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When the results of the "Beauty Pageant" are made public some outlets like ICIS and Law 360 will likely pick up the story. The beauty pageant consists of the presentations, interviews and the ultimate decision as to who will become the lead counsel and investment banker to the equity committee.
That's a 6-fold increase in the bond price since the petition date. The last time they traded that high was February 4, 2008.
The outstanding share count is now 175,217,249 (as per the Lotz Affidavit) which is up from the previously reported count of 146.6 million. The change was effected in 2 transactions:
1. The conversion of $14.3 million at par value of the 2024 Notes on 08/20/09 into 13,571,428 shares. The implied value of the debt at the exchange date was $2,850,000 (20% of par) based on the $0.21 per share value assigned to the equity on the exchange date.
2. The conversion of $6.1 million at par value of the 2023 Notes on 11/04/09 into 15,000,000 shares. The exchage also included an undisclosed amount of cash paid by MESA to AAR and other contract amendments which provide Mesa with increased flexibility to respond to demand fluctuations in the 50-seat aircraft market.
The net effect of the increased share count of roughly 28.5 million shares was the retirement of $20.4 million of the company's debt. This represents a blended share price conversion rate of about $0.72/share which would have to be reduced somehwat by the undisclosed cash considerations tendered in the AAR swap. At any rate, the conversions appear to have been timely and beneficial to the estate, as a whole, considering the current share price of $0.0422.
Bonds last traded at $94.375. That's a really strong move on high volume compared to the $80.50 at the beginning of the week.
MESA 09/30/09 Balance Sheet
http://www.scribd.com/doc/24956837/MESA-Air-Group-Balance-Sheet-09-30-09
As of November 18, 2009 there were 175,217,249 outstanding shares per the Lotz Affidavit.
No Problem, Ron. Watch the bonds as they have moved quite nicely this week up from $80.50 to $86.75 on over $22 million par value traded.
WSJ Article - That's My Automatic Stay!
http://blogs.wsj.com/bankruptcy/2010/01/04/hey-thats-my-automatic-stay/
A bankruptcy judge said the State of Oklahoma can’t use Tronox Corp.’s Chapter 11 filing as an excuse to not pay the chemical company for land it acquired as part of a highway easement.
The state’s Department of Transportation said the company’s bankruptcy should suspend a jury trial that would establish the amount of monetary compensation Tronox is entitled to for losing the land, but the company said the state is misreading bankruptcy law.
The Bankruptcy Code halts legal action against a company when it files for Chapter 11 protection, but the “automatic stay” rule doesn’t necessarily stop the company from pursuing legal action that’s to its benefit.
The Oklahoma Department of Transportation “is attempting to use the automatic stay as a sword against Tronox, when in fact the stay is a shield intended to protect Tronox,” the company said in court papers.
Judge Allan L. Gropper of the U.S. Bankruptcy Court in Manhattan sided with Tronox last week and said that a jury can make a determination about the easement compensation.
In 2007, Oklahoma used its condemnation power to acquire land Tronox owed for a highway easement. Under state law, Tronox is entitled to be paid for the land. The Oklahoma City-based company demanded a jury trial to determine the amount of that compensation.
Tronox’s January 2009 bankruptcy filing halted the condemnation process, but the company tried to enter into an agreement with the state that would have allowed the process to continue so the company could be paid for the land.
After the state refused to enter into the agreement, Tronox asked the judge to force the state to allow the process to continue, including the compensation trial.
Distressed Debt Investors Club Post on Tronox
http://www.distressed-debt-investing.com/2010/01/distressed-debt-research-tronox.html
The write-up is from a bond investor's point of view and assumes that the final plan of reorganization will assign no value to the current shareholders. To read the article it sounds like investing in the bonds, at these levels, is an absolute no brainer. That may be so, in a scenario where the creditors get to completely ignore the equity constituency, taking all of the equity AND all of the litigation proceeds. I am hoping that the plan of reorganization offered by the equity committee is confirmable and that it is superior to all other plans in offering a meaningful recovery to all parties in interest, not just the creditors.
Thanks for the nice welcome. I have known about Tronox for several months but did not take a position until last week. My position size is very small but I am looking to increase it as time goes on. I didn't like the Huntsman deal or what it would have meant for equity holders so I have been waiting on the sideline, just watching. Now that the outright theft is off the table there is new life here. If/when the legacy liabilities are returned to the rightful owners in Anadarko/New Kerr-McGee and back onto the balance sheets where the assets reside that should be used to pay for them, this company will look very attractive as an acquisition target as well as a standalone company.
My attention was recently directed back to Tronox a couple of weeks ago by a couple of institutional investors and another investor who owns both the stock and the bonds. Once I began looking deeper into the company and the prospects for recovery of the equity I ended up with the new blog. I started it just a few days ago. I did the same thing for Chemtura back in July after originally taking a position in March. Basically what you see on the blog is what I use to do my research on distressed equities. I mainly focus on the court docket and will read most all of the documents that are entered into KCCLLC and PACER. It is not necessarily entertaining reading, but one can find some good stuff in the dockets that can give you a few days/weeks head start and a competitive advantage over the rest of the market if one is disciplined enough to take the time to read through it all.
Best wishes.
Tronox Equity Research Blog
http://tronoxequity.blogspot.com/
Tronox Equity Research Blog
http://tronoxequity.blogspot.com/
I decided to start a blog dedicated to Tronox. I will update it as time allows.
Best wishes.
Rodney McFadden (Madclown)
It would just end up as fodder in a court filing or Trustee correspondence, but then again you may want to shoot for the trifecta, lol.
U.S. Trustee Appoints Statutory Committee of Equity Security Holders in Chemtura's Chapter 11 Cases
http://chemturaresearch.blogspot.com/2009/12/us-trustee-appoints-statutory-committee.html
Plastics News video link:
Here is another oulet covering the SK Capital purcase of Chemtura's PVC Additives Business. No new info provided but you might find it of interest.
http://www.google.com/url?sa=X&q=http://www.plasticsnews.com/headlines2.html%3Fid%3D17417%26channel%3D93&ct=ga&cd=5TGJIOu7IUY&usg=AFQjCNEYLjYweUPj9miGLVl3Lwe4cWEk-g
Bankrupt Company Bond Prices
http://chemturaresearch.blogspot.com/2009/12/bankrupt-company-bond-prices.html
Specialty Chemical Company Valuation Measures
http://chemturaresearch.blogspot.com/2009/12/specialty-chemical-company-valuation.html
Merry Christmas to the CEMJQ board. Anyone traveling be safe and remember to enjoy time with your families. If you're into this sort of thing, this is a great time of the year to look for someone in need and share some of the good fortune many of us have enjoyed this year.
God bless you all
Rodney
Some Items From the Court Doc regarding the PVC Additives Sale
http://chemturaresearch.blogspot.com/2009/12/chemtura-enters-into-agreement-to-sell.html
The deal appears to be worth about $45 million which includes $34 million in debt assumed by SK Capital Partners. Although there is variation among years the PVC Additives Business has historically comprised approximately 4% to 5% of the Chemtura’s overall yearly EBITDA.
In describing the virtues of the stalking horse bid the company had the following to say:
“First, the Debtors’ decision that the value of the Business would be best maximized through a sale if an appropriate price could be achieved comes only after considering all available options in consultation with their financial advisors and in connection with the development of the Debtors’ revised business plan, which was vetted with the Debtors’ key creditor constituencies, including the Committee. Second, because the Business is not a key component of the Debtors’ long-range business plan and, in fact, has historically contributed, on average, only a relatively small percentage to the Debtors’ overall yearly EBITDA, the value of the assets to be sold is relatively small compared to the Debtors’ assets on whole. Indeed, during the last year the Business has suffered from a number of difficulties, including significant and rapid decline in sales volume, decreased margins as a result of a rise in raw material costs, high fixed-operating costs and a decline in overall prices for the Business’s product. Third, the Debtors’ proposed Sale at this time will enable the Debtors to shed liabilities, such as environmental liabilities, thereby increasing the value of the Debtors’ estates for the benefit of all stakeholders in these chapter 11 cases.”
The “Bidding Procedures Hearing” motion will be held on January 14, 2010 at 9:45 a.m. (EDT). An auction will be conducted on February 22, 2010. The “Sale Approval Hearing” is scheduled for February 23, 2010 at 9:45 a.m. (EDT). Objections must be submitted no later than February 16, 2010 at 4:00 p.m. (EDT).
Link to 8-K:
http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=6665443&format=PDF
Link to Court Filing:
http://www.kccllc.net/documents/0911233/0911233091223000000000001.pdf
Based on what we know from the public filings we can account for at least 92 million shares or about 38% of the outstanding shares that are in the hands of institutional players. There are several other institutions that we know own shares but those totals are not yet known. This level of institutional ownership in a company in chapter 11 bankruptcy, this far into the process, is not normal. These folks have taken an equity position alongside all of us "unsophisticated" IHubbers.
Permanent Portfolio reports 3,050,000 total shares owned as of 10/31/2009. They had previously reported a complete divestiture of 3,000,000 as of 07/31/2009.
http://www.sec.gov/Archives/edgar/data/357298/000035729809000046/nq_2009-october.htm
Chemtura Comparative MOR Spread November 2009
http://chemturaresearch.blogspot.com/2009/12/chemtura-comparative-mor-spread.html
Link to Chemtura Equity Committee Acceptance Form
For anyone still in need of the forms to send in to the Trustee's Office here is a link to a PDF copy of all 4 pages.
http://chemturaresearch.blogspot.com/2009/12/chemtura-equity-committee-acceptance.html
Please remember that due to the recent spike in bankruptcies, the Trustee's Office in the Southern District of New York is very busy and most likely overworked and underpaid. As such, we must remember to be respectful and professional in any and all communications we may have with them. At this point, the work has been done, the letters written, the rebuttals have been sent in and it is up to us to respond with our willingness to serve if the Trustee grants us our committee. Now, we need only fax/mail our forms. No time to get cute ;)
GLTA and thanks to all longs for their past and continued support.
November MOR is out on PACER
Net Sales: $155 million
Operating Income: $9 million
Net Income: $9 million
EBITDA: $18 million
Net Cash Provided by Operations: $4 million
Equity: $369 million
Book Value per share: $1.52
Link to PDF on the blog:
http://chemturaresearch.blogspot.com/2009/12/chemtura-releases-november-mor.html
Reminder on NAFTA suit vs. Canada
Closing arguments are scheduled for December 17, 2009. I don't know when the arbitrator will render the final decision but Chemtura stands to recover as much as $80 million from this lawsuit, if they prevail. I have called the company to try to get more information regarding the expected date for the final decision but they either didn't know any more than what is publicly available or were not at liberty to say anything more. This proceeding is closed to the public but the link below provides the latest available information on the case:
http://www.international.gc.ca/trade-agreements-accords-commerciaux/assets/pdfs/PO%20No.%206.pdf
In the past, there have been a few non-mainstream media outlets that have covered this proceeding. Hopefully we will hear the outcome soon.
Chemtura Claims Register in Excel Format
http://www.mediafire.com/file/2ngozymy2tj/ChemturaClaimsRegisterInExcel.xlsx
SVP-Chemtura Rights Offering Debtwire Article
I have received a number of requests lately from institutions as well as retail shareholders for information regarding the potential $300 million rights offering being considered by the Ad Hoc Committee of equity security holders led by Strategic Value Partners. The article came from Debtwire on October 19, 2009.
http://chemturaresearch.blogspot.com/2009/12/svp-chemtura-rights-offering-debtwire.html
If you want to do your own SEC filing searches go to the link below and type in "Chemtura". This search will return every filing for the past 4 years that includes "Chemtura" anywhere in the body of the report. Once you have the document open, type "CTRL-F" and search for "Chemtura" within the document and it will take you right to the information you are looking for. This is how I find and track both the stock and bondholders on a daily basis and it sure beats the "needle in a haystack" approach. By doing this, you will get a jump on MFFAIS by a day or two and you will be dealing with information directly from the source as opposed to being dependent on a 3rd party to provide it to you.
http://searchwww.sec.gov/EDGARFSClient/jsp/EDGAR_MainAccess.jsp
I wouldn't put too much faith in MFFAIS. I always do my own searches directly on the SEC site because it is more accurate than MFFAIS. Case in point, according to MFFAIS, Maxim Series Fund Inc sold all 50,000 shares but according to the actual filing on the SEC site, they are still holding those shares. Sometimes the links to the filings from MFFAIS contain text that is unreadable and whatever automated search they are using can't find "Chemtura" in the document and just reports it on the site as "sold all". The erroneous reporting of the Maxim Series divestiture is not the first time this mistake has been made and it won't be the last.
I wouldn't worry about the Variable Insurance Products divestiture either because it could have occurred anytime between 04/01/09 and 09/30/09. Their last N-Q was filed as of 03/31/09. Always be sure to pay attention to the "as of" date for the filing.
I've been having the same issues. My orders at the ask were not getting filled.
Thanks BBalls. That is a great story.
I think your "poison pill" idea may have some validity to it. Consider that there is definitely some talking out of both sides of the mouth going on, depending on who the audience is. When the SEC questions the $300+ million in equity on the balance sheet their response is that it is reflective of fair value, in essence telling the world that the SEC filed 10-Qs can be relied upon to fairly present their financial position. In the courtroom it is a different story about doom and gloom scenarios with tort claims raining down and wreaking irreparable damage and havoc on both the equity and debt securities. In effect, saying the SEC filed documents are worthless. Doesn't this beg the question, which is it? Are they spot-on or worthless?
Another question is that if this doom and gloom were as imminent as the debtors and creditors would have the Court and Trustee believe, wouldn't it have been prudent to say as much in the November 24th 8-k filing linked below? It would have seemed as good a time and venue as any. Instead all I see is more of the same "Maybe" that Wall_Street is so fond of.
http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=6622915&format=PDF
Those who have done the research can see through it all. Those who have not, most likely see a "poison pill." But hey, what do we know? We are just a bunch of unsophisticated, bottom-fishing, vulture, retail shareholders playing the "bankruptcy bounce".
Not only is Jax an exceptionally talented carpenter and an equally terrible driver, he is also known for coining the phrase "Chivalry isn't dead yet!" This makes him quite a hit amongst the ladies.
List of Chemtura Bondholders
Follow the link below to view a partial list of the holders of Chemtura's June 2016 Bonds. The total outstanding debentures within this issue amounts to $500 million, so this list represents about 40% of the total.
http://chemturaresearch.blogspot.com/2009/12/list-of-chemtura-bondholders.html
The only number that sticks out in my mind is the $10 billion but none of those bonds are trading as if they expect the balance sheet to reflect in excess of $10 billion in liabilities. I guess they're misinformed too but that's funny seeing as how they are adequately represented by the Unsecured Creditor's Committee.
The creditors are singing "impairment" right now but that tune will change dramatically when it comes time to negotiate "who gets what." A tale of two stories. With their money they are betting a substantial if not full recovery and through their court appointed representatives they are claiming impairment.
The potential benefits of having the Ad Hoc Committee in the mix are twofold. One is that the rights offering they are seeking would most likely be used to pay down $300 million of the pre-petition debt. This would have the effect of reducing the liabilities by $300 million and adding $300 million to the equity. Equity would be increased but with a larger outstanding share count, how large remains to be seen. The second benefit is that they are bringing legal counsel to the table that is well versed in bankruptcy proceedings in addition to their knowledge of mass tort litigation. The hiring of legal counsel to represent their collective interests signals a strong conviction for the cause, which can have a much greater impact on the Trustee’s decision over and above the effect that letters from retail shareholders might have.
What is potentially confusing is the issue of whether the presence of this Ad Hoc Committee should be deemed “adequate representation.” It is true to say that their presence here has the potential to provide benefits to all shareholders. The counselors of the parties that oppose the formation of an official equity committee contend that the presence of the Ad Hoc Committee alone is enough to adequately represent all shareholders. Our contention is that this group does not have the fiduciary duty to represent any other parties outside of their Ad Hoc group. My point here is that one should not confuse “adequate representation” with “potential benefits” as they are separate issues. The Ad Hoc Committee can provide benefits to all parties while only having the duty to represent a few parties.
Here's another issue I wanted to touch on. To say that equity will definitely be cancelled if the EC is denied this time is a bit premature. In football terms, having an EC would be like facing 3rd down and 3 yards to go while without it maybe you are facing 3rd and 10 or 15. The example is not exact science, but rather an oversimplification of how the percentages swing in our favor by having one. This whole effort is all about putting ourselves in the best position to survive.
