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I am not sure if they can somehow mask their server name or not but that is why I have been careful not to go public with any names (other than government entities) because I wanted to protect their privacy as they certainly have a right to expect such treatment. I don't want to discourage their visits or involvement and I think it is a valuable tool and resource to be armed with that information. I will continue to pass along any info that is of relevance.
Just know that what happens on IHUB is not staying at IHUB and right now that is a good thing considering the effort that is underway. All along it has been widely assumed (myself included) that it would take the institutions to get the EC pushed through. Just allow yourself to consider the possibility that just the opposite is the case and that it is retail that will carry the day.
Judge Gerber is a fair, balanced and no nonsense Judge. He strikes me as the type of guy that will consider all sides and he has not heard your side of the story yet, but he is about to. From my experience this Trustees office is also staffed with fair, balanced and uncompromised individuals that are overworked (consider the huge cases they have seen) and probably underpaid. They will now have a chance to hear your voice as loud and clear as it can be heard.
It may be too late to say anything about this but if you have not mailed your letters yet, please, for your own sake and the sake of your fellow shareholders, be professional and respectful in all of your correspondence and you will receive the same in return. It always worked for me when I was a petitioner in this case.
You would be amazed at who visits this board, yahoo and the blog and how often they do so. Not just institutions but the SEC, FINRA and a whole host of other governmental type regulatory bodies. I know for a 100% fact that 8 of the active market makers for CEMJQ either continue to visit or have visited this board, the Yahoo Board and/or the blog. I get multiple hits from Chemtura, Biolab and Great Lakes etc., servers at all hours of the day and night and most either link to the blog or exit the blog to/from one of the aforementioned message boards. Many of the law firms involved in this case have also popped in from time to time.
When I first started the blog I was shocked and somewhat spooked by who was watching the content. I always assumed that stock message boards were for retail and that we somehow existed in a vacuum and that institutions would not bother themselves with what we had to say. That assumption was dead wrong. The only thing I can gather from it is that they are searching for answers just like we are or they intend to use the information they gather to profit from it either on the long or short side. Rest assured it is not for their entertainment, although reading Wall Street's court filings most assuredly provide some entertainment.
Jax, there isn't as much retail traffic on the blog as there used to be but the institutional and law firm traffic remain. I am seeing some new household names surface that never visited before today. You might recognize several of their names as being ones that previously owned shares of Chemtura as seen on MFFAIS. Perhaps they are looking to get back in or already have.
Rest assured the message of the Alliance is reaching some very interesting people. Jax and Wall have put many hours into this effort and I am proud of what they have accomplished in a very short time.
Based on what I have seen from Judge Gerber there may be some nice fireworks in the courtroom in the near future, especially if he has trouble reconciling the improved earnings and outlook of the company and the current bond prices with the grim picture that K & E like to present to him. He does not like being hoodwinked and seems to take no prisoners with those that try to pull it off as evidenced by his disdain for the DIP lender lawyers in only telling half of the story in thier opposition to some of the fee submissions. That was good stuff!
Best wishes to all.
I wanted to return to the board one last time to offer my sincerest apologies for the timing of my announcement yesterday. It was in bad taste and it was a serious error in judgment on my part but it was not a calculated maneuver. I was not operating under the assumption that anything I said or did would have the impact it had. I learned a big lesson the hard way. I never heard anyone complain about the content and timing of any positive developments I shared and I failed to calculate the ramifications of the content and timing of what I felt to be negative developments. All too often I see people coming in and out of message boards (including this one several months ago), pumping it up, taking profits and moving on without a word when they don’t like the direction it is going. I tried to do it differently, by offering my perception of the events as they unfolded, whether positive or negative. Now I know why most of them just go away quietly. The reason I did not post my final thoughts to the main board or the blog was to try and minimize the disruption but I only made it worse by doing so.
I have read through a number of the posts, both positive and negative. To the ones who offered support and appreciation for past efforts, I am thankful. To the ones offering anger and character assassinations, I understand. I felt it was only right that I return here and take the abuse, for the disruption I caused. I can’t take back what I did but I can offer up that this board is above what it showed the last couple of days. There is still time for you to put aside your anger and frustration, continue to do the awesome DD you are capable of and band together so that your voices can be heard before the court. There are a lot of brilliant and resourceful folks here that can figure out how to get that done.
