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Retracting an earlier opinion regarding no other alternative to paying off debt than an asset sale!!!!!
Would I be correct to say that Chemtura can exit BK once terms with it's bondholders have been renegotiated, and the revolving loans due in 2009 have been paid off? These debts total $564 million roughly, the rest of the 1.5 billion in debts aren't due for years. I realize $564 million is no small amount, however if terms for these two items can be renegotiated, then Chemtura should be able to exit BK fully intact. Bankruptcy was essentially a stalling technique used by Chemtura to give them more time to pay off these debts. In an earlier post, not sure of the exact date, I mentioned that I thought Chemtura had no other alternative to pay off it's debt, other than to sell off some of it's assets. Now that things are turning around I wonder if they still need to sell off assets? Doesn't the fact that they are now starting to show monthly profits give them more alternatives for paying off their debt other than an asset sale? Of the total debt that Chemtura has, they really only need to be concerned with about 30% of it now. Chemtura should come out of this BK smelling like roses, and so should it's shareholders. I was having my doubts for awhile, but after reading an old post, I now realize the potential of this stock and the error of my reasoning!!!!
I suspect the buyers are a private equity firm, but your guess is as good as mine as to whom they are. I've looked hard but I can't come up with any names, but I'll keep looking!
Isn't the current bond price of roughly $63 for the 2016 bonds. If I'm current the current price on the 2009 bonds aren't even half of what they were prior to chapter 11?
Who is selling at these prices? The float has got to be pretty close to dried up?
What about making chemicals for the solar industry?
I'm probably looking in the wrong places, but I can't find the bond price just prior to filing for BK? Does anyone know what the price had fallen to just prior to filing chapter 11?
Bankruptcy gives Chemtura the ability to renegotiate terms with it's bondholders. Hopefully those news terms bode well for bondholders. Someone posted a question a little while ago about the impact of the rising bond price on the bondholder. This may sound like a stupid question and probably is, but wouldn't the bond prices have tumbled immensely if the default on these bonds had kicked in when Chemtura filed chapter 11? I'm no bond expert, in fact I know very little about how these things work, but aren't rising bond prices a signal that investors feel Chemtura will emerge fully intact from bankruptcy, and that their chances of recouping 100% of their investment are very good? The more money being pumped into these bonds the quicker Chemtura pays off debts, which in term gets them out of BK faster. If the Chemtura BK was going to force them to pay only a small % of the face value of these bonds, then why have they continually increased in value since filing for chapter 11?
It appears that Chemtura is now self sufficient and funding it's own operations through it's business proceeds. Is any of the $190 million or so they borrowed from the DIP still being used to fund overhead costs?
I've tried my best to educate myself on how bankruptcy will effect Chemtura's immediate debt obligations. Bankruptcy will allow them to restructure their debt and perhaps even prevent them from having to sell an asset or two, though personally I think it will still happen. What debt will they be concentrating on when they emerge from chapter 11?
Will Chemtura have used all of the available $400 million in DIP financing before they exit BK. I believe I saw something that said Chemtura has only used about half of this thus far. Just wondering how much of this DIP they will have to pay back? Will they have used the whole $400 million before they exit BK?
The bottom line is that we need to get some momentum going here folks. This is just going to bounce up and down until we see a catalyst. Rogerson and company have proved they are starting to turn the business side of things around, however a few good MOR's in a row is not enough for any big price movements. Everything that Rogerson and company have done so far has been great, but in order to peek interest in this company, Chemtura has to get rid of it's debt. Shareholder equity will have to increase greatly before the PPS of this stock makes any significant moves. The catalyst will have to come in the form of refinancing or an asset sale, perhaps an issue of preferred stock or maybe an infusion of cash from a private equity firm. As long as Chemtura's debt obligations remain up in the air, the PPS will be stuck in limbo.
I wouldn't call 100k, 175k blocks @ .22 big money, at least not in terms of institutional investing!