If you want another football reference consider how likely it would be for a team that is supposedly up by 3 touchdowns in the late 3rd early 4th quarter to start running off script plays like flea flickers, reverses, hail marys and onside kicks. Probably not likely. So my question is why would legal counsel hang out in the depths of IHUB seeking to capture screenshots of posts (hail marys and onside kicks) and spend time visiting and referencing that ridiculously uninformed blog (flea flickers and reverses) if they felt they were ahead by a comfortable margin? Why do their official correspondences seek to attack the character of the individuals involved as opposed to attacking only the issues at hand? Do their arguments not stand alone on their own merits? Is the score perhaps closer than their scoreboard indicates? You make the call.
Check MFFAIS tomorrow and I think you'll find the following:
Gabelli Asset Fund as reported on 11/30/09 added 250,000 shares as of 09/30/09. They had sold all as of 06/30/09.
Or just go here:
http://www.sec.gov/Archives/edgar/data/783898/000095012309066881/p16241nvq.htm
I am still holding my shares and have done nothing but add more as the price has slid downward. I am not sure how anybody could read the postings on the blog and come away thinking I am not still a stockholder. I don't typically spend hours formulating letters in support of, and responses to the objections to, equity committees if I don't have a vested interest in the stock.
I don't post here as often as in months past but it is in no way tied to my view on Chemtura's potential. Cheerleading is not in my job description. I do most of my work behind the scenes, some of which I share publicly, some of which I do not. I think most will attest that when they send me PMs or emails with their unique DD I will respond in kind, but I do not post just for the sake of being heard from.
Just waiting on news like everyone else.
Best wishes.
Wall, it may be time for you to break out your Yoda signature again. Look at claim number 5124 which was filed by James Earl Jones (Darth Vader).
Let me just make a suggestion that I feel would be very beneficial to all of our interests. Let's try for a few days to forget about whatever is going on with the stock price and who may or may not have an interest in manipulating it. This suggestion is based on the premise that what is happening in the court room and in the court filings is what will ultimately have the greatest impact on our future. If you are of a mind to believe in this line of thinking, as I do, then it would be a better use of time and resources to take a look at the claims register (linked below) and try to expose some of the frivolous claims that are supposedly standing in the way of the equity committee approval.
http://www.kccllc.net/Creditor/CR130.asp
If you go to the link you can click on the column headings at the top to sort by first/last, largest/smallest etc. This is something that Wall_Street has begun doing but since there are over 14,000 claims in the register it might be a bit difficult for one person to do alone. The idea here would be to take a claimant, especially the ones represented by class action attorney types, and google them to see what they are really about.
Wall has already uncovered some investigation that exposed one of the claimants as a fraud who already won some big settlement for a diacetyl claim from another company and them some private investigators followed him around and found that he was suddely "cured" after he got his money in hand. The more of this we can uncover, the smaller the liabilities column of the balance sheet becomes.
If we focus on the issues that matter most, ignoring the bashers that will come, feeling but not discussing the pain of any downtrends in the stock price, then we can get this thing to a point where all these "naybobs of negativity" cease to have an impact on our current mindset. That's why many here do not respond to those types of posts because they are busy trying to uncover and discuss the things that really matter and have an impact.
Bet wishes.
The letters should be written in your own words. At this point, we are not an "Ad Hoc" committee so we are all essentially representing our own interests and no one person owes a fiduciary duty to represent the other. We are all basically acting and speaking on our own behalf and this is the way it must be done unless we were to form our own Ad Hoc committee represented by counsel. The administration and logistics of such an undertaking would be a nightmare, as well as the questions of "who pays" and "who pays what".
The points that have been raised in the numerous letters sent to the court and to the Trustee as well as my letters posted recently on "the blog" will provide some talking points. At this point, the time for making our initial case may be past but the time for offering rebuttals is now upon us. The key is to take the oppositions points and compare them to:
--what counsel's stance has historically been
--What the burden of proof has been in this case in past months (stock & bond prices rebounding, inadequately represented by other parties, company not "hopelessly insolvent")
--whether the burden of proof is somehow a moving target (i.e. everytime we satisfy the prior tests do they keep changing the rules to satisfy their own objectives)
--what the burden of proof has been in other Chapter 11 cases
--what the company has been saying or reporting to outside sources
--what information has been provided in the court documents
After reconciling their points with what you know to be the case based on other, perhaps more credible and definitely less biased, sources then you write a letter that points out the "folly" in your opposition's case.
Response to the Objection by Debtor's Counsel Regarding the Request for a Statutory Committee of Equity Shareholders
http://chemturaresearch.blogspot.com/