There will be no need to respond to this post as it would only cause more disruption. Concerning the thoughts of anyone who would offer further support or rebuke, I already know where you stand. There is probably no way to clear my name so this will be my final post on this or any other public message board or blog.
As always, best of luck to all.
I have not read all of the messages here but I saw enough to let me know that it is best that I go away. The sentiments expressed that I am somehow a pawn for someone are unfounded. I am not a pumper and I am not a dumper. I am an individual investor who just read court documents. I never told anyone to buy and I have never told anyone to sell. You didn't see me on here pumping my predictions of stock prices. No one retail person can move a stock like this nor would I want to be able to do so. It moves on supply and demand and there has been big money flowing in and likely will continue to regardless of what anyone on IHUB does. I do not have any inside information. I always made decisions based on the same information that is freely avaliable to all. All I ever tried to do was to take information from court docs and other sources and consolidate them into one place without expressing opinions on the content.
My decision to leave weighed heavy on me for weeks. There are people I have spoken to privately that can attest to that. If you go back and look at my posts they were not characteristic of a pumper and I always tried to hedge and temper any excitement with a warning about potential risks, always trying to keep the pros and cons in perspective. Perhaps I should have just gone away without saying a word. I don't know what the final outcome is. It saddens me that some are only interested in hearing what someone has to say if it is in line with their own thoughts. At its core, this board is above that.
Best of luck to all.
I just wanted to let the board know that, as of today, I am no longer a shareholder of Chemtura. This decision was based in part on personal reasons, but largely based on recent developments in the court documents that have provided a window into the future. I have put together a document detailing the reasons that I can no longer justify owning this stock. If you would like to know these reasons, send me a PM or an email and I will forward them to you as soon as time allows. I do not intend to post them to the main board to be used as fodder for the shorts and bashers, because there are too many good people here to cause that type of disruption. I may eventually post this information to the blog, but have not yet decided how much of the content is appropriate.
This experience has been amazing and I have gained a wealth of information here from all of the information sharing. This is one of the best boards on IHUB that I have ever followed and I am very proud to have been a part of it. I hope I have been of some benefit to you during my time here as you have been a benefit to me. This board has two excellent moderators and they should be commended for keeping this ship steering straight. You don’t have to be involved with stock message boards for too long before you realize the value of their time and efforts. Hopefully I can be reunited someday with the CEMJQ board members elsewhere on IHUB as I get involved with other stocks in the future. As of now, I am taking some much needed time off. Investing was once but a hobby of mine, but as things developed with this stock, it became a 7 day a week job in addition to my regular career. It’s been a long 6 months for me, many late nights, early mornings, lost weekends and a few too many lengthy court documents. I put a number of professional commitments on hold that will have to be addressed in the near future. For now, its time to unwind, spend some quality time with family and rededicate myself to my career without having to worry about all of the things going on with Chemtura that are completely out of my control.
I hope there are no hard feelings from anyone on this board as I have developed a deep respect for the skill sets of many who regularly post here. I have never before hoped I was wrong about a decision I had made in stock investing. For the sake of the longs here that I have come to value and respect, I sincerely hope I am wrong. At some point we all have to make the tough choices. For me the choice was black and white and ultimately came down to which I would regret more, selling too early or selling too late. I think if you see the memo I have written, you’ll get a sense of what my current mindset is and why I made the choice I did. I will continue to follow this case from afar and will update the blog on a periodic basis but probably not daily. If anything develops that changes my perception of the final outcome, this board will be the first to know.
Best wishes to all longs.
Jax, Thanks for your efforts.
Long read...worth your time
Equity needs and deserves a voice now…period. Read further…
This excerpt from the court filing linked below is why the debtors and creditors attorneys don’t want any new “sets of eyes” on the amount of billings they are ramming down our throats. I think this argument raised by the DIP lenders (of all people) is a prime example of why the Company Stock Fund wants an independent Fee Committee to oversee all of this. The attorneys for the debtors and creditors want to continue to let the fox guard the hen house and silence the voice of shareholders.
The DIP lenders are suggesting that attorneys for the Unsecured Creditors have submitted billings that would purportedly be about $800,000 above what they agreed to when the court said it was okay for them to investigate the preferential payments and collateral pledged to the DIP lenders. And that is for ONE reporting period. The total of the cash benefit to the company IF they win that adversary proceeding would only be about $6 million. How much of that would be left if the attorneys managed to drag it out for a few more months? Is it any wonder they are diametrically opposed to forming an independent fee committee?
