Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Snail mail for reports.
Yes, I would like to ask them to mail me a copy, by snail mail, to my residential address.
Louis J. Desy Jr.
Email for Vik at the company?
Does anyone have an email or contact for the company?
I want to ask for a copy of the latest annual report to be mailed to my residential address.
Thanks,
Louis J. Desy Jr.
Anyone following the upcoming annual meeting?
It looks like there is a shareholder activist trying to get some value unlocked or excess capital returned.
Louis J. Desy Jr.
Chesapeake Energy's Borrowing Limit
I can't believe any banker would have allowed it. This is how banks get into trouble. Hopefuly NG prices will rise and everything will work out ok, but if it doesn't, then I expect CHK will draw down the whole credit line and the bank will get stuck with lots of property and no one to sell it to.
Louis J. Desy Jr.
Shares are probably worthless
The schedules have not been filed yet. BTUUQ asked for an extension to file the schedules, so they should be filed any day now. Once that happens, we will be able to see if the market value of the assets will cover all of the liabilities with anything left over for the common shares.
At this time, I am expecting that there will not be enough to cover all of the unsecured liabilities, meaning that the common shares will end up worthless. The unsecured bonds are trading like they are going to suffer large losses, meaning the common shares would get wiped out.
While the stock has been up from its post filing lows, I think that is based on the retail market thinks the company is going to be saved and not reading the current situation properly.
I had been waiting for the common shares to fall below $0.50, and then going to play any bounces, since I have some JUNE 2016 $0.50 put options that would protect the trade, but it looks like they are going to never be in the money with what the shares are doing. Fortunately, I sold the $2 and $1.50 puts on the first day, instead of trying to wait for 'lower prices'.
I do find it alarming that the retail market is almost trading the stock back up to the point it was at just prior to filing BK; it is like the retail market is saying the filing Chap 11 is a 'non event' when the truth is the common shares are probably going to be wiped out.
Louis J. Desy Jr.
Disclosure: Still holding JUNE $0.50 puts
Not until they run through the line of credit
They are good until 2017 at least. Unless something strange happens and the line of credit get cancelled, the company is good though 2017 since the line of credit will not be reviewed until mid 2017.
Of course, the problem is that as they continue to lose money, and end up drawing down the line of credit, it pushed the common shares further to the back of the line in any recovery.
I think the most likely outcome, unless there is a massive spike in the price of NG (like $9/MMBTU) is that the common shares will be a 'zombie' with the company not filing BK but the company not making any money either.
If BK does come for the company someday, I expect it will not be until the whole $4B line of credit is drawn down, and that could take a while, like over a year, maybe as long as three years.
Louis J. Desy Jr.
Common probably to be wiped out
The stock may not open at all today since they get delisted and need time to move over the the OTC for trading. The same thing happened when BTU filed for Chapter 11, halted for the day and then reopened under the new symbol on the OTC BB.
I can understand, but not agree, with why some people would gloating about their prediction of a filing having come to pass. The reason is that prior to this anyone who questioned the 'pumpers' was probably being mocked and openly called a fool; even though they were completely correct in that the company was doomed.
Louis J. Desy Jr.
Disclosure: I had shorted SUNE around $10 months ago but closed out around $8 months when it seemed 'stuck' in its decline.
No reverse split announced
There has been none announced. In a BK there is no need to do one. Usually, a company does a reverse split to meet minimum price requirements to keep the listing on an exchange like NYSE.
Since they are in BK, they get 'booted' off the of exchanges and stuck being on the OTC, so there is not reason to do a reverse split to get the share price up.
Louis J. Desy Jr.
Book value
The problem is that is book value, what they paid for the assets. The current market value is probably a lot less and the losses will get booked once there is a transfer of assets or sale of assets.
The same thing happened over at Allied Nevada Gold (ANVGQ). Once they started selling stuff off, all kinds of loses got book and wiped out the equity, but it was too late of people to realize this was going to happen.
Louis J. Desy Jr.
HQ being rewarded
Yes, that does happen a lot. The argument or reason given is that they are key people and are needed to run the company. The problem is that one of the reasons the company is in such bad shape is that they made bad decisions and ran it into the ground.