I agree with all your replies. Perhaps I have misstated my words. I believe this stock has potential otherwise I would have dumped all my shares. My point was that I don't believe enough has happened with this stock (news, financials, volume) to warrant any big jump in PPS. Something big might happen tommorrow, I don't know, however the movement in the PPS has been slow. Many positive things are happening with this company, yet there has been very little upward movement. I was merely trying to say that in order to spur on upward movement, we are going to need more than what we have been getting!
Bold prediction! I truly hope your right!
That was the expected runnup after filing for BK. Happens quite frequently after BK. Run up and sell off. With most of the selling done, this stock is settling in, waiting for a catalyst. The big boys are going to need a catalyst to jump back in. It's going to go up and down for a while until we get some significant news. I may be totally wrong here, I'd love to see this thing trend upward regardless of the reason, but at this point I believe we need something else besides a few good MOR's. Rogerson and company are doing a remarkable job, but we need something to jumpstart the big boys interest. If any of you see things differently I'd love to hear your take on things.
Just an up day, not the start of any run up. We need a catalyst to make this run, and right now we don't have one. I think this stock has bottomed, but in order for this stock to begin a gradual run up we need some sort of impacting news, and right now it doesn't look like there is any on the horizon. I am going to hold onto my shares, and try to wait patiently for some significant move. I still believe that this bankruptcy will end sooner than later, but I'd be surprised to see this stock move over .35 before the end of August, unless we get "some news". It's going to take more than a few good MOR's in a row to get this moving!
Definitely accumulation happening. This pattern has been going on for weeks. Someone or some group has been buying up blocks in the .21 to .23 range for the past few weeks. I wonder who is buying up these blocks? They are definitely flying under the radar! Hard to find out any information. Anybody know who the players are?
Chemtura debt may get postponed, but it's not going to go away. An infusion of money will "have" to come from somewhere. I realize speculation is meaningless, but I was just wondering where those on this board think it will come from? Just curious!
Thank you MadClown for the post. The site you posted cleared up my confusion. The $170 million or so I mentioned was part of the DIP credit facility. Basically Chemtura only needs to concentrate right now on paying off the bonds and what part of the money they have used from the DIP before exiting BK. Where do you see this money coming from to pay off these debts? 1. Asset sale? 2. More loans? 3. Issue of more stock (dilution or preferred stock issue) 4. Buyout/takeover? 5. Renegotiate payment terms on debt? What other options are available? I think whatever the outcome, it will happen within the next few months. I don't see this BK playing out for long?
Isn't there some other $170 million loan or something like that due this year also?
Thanks for the reply jrdig7. If CEM exited next week the POR has to be filed before the judge signs off? Is that correct?
MM's are definitely holding the door open for accumulation. MM's are the ones in the drivers seat with regards to the PPS for this stock. There is much more buying than selling going on these past few weeks, but yet the price seems to staying in the .21 to .23 range. Why, quite simply someone wants cheap shares "now" because they see promise for Chemtura in the future. It's not about buying 3,4,5 or 6 million shares at .22 for a tax write off. The tax benefit is minimal. Keeping these shares low is enticing for someone to accumulate plain and simple. There is definitely collusion going on between the MM's and someone. What other explanation is there?
If Chemtura exits BK early, which I think they will do, will a POR still need to be filed? Is a POR a requirement of bankruptcy, regardless of how long it takes a company to emerge from BK? Once a company files chapter 11 do they have to complete all steps of the bankruptcy proceedings and see the BK process through in it's entirety? I don't think the Chemtura bankruptcy will be a long and drawn out one. The bonds basically were the reason for them filing chapter 11. You have the DIP financing to pay back also, but I believe an asset sale will happen soon, perhaps no more than 2 months from now. If that doesn't happen Chemtura will find alternative financing within the next couple of months I believe. I think the extension to file a POR in November is more time than they need. I'm probably wrong here, but I don't believe this BK was that complicated. Any opinions?
When I read these posts they all seem to imply a common theme. The theme being Chemtura stock as a long term investment. I sold most of my post bankruptcy Q stock @ .45 and made my investment back plus a decent profit. Now I am playing with house money so to speak. I knew prior to investing in Chemtura that doing so was a risky venture, however I managed to get in and out quickly, with a profit to show for my efforts. I hope that my remaining shares make me a profit down the road, however I haven't forgotten that more often than not, Q shares usually end up worthless when a POR is put forth and the company emerges from bankruptcy. There is nothing wrong with optimism and hoping that your investments pan out, but let's get real here. Chemtura Q stock is a gamble. If your a gambler and have the balls to invest in this stock great, but let's not forget that the possibility for share cancellation still remains, however small we think it might be. If Chemtura commons remain intact when Chemtura emerges from bankruptcy that would be wonderful, and I hope that's the case, however we shouldn't forget the possibility looms that our shares "could" end up worthless when CEM emerges from bankruptcy. I am not worried about this happening, so please don't tell me to sell out if this bothers me, because it doesn't. I am merely stating that we should look at this stock in the short term for now, short term being pre POR filing.
With all your DD and knowledge of BK proceedings are you personally convinced that commons will stay intact when Chemtura emerges from BK?
Thanks for all your responses. I hope we have a healthy PPS by the time the POR is put forth. I'm holding and hoping we see a PPS rise soon. When I compare the fundamentals and the PPS, it makes me wonder what the holdup is? It's just frustrating watching this stock try to get out of the mud!
I realize it is up 1000% but this is a $1,000,000,000+ operation. I realize Chemtura is in BK, and that these things take time, but the numbers just don't add up, that's all I was trying to say. From .02 to .22 is a fantastic gain, but the fact remains this stock should be higher. I'm not complaining, I'm just wondering what's holding this back?
Who is accumulating? With such low volume it certainly isn't the "big boys"! This stock is worth more than the range it has been trading in for the past few weeks. The ask could and should be considerably higher, don't you think?
I get the feeling that unless an asset sale happens or massive amounts of institutional buying occurs this stock will move very little toward the upside prior to emergence from BK. The common theme seems to be low volume, lack of interest, unwillingness to take risk and a lousy economic environment. Unless the economy picks up significantly, buyer sentiment is not going to improve. I can see a scenario where the PPS moves very little before the POR happens, and then the commons get heavily diluted or perhaps cancelled. I hope neither happens, and I don't want to sound like a pessimist, but as subzeroed pointed out Chemtura is in bankruptcy, and large institutional investors are reluctant to sink their money into a BK company in this economic environment. If the ecomony was healthy and Chemtura was in the same situation things would probably be different. I expected that I would have to exercise a large amount of patience when investing in Chemtura, and I don't want to contradict any of my previous posts, but I'm beginning to wonder if Chemtura will ever live up to the hype surrounding it? It may never live up to the expectations we all have for it! I hope the PPS is significantly higher come POR time, but then again maybe not. Right now it's looking like maybe not!
Could someone please educate me? I have a basic understanding of MM's and how they work, but how do they benefit from keeping the PPS of a particular security such as Chemtura low? Is this done to increase volume and induce buying? If say the bid was .45 and the ask .46 for Chemtura wouldn't they make the same profit? Is there any other purpose to keeping the PPS low other than to induce buying and selling. I'm a novice trader and also confused about why the bid/ask for Chemtura is not much higher than it currently is. MM's hold a supply of certain securities, so why can't they increase the bid/ask price when the BV of a security increases. I'd appreciate as much education on this subject as anyone is willing to offer!
What's it going to take short of an asset sale to move the PPS for this stock?Logically the PPS should be trending upward with the numbers now starting to show Chemtura is making a profit. The volume is low, however the small volume activity we are seeing seems to be coming from buyers rather than sellers. I realize large bid volumes obviously would be better, but what is holding the bid/ask in the range it's been in for at least three weeks now? There has to be manipulation going on by someone. Am I expecting too much from a BK stock? I realize that BK stocks probably move differently than listed stocks, but shouldn't the positive results we have seen for the past few months have some sort of effect on the PPS? There has to be some interest in this stock somewhere? Someone has to be intentionally holding this down?
What is the 5% rule? Someone mentioned in a post that Warren B. ascribes to this when trading.
How about adding a PE ratio as well MadClown?
Most likely the MOR will be released this week, if history repeats itself. I'm not one for predictions, however if we see a healthy MOR for the month of June, most likely the .20-.25 trading range we have been seeing for the past number of weeks may come to an end. Prior to BK Chemtura had been operating in the red for quite some time, and had not been a profitable company for a number a quarters, hence the BK filing. Now we are post bankruptcy. The economy is no better now than prior to BK, it may even be worse. I may be wrong here but doesn't Chemtura essentially run the same businesses now that it did prior to bankruptcy, except that now these businesses operate on a smaller scale due to restructuring and cost cutting? Last months MOR was much better than what we were led to believe. If the MOR for June shows that Chemtura has now become profitable, wouldn't it be prudent to say that the PPS should begin an upward trend? If Chemtura can show that it has now started to become a profitable company in this business environment, it would make sense that investors would start getting onboard. There is all kinds of speculation as to what events can jump start the PPS. Many think the only thing that will jump start the PPS between now and the time they exit BK is an asset sale. Others think the PPS will see no significant movement until a reorganization plan is put forward. Some don't see any real movement until Chemtura exits bankruptcy. I am not one of those people. I think investors will start getting onboard based on strong MOR's from here forward. If we see a strong MOR for June I believe an upward trend will start. What effect do you see the indication of profitability having on the PPS?
I've looked in a number of different places and can't find anything that confirms yesterday's meeting of creditors even took place. Does anyone know if this meeting went ahead as scheduled, or if perhaps it was rescheduled to another time? If the meeting took place did anything of importance happen? I would think court documents would reflect something, or is it too early to be looking for information on this meeting?
Doubts about an asset sale. My point for those who misunderstood me or perhaps I did not articulate my point correctly was that I am beginning to wonder if an asset sale is going to happen? I hope an asset sale happens, and I do realize Chemtura wants it to happen. The evidence suggests they are trying to sell assets, however the point I was trying to convey was whether or not it can happen in this environment? Did I contradict myself, probably, however I'm starting to have doubts. I'm sure these thoughts are not exclusive to me. I posted 6/25 that an asset sale is inevitable, however presently I'm having my doubts. This was all I was attempting to convey. Sorry if I was misunderstood. Thanks for your replies all!
Has a date been set for creditors to File Proof of Claims, and is there any chance a date for these claims will be set at tommorrows meeting?
There is no guarantee an asset sale will happen anytime soon, or for that matter at all. The actions that Chemtura have taken according to court documents indicate they would like to sell off some of their assets, however the question remains will they be able to? Evidence suggests that an asset sale is the most viable option for Chemtura to relieve it's present debt, but it's not their only option. Chemtura may not find a suitable buyer for their assets, and may have to consider other means to pay off debt. An asset sale may be the best option, but it is not the only option. I believe it will be months before an asset sale happens, if it happens at all? With the current economic environment the way it is, there is a strong possibility Chemtura will have to use other means to rid itself of debt, besides an asset sale. I'd like to see an asset sale as much as anyone,because I do think it will have a positive effect on the PPS, but the on the other hand let's get real, an asset sale may not happen for some time, or perhaps not at all. People need to stop with the asset sale is imminent mentality, because no one except those involved in the BK really knows what is going to happen in the near future.
Debt for Equity?
I've heard talk about the possibility of trading debt for equity? This would be a share price killer! Anyone heard any talk of this?
I agree, there is alot of impatient people out there. I think people are reading bad news into the court delays. Perhaps they are worried that their shares will be diluted or cancelled. Investors need to have patience, things happen slowly in bankruptcy. There is nothing to suggest things are getting worse for Chemtura, quite to the contrary. All evidence suggests Chemtura is getting stronger. With a whole slew of courts events happening this month, investors need to hang in there. Your patience will be rewarded!