These attorneys who are jamming you for $500, $600, $700 per hour and filling up over 1000 pages worth of billing statements per quarter are the same people who don't want you to have a seat at ANY negotiating table. Wonder why...
“1. This Court’s Final DIP Order (as defined below) explicitly sets a limit on the fees and expenses that may be incurred by the Committee in its efforts to investigate the Prepetition Secured Indebtedness and prosecute any related pleadings at $200,000 (the “Final Fee Cap”). The Final Fee Cap, which the Committee specifically cited to in conjunction with its ultimate decision to withdraw its objection to the entry of the Final DIP Order, was the product of intense and arms-length negotiations, in which the DIP Lenders agreed to a significant increase in the size and scope of the cap that was contained in the Interim DIP Order (as defined below).
2. Notwithstanding this unambiguous limitation, Akin and FTI collectively ask this Court to approve fee applications that involve what is likely in excess of $1,000,000 in fees and expenses for work related to the investigation of the Prepetition Secured Indebtedness and prosecution of any related proceedings (collectively, the “Avoidance Action Fees”) out of a total of $2,707,739.34 in fees and expenses.
3. Due to the multiple categories that Akin used to collect time related to Avoidance Action Fees, it is impossible to make an accurate assessment of the amount of Avoidance Action Fees that exceed the Final Fee Cap. In seeking allowance of, and authorization to pay, Avoidance Action Fees in an amount that is nearly five times the Final Fee Cap, the Committee has disregarded completely the limitation in the Final DIP Order. Moreover, to the extent that, to date, Akin and FTI have received payment in respect of Avoidance Action Fees in excess of the Final Fee Cap, they should be required to disgorge the portion of such fees and expenses that collectively exceeds the $200,000 cap.”
http://www.kccllc.net/documents/0911233/0911233090922000000000019.pdf
Glad you brought up the retrace because as I have reflected on the price action from Friday afternoon, I am wondering if it was one of those “hold my beer and watch this!!!” moments. I am also wondering if the thought ever crossed their mind(s) as to what would happen when you dump 4 to 5 million shares within one hour into a thin bid/ask structure. One minute they’re thinking they have it made at $1.10 and will now demonstrate their investing/flipping prowess, the next minute their trades are firing off at $1.00…$0.90…$0.80…$0.70. And to top it all off, they now have a due and payable to the U.S. Government of, most likely, about 1/3rd of the profits that they didn’t lose to the eager and willing buyers. It’s one thing to take profits and I am all for that, but it is another thing to know how and when to do it.
Thanks, Clint. Its not been a one way street, I have learned a lot from the members of this board and have added a bunch of investing resources to my toolbox. I hope everyone here has become a better investor/researcher from this experience. We will learn a lot more from the next 3 months, guaranteed. Its one thing to take an old bankruptcy case and research it but you learn a whole lot more if you follow it in real time and have some skin in the game.
GLTA
Thanks, Jax.
Just trying to promote awareness and discussion in as many venues as possible. I tried to hit on many of the key search terms that the blog gets from google searches. I know there is a lot more that could have been incorporated but there is only so much time in the day.
GLTA
Will Chemtura Shareholder’s See a Meaningful Recovery?
New blog post.
http://chemturaresearch.blogspot.com/2009/09/will-chemtura-shareholders-see.html
Nice post Clint. Somehwere in the middle would be a favorable outcome. IMO, the final landing place would likely be in the middle as opposed to one of the extremes. It all depends on the agreed upon fair value measurements of the company's assets combined with the ultimate source for satisfaction of the company's pre and post-petition liabilities.
It's as simple as that, yet complicated at the same time. To reach those valuations and negotiate the settlements that go into that equation is a very expensive and time consuming process for a global diversified chemical company. At this point, uncertainty abounds, but I will offer up that if uncertainty wasn't in the equation then none of us would have been able to buy a stake in this company at depressed levels. Some bailed when uncertainty became a reality while others greeted it with open arms and jumped in.
Let's keep the debate going, and allow ourselves to hear something we don't agree with once in a while. It is healthy to have our foundation shaken from time to time as it forces us to reassess why we made the choices we made and if those choices are still right at the present time.
Good luck to all longs.
The reasons we bought 6 months ago are still intact today. Stay strong, bend but don't break.