While I can not fault them for not seeing the world markets being flooded with oil, driving down prices and making coal less needed, I do fault them for piling on debt to by more properties when prices were 'sky high' and almost certain to go lower over time.
There have been arguments that Chapter 11 should not be allowed and that companies should only be liquidated so the assets end up in the hands of a new set of managers, not with the same old people that ran things into the ground.
Louis J. Desy Jr.
The subsidiaries and the common
I think you are confusing common stock equity (shareholder equity on the balance sheet) with assets. The two are different things.
The subsidiaries are part of the assets of BTUUQ in the bankruptcy estate. At some point, once the plan is announced and put into effect, those assets would either still belong to the existing shareholders or 'new' shareholders in the reformed company (the 'new' issued common shares) would be distributed to the different classes of liabilities in the bankruptcy estate in order of priority.
So while the subsidiaries may not themselves file bankruptcy, they are assets that will someone get distributed to the liabilities when the company is reformed.
I am expecting that the credit line and bonds will get all of the new common shares in the reformed company, part of which will include the subsidiaries; and the existing common shares will be cancelled (or get warrants that are virtually worthless).
Louis J. Desy Jr.
The 'agency' problem
The problem is that management does not really have any more risk in it. Any loses in the common shares are already done and there is not much to do about it. (Although I now see the common shares trading up 15% to $0.95!)
At this point management is really 'playing with other people's money'. If they take a gamble, management wins. If the gamble fails, then other people lose out and not management.
The agency problem is that the downside or lose gets put onto someone else besides the risk taker.
If it was management's money at risk, then they would probably be more conservative with the money.
Louis J. Desy Jr.
'Limited' trading with $0.50 puts
One thing I had been trying to do is to figure out what to do with my $.50 puts. I should have sold them yesterday, along with everything else, but didn't.
BUT anyone holding $0.50 puts may be able to use them to 'protect' trading in the common shares for the same amount of shares as long as they but the stock at, near, or below the strike price. So unless BTUUQ has a big drop, it looks like that is what I will be doing, assuming the stock drops to $0.50 or less prior to June.
this risk in holding and not dumping is that th options expire worthless, but the pricing in them is so bad that it wouldn't be much worse than selling at market now.
Even if I by shares at $0.80, the worse I can lose is down to $0.50, since I could exercise the options and get back $0.50 per share.
The benefit is that I can trade the stock, and have downside protection at $0.50.
One problem is that I am limited to the number of options I have now, since when a stock is in bankruptcy, you can't open new positions in the options, you are only allowed to sell the options and close the trade, or exercise the options and thereby close out the option.
Louis J. Desy Jr.
What happens with common shares
In a chapter 11, what will happen is there will be setup a 'bankruptcy estate'. All of the assets and all of the liabilities on the day of the filing will be totaled up. The company, with court approval, will present a plan as to how they plan to either pay off the liabilities with the assets or what they will give the liabilities in the reformed company.
The liabilities will be given an order of priority, called classes. the highest classes will recover first, and go down the list.
The order of priority, with highest to lowest is something like this:
1: Debtor in Possession Financing (DIP).
2: Secured Bonds and secured lines of credit.
3: Unsecured bonds, trade credit with vendors and other unsecured creditors.
4: Preferred Shares.
5: Common Shares.
In the case with BTUUQ, while there is equity as reported by the last 10Q reports, the market value of that is probably a lot less and the money will probably run out before they get all the way down the list.
Most of the times in a situation like this, the common shares get cancelled, and the stock becomes worthless. There may be some warrants issues, but the value and strike price will be so high, since the reformed company needs to rise high enough so that all higher classes get made whole, that the warrants usually have no value.
The date of cancellation of the common shares will be about 8 to 10 days after the court enters an order confirming the plan, which sets the effective date. The 8 to 10 day delay is because there is a bankruptcy court rule where that is the time to file an appeal on the confirmation of the plan, but once the effective date happens, the common shares will instantly get canceled. In some cases, this event happens in the middle of the trading day and the common shares area 'dead'.
