesting data point.
I feel certain that the actual tradeable float is much smaller than what I can confirm from public filings.
All is well Oaps, thanks for asking. It is a busy time for me at work, at home and in the distressed investing world. There simply aren't enough hours in the day right now.
Hope all is well with you.
Stick to the 10-k. The difference between the balance sheet numbers on the MOR vs. the 10-K have to do with intercompany items that get eliminated in consolidation. Just as a hypothetical example, if the parent company owes the sub $100 million it is a liability to the holdco but an asset of the subsidiary, for the same amount. When the numbers are consolidated in an SEC report, they cancel each other out. The 10-k is the better representation of what the real numbers are because it includes all of the debtors financial information in addition to the financial information of all of the non-debtor subs.
As a general rule, MORs are somewhat useful in determining directional movement of account balances by comparing one MOR to another but are extremely unreliable for use on a standalone basis. The income statement portion is more useful than the balance sheet but still is not a representation of the full picture because the non-debtor sub income is not presented on the same basis as the debtors income.
Non debtor sub income (loss) is lumped into an account called "equity in net earnings of sub". Since it is presented this way we don't know the exact distrbution at the individual account level. It is presented as one number that we have no idea what it is comprised of. It would be like someone telling you what net income without telling you how they got there. With an SEC filed report, you get the full picture. There are also accounts on the income statement that are eliminated in consolidation which usually results in differences between the 10-Q or 10-K and the relevant MORs that cover the same time period.
Almost 1000 pages long. Have a nice weekend.
I agree it is fantastic news. It is the strongest language we've seen from the Company regarding its shareholders. They stop short of coming right out and declaring an equity distribution but in my mind, the language is strong enough to support my assertion that the downside risk is at or above where the stock currently trades.
I think all involved know that the company can be strong as a standalone company once all of the poison is cleaned up that Kerr McGeee jammed into the balance sheet. In looking at Huntsman's bullish comments on the TiO2 segment and Tronox's recent EBITDA numbers from the MORs the outlook certainly looks positive, going forward.
Tronox Motions to Extend Exclusivity to July 12, 2010
http://tronoxequity.blogspot.com/2010/03/tronox-motions-to-extend-exclusivity-to.html
In a filing today, Tronox Inc, motioned the court for a further extension of the Exclusive Filing Period an additional four months to July 12, 2010, and the Exclusive Solicitation Period an additional four months to September 13, 2010. Objections are due no later than March 18, 2010 at 4:00 p.m. (ET).
In addition to providing an update on the case since the last motion for the extension of the exclusive filing periods, the Debtors submitted the following statements impacting on the equity constituency:
“Throughout these chapter 11 cases, Tronox has focused on maximizing value for all stakeholders. Early in these chapter 11 cases, Tronox, in accordance with the requirements of its DIP facility, entered into an agreement to sell substantially all of its assets to affiliates of Huntsman Corporation (“Huntsman”) and obtained approval for a competitive auction process. Always cognizant of the desires of its stakeholders to explore a standalone plan and its duty to maximize value, Tronox negotiated flexibility into the asset purchase agreement with Huntsman to engage in a dual path process of either selling its assets or consummating a standalone plan of reorganization. Since this Court’s December 10, 2009 order extending Tronox’s Exclusive Periods to March 15, 2010 and May 14, 2010, respectively, and as a result of herculean efforts, Tronox and its key creditor constituencies reached an agreement on the framework and substance of a plan of reorganization, thereby eliminating the need for an auction. Consequently, Tronox cancelled its scheduled auction and, since that time, has focused on negotiating and documenting a standalone plan of reorganization.
The negotiation and documentation of the standalone plan is complex. Tronox must make sure numerous creditor constituencies with disparate rights and views are comfortable with the plan, which takes careful consideration and time. In addition, Tronox is working hard to attempt to achieve a fully consensual plan by brokering a settlement between Tronox’s equity committee and creditor constituencies. Based on the progress Tronox has made to date and the momentum it has generated towards constructing a standalone plan, ample cause exists to extend the Exclusive Periods for a fourth time to enable Tronox to bring these chapter 11 cases to a successful end.”