A question to all, whether you are a believer, doubter, regular poster or lurker. Maybe you’ll see it as a rhetorical question or maybe you’ll see fit to sound off on the issue. I know the foregoing is an oversimplification of the entire big picture here, but just play along. This is a rare Chapter 11 case we are dealing with, most are slam dunks, this one is not.
• The latest 10-Q shows $319 million in equity remaining in the company (consolidated but not audited).
• Latest MOR shows $334 million (less reliable, not audited, not consolidated).
• This is after almost $1 billion in asset impairments in Q4 2008 and more than $160 million since that time.
• We have hired some of the most respected accounting firms and patent attorneys etc. from around the world to aid in assessing the value of assets. Those assessments have been factored into the latest 10-Q with the remainder to be included in the next 10-Q to make the goodwill/long-lived assets of the Consumer Products division reflect fair value.
• Currently, using the latest 10-Q, the books show that there is about $1.31 per share in equity value remaining
• The market is reflecting $0.85 per share in value so it is trading at a discount to the company prepared books
The central question we have to answer is what is the true value of equity remaining? Even after the price decline on Friday, the market is still reflecting a meaningful recovery for shareholders. If you are inclined to say that the equity holders should be wiped out then who does the $319 million belong to if not the current shareholders? In your answer, don’t give me the tired argument that because most of the current holders are post-bk holders that we have no claims. If that is true then the same could be said of the bondholders because all three of those issuances also experienced an exit in masse and the prices of those debentures traded for pennies on the dollar in March and April.
Let’s get down to brass taxes. How much is left, who does it belong to and why?
I've had enough of the nice guy routine. Time to take the gloves off and tell it like it is, just like Wall_Street. His is a voice you can trust. I am familiar with his work from elsewhere, standup guy and straight shooter. When I get mad, I am more productive anyway. While I am on my soap box, there just is no nice way to put this and this is a message and warning to all...
Yeah, I know my tone has changed and its not because i'm bi-polar, it's to get your attention.
Please stop posting about your entry points, exit points, net worths, when you'll sell, when you'll buy or how much fun we'll have in Cabo. There is a time and place for all of that but that time has not arrived. When it does, i'll join you. If you need to let off some steam and gloat a bit do it with a private message or in an email. It seems innocent and we are all friends here but there are people lurking out there that will capitalize on your emotions because they do not care about who they hurt when they do what they do. Many are not playing with their own money and no longer have a moral compass. The more private information you give them, the more of an advantage you surrender. Just think about it, what venues are there to gauge the emotions of equity holders outside of the market during trading hours, well there's Yahoo and then there's IHUB. They're here because you're here.
Think the big boys don't lurk here? Try again. Collectively there are more Market Makers, large institutions, hedge funds, private equity caital, debt consolidators, law firms, industry competitors, government agencies, trade publications etc. that follow this CEMJQ board than there are people who post to this CEMJQ board. There may be more of them than there are boardmarks. While it would not be prudent for me to deliver to you concrete proof of this fact, just know it is a fact. If you've ever thought anything I have said here was useful, then take this post to heart. Be careful what you say and to whom you say it.
We had a bad day on Friday, it looked and felt different than any other retrace we've ever had in post-bk trading, because it was different. That's fine. There's no cause for alarm as far as I can see it, nothing fundamentally has changed. In fact, we got a few bits of good news this past week because we have a new revenue source and another decent MOR. If the stock rebounds, and I certainly think that it will, those who held through it will be that much stronger. It's the old "bend but don't break" theory.
The exclusivity period ends on Nov. 13 and if the Chemweek article is correct the company is planning on filing its plan by mid December. That means there's less than 3 months left until we know the final outcome. Time to stop looking back in time and start looking forward. Our goal is 2 to 3 months ahead and what happened on Friday will not affect that outcome. The only people it affected are the short-term flippers.
Good luck to all longs.
Agreed. I think the Chemweek article has a lot of merit and offers some very positive verbiage. However, with respect to an asset sale, we're talking "a Tale of Two Documents" because the court docs clearly bear out that there is some moving and shaking going on. If not then there is some serious bill padding going on. When they go the trouble of refiling the billing documents with "Project Hoover" in place of PVC or PVCA then something is up.
Just for fun, here is a Legend for anyone who wants to go back and re-read the Lazard Billings and see what they looked like before redaction. ABL and UCC are not items that were redacted but just thought it would be helpful to know. Some people who are lurking on this board may not be too happy with us posting and discussing these changes but my suggestion to them is that they should not have been so eager to leave the office so soon on Friday, August 14, 2009. Redact before releasing if you don't want it discussed.
ABL = Asset based lending
UCC = Unsecured Creditor’s Committee
Lazard Changes:
PUD (Poly-Urethane Dispersions) = “Cloud”
PVC or PVCA = “Hoover” In late June, these discussions have been reduced to a “term sheet” so while the deal may or may not be imminent, it appears very likely.
GE = “Potential lender” (page 31) – DIP related
Barclay’s = “Potential lender” (page 31) – DIP Related
“Buyer Calls” = “Interested parties” (Page 34)
Lubrizol = “interested party” (page 36) – potential suitor for Petroleum Additives
“Taft site” = “facility (Page 43)
Currently posted "redacted" Lazard Billing Doc:
http://www.kccllc.net/documents/0911233/0911233090820000000000007.pdf
Happy Reading!!!
Unless you are a pre-bankruptcy stockholder that is involved in a suit against the company or you otherwise have some sort of claim against them, then there is nothing you should do or need to do with the claim form.
Some thoughts before I enjoy the rest of my weekend:
The seller yesterday had a lot of shares, not necessarily a lot of sense. You’ve heard the old saying, “more money than sense.” Well, you saw it in action yesterday. There was no reason to panic then or now. That was the most disorderly exit we have seen, thus far, and we have seen exits that exceed that by tenfold. Just go look at the number of institutions that “sold all” as of 06/30/09 on MFFAIS. Then go look at the chart for the month of June. Folks, that is what an orderly exit looks like.
The seller yesterday was definitely not a long-term holder, not when they entered, and not when they exited. They left a lot of money on the table because they didn’t understand how to take profits and exit a position in an orderly fashion. Congrats to anyone who picked up shares yesterday because you just captured the lost profits by yesterday’s seller. Based on that alone, it was not one of our institutional players. Frankly, I’m glad they sold and I hope they don’t come back. We don’t need people with a lot of money buying and selling this stock if they don’t know the risks and especially if they don’t know how the pinksheets market works. Good riddance.
All weak players get out now, please. If you don’t know and understand the risks by now, kindly exit stage left. Some of us have been following this case daily for almost 7 months now and the most important 3 months lie ahead. There is no longer any place for you here if all you want to talk about is doom and gloom scenarios. We know the risks, have stared them in the eyes and said "bring it on." So spare us your opinions that have already been priced in here. I have never put anyone on ignore in the past but my iggy button is getting dusted off for possible and probable use.
This is a board of serious shareholders who have offered up some excellent due diligence. Just go out into the marketplace and try to find any better or more timely info on a bankrupt stock. See if you can even pay for the info and services provided here. Then see where you can find it for FREE, besides here. Abuse it and it will go away.
Good luck to all longs, and have a great weekend.
Thanks, Chem8. Nice contribution.
Someone with a lot of shares wanted out today. This stock is fairly thin both ways, despite the 243 million outstanding shares. Most of us, who are long-term holders do not have buy or sell orders in so it can move big one way or another. A big seller exiting can take out many stops along the way. Some others could have panicked, some others may have wanted to take some gains. We traded 25 million shares this week before today and traded another 3 to 4 before the selloff, so 4 to 5 million share selloff versus 33 total traded on the week took out the entire weeks gain, just goes to show how thin it is.
Have a good weekend.
That's what it looks like when a big fish exits. Most likely one big holder exiting, selling at the bid and taking out stop losses along the way.
Truly sorry to hear that. I know of several communities near me that were hard hit by plant closures, oil and gas price collapse and big projects that were shuttered or awarded elsewhere. Many folks have felt a material adverse impact from the events of the past year. There is always a dominoe effect or a negative feedback loop when plant closures occur, especially in small towns.
Best wishes to you.
V shaped recovery for Polyvinyl Chloride (PVC), you don't say...
Full article from Calimero's post below:
V-shaped recovery in the cards for chemicals - economist
BOSTON (ICIS news)--The global chemical industry is undergoing a V-shaped recovery, following industrial production, which is expected to last at least through the third and fourth quarters, the chief economist of the American Chemistry Council (ACC) said on Thursday.
“Destocking is ending and leading indicators suggest a trough with recovery of final demand and inventory swing engendering an upturn,” said ACC chief economist Kevin Swift at the Chemical Purchasing Summit organised by ICIS and Purchasing magazine.
“We see a V-shaped recovery into Q3 and Q4, and more signs of an industrial recovery in 2010,” he added.
The economist said he is seeing V-shaped recoveries across the board in plastic resins, chlorine, polypropylene (PP) and polyvinyl chloride (PVC).
“Chemical recoveries have historically been V-shaped,” he added.
For 2009, global chemical production is expected to fall 5.9% before recovering to 3.5% growth in 2010, led by strong growth in Asia Pacific, Latin America, Eastern Europe and Africa & Middle East regions, said Swift.
US chemical production is projected to decline 7.2% in 2009 and bounce back 1.7% in 2010. Excluding pharmaceuticals, chemical production will decline 10.7% in 2009 and recover by 1.5% in 2010, he noted.
The recovery in the overall economy from the depths of late 2008 and early 2009 is driving chemical demand, said Swift.
“This time last year we stood at the abyss and there were the sounds of shoes dropping - Lehman Brothers, then AIG. Things were spinning out of control,” he recalled.
“But now, the picture is clearer. A virtuous cycle is emerging and the economy will return to a growth trajectory, with a stabilising and improving housing sector and consumer spending,” he added.
However, the sustainability of any long-term recovery will depend on final demand from consumer spending and investment, Swift noted.
http://www.icis.com/Articles/2009/09/17/9248416/v-shaped-recovery-in-the-cards-for-chemicals-economist.html
I think there is a gentlemen's agreement that Jax and I will not gloat on any given Sunday. It is a long season.
I don't think there is any sandbagging going on. Restructuring costs, especially the legal, tax and financial accounting aspects are devastating to most bankrupt companies. If a company goes into bankruptcy with just a small amount of equity and the bankruptcy process is lengthy, it is most likely over for the shareholder. There enlies one of the reasons that a swift exit from bankrutcy is best. If Chemtura emerges in a 12 month timeframe, given the complexity of the case and sheer volume of contracts, subsidiaries etc., that will be considered swift, and very positive.
Something to consider is that you can't just take out the restructuring costs and say that if we weren't in bk our net income would have been the $1MM plus the restructuring costs, and that is because acccrued and unpaid interest on the unsecured pre-petition debt of about $7 million was not reflected in the latest MOR. It is basically a wash when you consider restructuring costs have been roughly the same as unrecorded interest expense.
What you have to look at is backing out the restructuring costs plus adding on the interest expense. When looking into the future we want to see that the new products like GeoBrom and the TETRA relationship combined with an economic recovery are enough to bring this company back to being the revenue generating machine it once was, only this time with less debt and a lower cost structure. Time will tell.
I vaguely remember the the 12 cents issue but I clearly remember the daily if not hourly posts about share cancellation, immediately followed by predictions of the stock breaking out through resistance and going parabolic.
Alas, those were the good ole days!
Final poll results based on 118 votes:
Looks like the majority vote carried the day!
Which Happens First?
CEMJQ.PK closes at or above $1.00 – (67 Votes or 56%)
The 2016 Bonds (HTRA.GA) close at or above $100 (11 votes or 9%)
Both occur on the same day – (39 Votes or 33%)
Neither Event will ever occur - (1 vote or 0.8%)
Congratulations CEMJQ longs. This is no longer a penny stock and we can no longer be labeled as vultures, bottom fishers or penny flippers playing the "bankruptcy bounce". Those of us who bought in the low pennies and held strong till today have been vindicated and deserve to shed that label. Confirmation of what we knew then is being recognized now.
Back to work for me. Just had to get that off my chest.
Newest court doc regarding Chemtura's decision to assume certain non-residential real estate leases. There are a couple hundred pages of brine leases that they are keeping. I guess it would be handy to keep them in light of the release of GeoBrom.
http://www.kccllc.net/documents/0911233/0911233090916000000000033.pdf
Now that is what I call Enhanced Due Diligence. Interesting idea.
The main distinction between the 2026 bonds trading at a discount to the others is that they are not guaranteed by any of the subsidiaries, thus they are the sole responsibility of Chemtura Corp. The 2009 are issued by Great Lakes Chemical and guaranteed by Chemtura Corp. The 2016 are issued by Chemtura Corp. and guaranteed by some of the subsidiaries.
Here is a link to a more detailed description of the bonds:
http://phx.corporate-ir.net/phoenix.zhtml?c=68079&p=irol-newsArticle&ID=1251866&highlight=
Don't forget about this little nugget...
http://www.canadians.org/campaignblog/?p=138
If Chemtura can successfully argue its case against Canada in this NAFTA suit, it stands to recoup as much as $100 million in lost profits. If I remember correctly, there are hearings that will occur this month before the 3 member arbitration panel. Hearings are closed to the public. You can follow the case at the link below:
http://www.international.gc.ca/trade-agreements-accords-commerciaux/disp-diff/crompton.aspx?lang=en
Stop by the blog and cast your vote
http://chemturaresearch.blogspot.com/
Much of the hiring of patent attorneys would have been with the intent to establish the fair value of the company's assets, whether previously recognized on the balance sheet or not. Statement of Position 90-7 defines the accounting rules to be used by a restructuring company that expects to emerge from chapter 11 as a going concern. In order to formulate its plan of reorg the company must establish the fair value of its assets and compare that against all of the pre and post petition claims asserted against it in order to comply with SOP 90-7. This can be particularly difficult for the international subsidiaries, so they hire accountants and attorneys to do it for them, for a not-so nominal fee.
Below is the text of paragraph 9 of SOP 90-7:
"An important part of the process of developing a plan is the determination of the reorganization value of the entity that emerges from bankruptcy. Reorganization value generally approximates fair value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the assets of the entity immediately after the restructuring. The reorganization value of an entity is the amount of resources available and to become available for the satisfaction of postpetition liabilities and allowed claims and interest, as negotiated or litigated between the debtor-in-possession or trustee, the creditors, and the holders of equity interests. Reorganization value includes the sum of the value attributed to the reconstituted entity and other assets of the debtor that will not be included in the reconstituted entity. Reorganization value and the terms of the plan are determined only after extensive arms-length negotiations or litigation between the interested parties. Before the negotiations, the debtor-in-possession, creditors, and equity holders develop their own ideas on the reorganization value of the entity that will emerge from Chapter 11. Several methods are used to determine the reorganization value; however, generally it is determined by discounting future cash flows for the reconstituted business that will emerge from Chapter 11 and from expected proceeds or collections from assets not required in the reconstituted business, at rates reflecting the business and financial risks involved."
Direct quotes from the original court filing to reject BP contract:
"As a result, on a monthly basis, the Debtors are making payments to BP in amounts exceeding the market value of the natural gas received by up to $800,000 per month."
"These alternative proposals would result in more than $5,000,000 in savings to the Debtors from June 2009 to the close of 2009."
http://www.kccllc.net/documents/0911233/0911233090520000000000006.pdf
The thing to remember, though, is that the difference between what BP receives in the negotiation and the amount they are legally entitled to according to the original contract is subject to become a claim that must be satisfied under the plan of reorganization. Just depends on what the details of the negotiation entail. We have been waiting months for this outcome.
Ray, you're correct. In purchasing a bond, you're buying a series of cash flows. The cash flows would give you the interest earned based on the face value and stated coupon rate and then the final cash flow would be to receive the face value plus the final months interest. Paying $90 on a 1MM trade would be paying $900,000 for a $1,000,000 bond. Folks buying the bonds now would be entitled to receive the face value plus all accrued and unpaid interest.
Chemtura Comparative MOR Spread August 2009
http://chemturaresearch.blogspot.com/2009/09/chemtura-comparative-monthly-operating.html
Not really sure what will happen under that scenario. At some point discussions will be held to decide "who gets what" under the plan of reorg. The creditors and debtors will be at that negotiating table, so the question remains who will represent the interests of the equity holder when that time comes. Metalmark, which owned 25% of the outstanding shares would have been a likely candidate to make a play for an equity committee but they bailed. If I remember correctly, their original position cost them over $300 million. When the bonds fell to 10 cents on the dollar, they could have preserved their position for $30 million or so, give or take, assuming all bond holders would have been willing to let their position go for that price. Now the largest shareholder is the company itself which owns 50% of the stock. It is an interesting scenario and an interesting play. At this point, any big money that wants to make a play for the company's assets would most likely do so by acquiring the bonds at 50 cents on the dollar. This case certainly warrants watching closely given the book value per share but the asset valuations will be key.
GLTA