BTUUQ may have all kinds of up and down swings, but it is either people in the retail market who have no idea what they are doing; or it is the professional traders who know the retail market will 'show up' and are playing a dangerous game, but one if they can estimate the swings can make a large amount. The problem is that they risk the retail market panics and dumps everything, leaving them stuck with worthless shares. I usually do not 'play that game'; but if I did, I would only do it with money that if the stock disappeared in the next second, I would not be upset with the trade.
As an example of how volatile some parts are, there is no bid on the JUN $0.50 options that I have at this moment. Yesterday, it was at $0.23!
Louis J. Desy Jr.
Put options trades
I sold all the April 15 and April 22 put options yesterday. I had $1.50 and $2 prices. I got lucky in that I sold when the stock was in the low $0.60s. I missed the drop later in the day to $0.55, but at least I didn't hold on to them as the stock rose to $0.82.
I still have $0.50 Jun put options that I am going to close out today. I should have gotten out of them yesterday also. Originally I bought since I had expected when they filed that the stock would drop to $0.30 or under, but I think the shares are going to 'hold up', almost right until they get canceled.
The April 22 trade returned 40%, but that is because I bought them so long out that that the price was high.
The April 15 trade returned 193%, mainly because I bought most just several days prior to the filing. There was a lot of risk here, because if BTU had waiting until Friday to file, I could have been stuck with trying to close out the position when the stock didn't open for trading on the day they filed.
Louis J. Desy Jr.
Put option trades
I sold the Apr 15 $1.50 and Apr 22 $2.00 since I do not know what to expect in the next few days. One trade was up 193%, and the other was up 40%. I had expected more since I though the stock would drop to $0.30 or lower, but it does not look like that will happen before the options expired.
I would recommend selling and being happy with the trade since I do not think it will go lower.
You definitely do not want to hold and find the retail market is pushing the shares up because they think the compay is 'going to be ok'
Louis J. Desy jr.
I have no idea why anyone is buying the common shares
The bonds are much lower in price and higher in priority, that anyone who thought the company was going to be ok after the reorg, should buy one of the bond series instead of the common shares.
Some of the lower tiers of bonds are trading like those are going to be wiped out also.
Louis J. Desy Jr.
Looks like it will open around $0.75/share
It looks like BTUUQ will open around $0.75/share. At 9:13am, the bid/asked is $0.75/$076 with 64,500 shares traded already.
I am surprised at how well it seems to be holding up, since I expected a bigger drop.
Louis J. Desy Jr.
Disclosure: I own put options.
$0.70/$0.80 bid/asked in premarket
No shares have traded yet today, and I am not sure if premarket trading is available under the symbol BTUUQ but the bid/asked is $0.70/$0.80, so IF the shares opened, it would be off about $1.20 or a little more than 50%.
I don't think we are going to get a bounce, because they announced the filing and the DIP financing in the same press release.
ACIIQ did have a big drop and then spike, but that was mostly because there was some days between the Chap 11 filing and the DIP finacing; so the stock dropped big on the Chap 11 announcement and then ran up big when the retail market piled in on the DIP financing that they thought was going to save the old common shares.
Here, they made both at the same time, so I expect the Chap 11 dumping will swamp anyone buying because of the DIP financing.
Louis J. Desy Jr.
Disclosure: I own put options.
Early trading or bid/asked quotes
While no shares traded today (it got halted early on, around 6:45am), there are some reports that the last quote was $0.56 and I saw level II with bid/asked of $1.50/$0.75 but do not expect that will hold once trading starts tomorrow.
A number of posters seem to think or expect the stock will open down 80%, which would mean $0.41.
I am expecting that prior to the open of the market tomorrow, there will be a press release about the plan, and show nothing for the common shares.
I wish I had better news.
Louis J. Desy Jr.
Disclosure: I own put options.
Maybe no one notified the exchanges fast enough
I seem to remember a simular problem with the March 2016 bond interest payments. Some brokerage accounts credited the interest to their accounts since they were not notified, and then had to take the payments back when BTU told them the payments would not be made.