“…In addition, Tronox has engaged in extensive discussions with the Equity Committee in an effort to incorporate the Equity Committee into the existing plan framework, including scheduling and participating in meetings with the Equity Committee on January 20, 2010 and with the Equity Committee, the Creditors’ Committee and the ad hoc bondholder group on February 24, 2010. Tronox intends to continue these negotiating efforts in hopes of presenting this Court with a fully consensual plan of reorganization before confirmation, if such a plan is possible.”
“Here, ample cause exists to extend Tronox’s Exclusive Periods. Tronox’s efforts and foresight while negotiating the asset purchase agreement with Huntsman have placed these chapter 11 cases on a track to the successful consummation of a standalone plan. Now, Tronox is focused on negotiating and drafting the necessary documentation for that plan, as well as trying to bring the Equity Committee into the deal and obtain its support for the plan. Tronox has earned the right to continue to captain the ship to confirmation without interference or distraction from any competing plans.”
“…With that goal in mind, Tronox remains committed to including the Equity Committee in the plan of reorganization, if a deal with the Equity Committee is feasible, and, in that regard, Tronox has met with the Equity Committee in an effort to reach full consensus on that plan...”
Link to filing:
http://www.kccllc.net/documents/0910156/0910156100301000000000006.pdf
Tronox Monthly Share Volume Reports Feb. 2010
Follow the links below to view market maker activity for each Tronox equity issuance
TRXAQ
http://www.otcbb.com/asp/tradeact_mv.asp?SearchBy=issue&Issue=trxaq&SortBy=volume&Month=2-1-2010&IMAGE1.x=21&IMAGE1.y=12
TRXBQ
http://www.otcbb.com/asp/tradeact_mv.asp?SearchBy=issue&Issue=TRXBQ&SortBy=volume&Month=2-1-2010&IMAGE1.x=23&IMAGE1.y=5
Tronox and TiO2 related: HUN Earnings Conference Call Q4 2010
From the Conference Call:
Seemed to insinuate that Tronox would have been accretive day one. In other words, buying Tronox for $415 million would have improved the HUN bottom line immediately.
Pigments:
• $23 MM of adjusted EBITDA for Q4 2009;
• Best Quarter since early 2007;
• Earnings improved by $35 million for the year and $7 million improvement for the quarter;
• Year-over-year sales increase of 33% in pigments segment;
• Seeing robust recovery in demand in Latin America and Asia, North America growing not contracting, Europe (largest market) has more modest recovery – HUN has more Europe exposure than they would like;
• Finally getting traction on price increases which has helped the bottom line;
• Anticipate Pigments segment to have further improvements throughout 2010 as global economic conditions continue to improve;
• The Company seemed to be more positive on pigment segment outlook than in any other area;
• Overall, HUN reduced costs by $150mm yoy, increased ebitda 3x yoy;
• Increased volume contributed more to the bottom line than did price increases;
• 2009 Adjusted EBITDA $511 million;
• Q4 EBITDA of $165 million annualized at $660mm;
• Huntsman sees a clear path to a return to normalized EBITDA of over $1 billion due to return of underlying demand and full-years benefit of cost cutting and improved manufacturing efficiencies. They successfully dodged the question on when they would achieve these normalized levels.
• Q&A Session:
• $2.462 billion net debt not including 254 million off balance sheet A/R securitization;
• Higher raw material costs takes about 30-90 days to pass through to customers;
• Peter Huntsman did say he thought contribution margin could be stable for 2010 and that coupled with volume increases would lead to stronger earnings;
• Seeing increase in overall order patterns. Q4 up 10-12% over Q3 orders;
• Revenue down in Pigments ($14mm), but adjusted EBITDA up from $4 to $23 on increased price of $10 million and sequential improvements in SG&A of about $10 million. It is a seasonal business and volume was down on seasonal basis in pigments;
• 2010 TiO2– modest volume growth that will be aided by restocking of inventories, particularly going into winter months very low compared to other seasonal times they see. Seeing restocking taking place and demand taking place, North America up 6%, Europe up 29%, Asia up 100% ;
• TiO2 business was hit the hardest of all segments during the downturn and has been in a 2.5 year trough. HUN is optimistic on TiO2 business, going forward;
• TiO2 year over year prices were flat, but volumes up yoy. (Perhaps HUN did not increase prices along with competitors? Seems to contradict earlier statement about prices being up in Q4);
• Tronox deal now off the table. They have interest in small bolt on acquisitions that would be accretive day one. Otherwise, HUN is not looking at acquisitions as they want to hold balance sheet where it is. May look to purchase more of its bonds over time with its cash hoard.
The holding company owns stock in all of its subsidiaries, they just are not publicly traded stock. We own stock in the holding company, Chemtura Corp. The language you included in your post isn't referring to the CEMJQ.PK stock we own. In order to transfer its interests in theses entities over to the purchaser it has to transfer the stock that it holds in the subsidiary being sold.
MESAQ Monthly Share Volume Report January 2010
http://www.otcbb.com/asp/tradeact_mv.asp?SearchBy=issue&Issue=mesaq&SortBy=volume&Month=1-1-2010&IMAGE1.x=17&IMAGE1.y=9
Tronox News: MDEQ says Creosote doesn't threaten neighborhoods
The Mississippi Department of Environmental Quality said today that sampling around the old Gulf States Creosote site in Hattiesburg indicated low levels of cresosote compounds, but the results were below ground water protection levels and soil screening levels.
The agency, in letters to Mayor Johnny DuPree and the Forrest County Environmental Support Team, said the samples showed there is no health or environmental risk to the surrounding neighborhoods.
The site was previously owned by Kerr-McGee and then by Tronox.
Members of the Forrest County Environmental Support Team have argued that the areas around the plant have been contaminated.
See details in Friday’s Hattiesburg American
http://www.hattiesburgamerican.com/article/20100225/NEWS01/100225015/MDEQ++Creosote+doesn+t+threaten+neighborhoods
For anyone following TRXAQ and TRXBQ, here is a link to my monthly operating report spreadsheet for January 2009:
http://tronoxequity.blogspot.com/2010/02/tronox-monthly-operating-report_22.html
I believe the risk/reward on Tronox looks very nice at these price levels. This is a stock, though, that you have to accumulate slowly as the true float is quite small. Between the two issuances there are only 41 million total o/s. A lot of shares are locked up on the equity committee and there are some other big holders that have been in long-term that are not likely to divest at this point.
You will need to be patient in accumulating and patient in waiting for the final reorganization. It is more of a long-term proposition but final emergence should occur in Q4 or Q4 of 2010, if I had to guess. For those that are only into chart plays or quick flips you would want to look elsewhere because of the way it trades with large spreads and relatively low volume.
best wishes
Tronox MOR Spread January 2010
http://tronoxequity.blogspot.com/2010/02/tronox-monthly-operating-report_22.html
A couple of notes:
Gross profit% of 19.32% is the highest in the post-petition era.
Assuming depreciation and amortization expense is 10% of COGS, I get EBITDA of $11 million for January 2010, which is $132 million annualized.
I know there are some that are bemoaning the lack of news or perceived action but you have to realize that this is just how the game is played. In any event, as long as this company contines to cash flow and generate the current EBITDA levels then the longer it stays in bankruptcy the higher valuation the EC will be able to argue for in the end.
Here's something else to consider; since we have an EC we cannot just be ignored. Worst case, they throw $20 million at equity to go away and you get $0.50 per share. More likely, the valuation at emergence is many multiples from the current trading price. This is a nice risk/reward situation that we currently have at these price levels. IMO, the downside price is actually above where we are now. I don't normally disclose my trading or positions but I have more than doubled my position in the last 4 trading days. If the price continues to slide, I will lighten other positions and continue to add whichever is cheaper, TRXAQ or TRXBQ.
I continue to remain thankful for the current sellers and very optimistic that my investment and patience here will be well rewarded in the coming months.
Best wishes
No hard feelings, Clint. We're all here to make money and hopefully learn along the way.
I am not familiar with either of those cases. Between CEMJQ, TRXAQ, WAMPQ, MESAQ, FGOCQ and MTRMP I don't have much time to look at too many other BK names, lol.
Blog Post on the proposed 2010 KEIP
http://chemturaresearch.blogspot.com/2010/02/chemtura-seeks-approval-of-its-2010-key.html