Louis J. Desy Jr.
Usually takes less time
I am surprised it is going to take so long. Usually the symbol changes only take a few hours to do and can be done if notified early enough in the day.
Louis J. Desy Jr.
Never mind, I found it
http://otce.finra.org/DLAdditions
BTU changed to BTUUQ and halted pending move to Other OTC, with trading to resume 04/14/2016.
Louis J. Desy Jr.
BTUUQ change
Is it a FINRA rule that the trading will not start until tomorrow, or was that an announcement?
If it was an announcement, I think this is the first time I have ever seen a stock stopped for the whole day!
Louis J. Desy Jr.
Trading halt code D
It looks like the symbol is going to be changed before trading starts up again. I thought it would have been finished by now.
Louis J. Desy Jr.
Last trade 1,275 shares on 04/12/2016
I am showing 1,275 traded last yesterday, 04/12/2016.
This morning it was halted at 6:45am and nothing since.
http://www.nasdaqtrader.com/trader.aspx?id=tradehalts
04/13/2016 06:45:33 BTU Peabody Energy Corporation Common Stock NYSE
T1
A T1 halt is:
"Halt - News Pending
Trading is halted pending the release of material news."
Louis J. Desy Jr.
Disclosure: I own BTU puts
BTU trading halted at 9:09am
Yes, it is halted right now. Level II quotes show it as $0.75/$1.50 but other sites showed it as under $0.60; so I have no idea where it will open or how it will trade.
Louis J. Desy Jr.
DIP bounce may not happen
Sine the announced the DIP financing along with the Chapter 11 filing, I do not expect there to be a 'DIP spike' since any spike up in price from the DIP financing will get swamped by the selling due to the chapter 11 filing.
If only they had waited a few days to announced the DIP financing, then we could have rode the DIP spike.
Oh well.
I hope that anyone working there is able to get another job soon and this just ends up being an unplanned vacation for them, but I fear the areas these mines are in have been devastated and there is simply not enough work for people.
Louis J. Desy Jr.
Disclosure: I own put options on BTU but I am not happy about what has happened and wish I could have done something to stop the Chap 11. I would rather make money on a company and its workers doing well, instead of placing bets on when a company is going to go 'down the drain'.
I was not expecting until tomorrow.
I am surprised they filed today, I was expecting they would have filed tomorrow and was looking to but another small amount of put options.
I had even wondered if they wouldn't file until after the April 15 options expired worthless. I was planning on buying a few more April 15 put options near the end of today, and then if nothing happened on Friday, roll the position over to April 22 late in the day on Friday.
Louis J. Desy Jr.
Equity is negative
The problem is that one of the recent 10Q or 10K reports showed equity negative something like $800 million or more, meaning one can expect to common shares to get almost nothing.
While I am glad to hear the common are getting something, they are getting something where the strike price will be so high that they will never get in the money.
While the common shares may go up, it will only because the retail market is trading it and have no idea how little the warrants will be worth.
Since the downside is to get stuck with something that is worth almost nothing, I would recommend getting out of the trade with a profit and being happy about it, instead of holding on for more money.
Louis J. Desy Jr.
Yes, it will get cancelled
I expect at some point the common shares will be cancelled. I have not looked in a while, but I will check to see how the Chap 11 plan is coming along a little later tomorrow, and give you an estimate when I expect it will happen.
Anyone holding the stock into this run up has been given a gift and should take profits.
Louis J. Desy Jr.
Still above $2
Here we are, just a few days from the company filing for Chapter 11, and the stock is trading like there is nothing to worry about.
I am simply amazed.
Louis J. Desy Jr.
Disclosure: I own BTU put options and wondering if I should buy more, either April 15 or April 22.
Using the credit line does not help the bonds much
The problem is that the credit line is higher in priority than the bonds, so if CHK starts drawing down the credit line, the bonds have less to recover from and there is nothing that can do done to stop CHK.
Over the short term it may be positive, but if CHK draws down the entire credit line, it is bad over the long term; since now there will be billions in borrowings ahead of them in priority.
Louis J. Desy Jr.
Borrowing base left in tact
http://seekingalpha.com/news/3172399-chesapeake-energys-borrowing-base-maintained-4b?uprof=45#email_link
The borrowing base was left intact and the next review is not until June 2017.
I guess some loan officer will be changing jobs around May 2017.
Louis J. Desy Jr.
Disclosure: Amazed that anyone would loan CHK money for anything.
Holding above $2 for the moment but sliding
I am still amazed that the stock is holding up so well. While this week the stock seems to have shown some weakness, it is not anywhere near what I thought it would be showing considering that next week is the end of the grace period.
One seekingalpha article seemed to think that one reason the stock was holding up as well as it has was that with the reverse split there are a lot fewer shares out there. While, in theory, it should not matter how the ownership/common shares are divided up, everyone knows that at very low prices or very high prices there is some strange trading that goes on partly due to the extreme price.
A Win-Win Trade In Peabody Energy:
http://seekingalpha.com/article/3963737-win-win-trade-peabody-energy
Looks dead
LINE looks worse than dead. Apparently, there is some talk that instead of the shares just being worthless with a Chapter 11 filings, there could even be a tax liability triggered.
The debt exchange just looks like the high series of debt rearranging the order they will be in for the Chapter 11 filing that will probably happen within 90 days.
Louis J. Desy Jr.
Making too much money
I think the problem that people have is not just that the company lost money, but there is still a good chance that they end up bankrupt. The problem is that people like him were one of the main architects of the coming disaster, and are being rewarded for engineering it and making it all possible. So far that person has not suffered anything for what is happening and is even being rewarded for doing it!
Instead of being fired and replaced with someone who might be able to save the company, shareholders instead are treated to people who are getting paid large sums of money as they sail the company over the edge into bankruptcy.
That is why people object to the salaries.
Can anyone seriously make the argument that anyone at the top really is worth what they are being paid or even deserve what they are being paid for the 'great work' they have done with the company?
If somehow this company survives, it will not be because of the great job they did, it will be because a miracle happened and rising NG prices saved them. Anyone can do a good job if they happen to be in the right place at the right time. Such behavior also rewards people who just 'go along to get along' in spite of what the facts show.
At the moment, it appears the 'great plan' for the company by the people running the company, is to sell off whatever they can, and draw down the credit line. Then if things have not turned around, leave the bank stuck with billions in loans that they can't recover and most, if not all, of the bondholders and shares holders with nothing.
I am amazed that any bank would even allow the line of credit to still remain open for the company to draw upon.
Louis J. Desy Jr.
Moody's downgrades Bowie to Caa1
It does not look like Bowie Resource Partners LLC has the money or ability to raise the money needed to complete the purchase of mines from BTU.
March 31, 2016 press release about the downgrade:
https://www.moodys.com/research/Moodys-downgrades-Bowie-to-Caa1-outlook-stable--PR_346665
Selected quotes that I think show how little cash Bowie has and would be unable to borrow anymore money to purchase anything:
Tape seems to be saying nothing happening
Two and a half minutes into the trading day, vol less than 50,000 shares and the stock onlt off a few cents.
It looks like the tape is saying that nothing is going on today with the 90 day going concern deadline.
Louis J. Desy Jr.
Disclosure: I own BTU put options.
PPS didn't go up 03-31-2016
I would expect that is because there is no word what is going on with the 90 day deadline due to the going concern language in the 10K report.
I sent an email to the company asking if there is a grace period that applies or if they lender waived the 90 day default. I am looking to find out who the lender is so I can contact them also.
While not a big change in price, it did decline in yesterdays by $0.12 for 4.92% and yahoo is showing pretrading this morning down another $0.06 at 8:39am, but the volume is below the 3 month average volume is this may just be trading noise and not mean anything special.
Louis J. Desy Jr.
Disclosure: I own BTU put options
Link to 10K report as filed with SEC:
http://www.sec.gov/Archives/edgar/data/1064728/000106472816000157/btu-20151231x10k.htm
Section about 90 day deadline in 10K report: