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It would appear that the “filing under seal” is standard operating procedure. The rates and negotiations could contain proprietary information that the DIP agent (Citibank) doesn’t want its competition to know. This was a requirement that the DIP agent demanded as a condition of entering into the 2nd amendment, not something that Chemtura is trying to hide. Here is the reasoning provided in the original motion to file under seal.
“Because the Fee Letter contains detailed proprietary information that is considered by the DIP Agent and other similarly-situated banks to be highly sensitive, confidential and not typically disclosed to the public or made available to competing financial institutions, the DIP Agent required, as a condition of moving forward with the Second Amendment, that the Debtors use commercially reasonable efforts to prevent the Fee Letter from becoming publicly available. Accordingly, the Debtors have filed this motion in connection with the filing of the Amendment Motion.”
http://www.kccllc.net/documents/0911233/0911233090709000000000012.pdf
I will add the P/E ratio for June. The P/E will have more meaning and utility if we can get a few consecutive months or quarters of positive earnings to compare. Thanks for the input!
Chemtura MOR Spread March-May 2009
http://www.scribd.com/doc/17338858/Chemtura-MOR-Spread-May-2009
Here is a financial spread of the last 3 MORs (unaudited) with a few selected financial ratios added. For future reference, it can also be accessed from the blog site in the "Financial Information" section. I will update it with June's numbers when they become available. Starting with June, I will probably add a cashflow section. If you think any other ratios would be good to have, just let me know.
Fine explanation. That is how I understand it.
Just a reminder to watch for the monthly billings submitted by 3rd party service providers like Kirkland and Ellis as well as Lazard and others. These service providers have to submit their billing reports to the court in order to receive payment for services provided in connection with the work performed in these Chapter 11 cases. These billings should show up in the court documents on PACER and KCCLLC. Look for the line item descriptions in their billing statements to find the key issues they have worked on and researched.
I believe the court system for the Southern District of New York allows service providers to submit their billings on a 120 day schedule unless they petition the court to allow for more frequent billing. I do not remember seeing any such requests hit the court docket. Since the BK petition was filed on March 18, 2009 the first day to file billing statements would be this Thursday, July 16, 2009.
It will be interesting to see if there is any mention of an asset sale or if any potential suitors are named. I would expect to also see some activity with respect to both the foreign and domestic NOLs.
Unsecured Creditors Statement on 2nd DIP Amendment
See the link below for my attempt at a summary.
http://chemturaresearch.blogspot.com/2009/07/chemtura-official-committee-of.html
Sales Breakdown by Geographic Region
http://www.kccllc.net/documents/0911233/0911233090709000000000013.pdf
Here is a breakdown by geographic region of Chemtura's $3.5 Billion in net sales recorded in 2008. See page 8 of the source document linked above for more information.
U.S. and Canada - 48%
Europe & Africa - 32%
Asia/Pacific - 15%
Latin America - 5%
Thanks for the positive feedback that you and several others have shared. In creating the blog I just wanted to have a place to go to quickly review the bigger events of the day or week related to the court proceedings, financial reporting, press releases or other related news items. I know it can be time consuming to read through several hundred posts per day. I intend to keep it "news based" as opposed to offering opinions. I figure that IHUB is a more appropriate place to discuss opinions and "what if" scenarios. I can't promise that I will cover every significant story but I will do my best.
GLTA
Chemtura Bankruptcy Case Update - July 10, 2009
http://chemturaresearch.blogspot.com/
Proposed DIP Financing Amendment
http://www.kccllc.net/documents/0911233/0911233090709000000000011.pdf
Chemtura is seeking approval of the court to obtain an extension of the maturity date of the DIP financing as follows:
The Second Amendment provides for two possible extensions of the Stated Maturity Date, as follows: (1) from March 22, 2010 to June 22, 2010 (the “Fifteen Month Extension Option”) and (2) from June 22, 2010 September 22, 2010 (the “Eighteen Month Extension Option” and, together with the Fifteen Month Extension Option, the “Extension Options”). Second Amendment
at § 1(c), (h).
The creditor's committee and DIP lenders have already given their approval.
The transcript for todays 341 hearing (MOC) should be available within 5 business days. I am trying to find out more information. In the meantime, keep watching http://www.chemturacommittee.com/home.php3 for any related news. This is the official website of the Creditor's Committee. If any transcripts, news or related summaries are to be made available, this would be the most likely place to find it. I will keep digging and post any info I find.
Thanks for giving the heads up. Didn't notice it yesterday, been busy working on some other Chemtura related projects. I briefly read the filing and I hate to say it but the Occidental legal team just cut thru Biolab's case like a hot knife through butter. If you like reading adversary proceedings where two heavyweights trade blows this one will not disappoint. I wouldn't worry about it. If Occidental wins it won't cost Chemtura anything.
The company appears to have been trying to make the situation appear more dire than it really was. One of the doomsday scenarios they mentioned in the original complaint was complete liquidation of the entire business line if they did not receive their orders within a few days of the complaint. Obviously this scenario did not materialize, LOL. I am sure that neither company wants to lose the relationship they have with each other. The remaining issue centers around whether Oxychem has to reimburse Biolab for any delay in shipment. If they do win, they will recoup related court costs and be awarded some form of monetary damages, but probably not enough to get too excited about.
New Source of Chemtura Bankruptcy Case Information
In connection with docket # 716 the following is a link to the Chemtura Creditor's Bankruptcy case information including a monthly calendar among other useful items. This may be a source to turn to for information regarding the results of the Meeting of Creditors to be held tomorrow. We shall see.
http://www.chemturacommittee.com/home.php3
I heard from the Trustee and she indicated that the responses of both the Debtors and Creditors would be mailed to the individuals who petitioned the Court for an Equity Committee and that there would be a certain period during which responses would be accepted for consideration by the Trustee before a final decision is made. All of this came with a stern warning that all of the information contained in the responses of the Debtors and Creditors was confidential and not to be made public. Due to this warning, I will no longer discuss the EC issue (as it relates directly to this case) publicly until the issue surfaces in the court filings. I will be doing more extensive research on the issue as it relates to other cases and will post the results of that DD as it becomes available.
Apparently, this stage of the process is not part of the public domain. This is consistent with the PGPDQ case as their initial attempts to form an EC in February 2009 commenced with the petitioning of the Trustee directly. These initial petitions and responses were not filed with the court docs. It was not until the Ad Hoc Committee (who had obtained legal representation) filed an official motion before the court in March 2009 that the Equity Committee requests became part of the court filings. The official appointment of the EC did not happen until June 18, 2009.
This is a process that will carry on in the background, for now. Based on the PGPDQ timetable, it may not be resolved for a while. Now that the Debtors have filed their motion to extend the exclusivity date to November 2009, time is not the issue it once was when the exclusivity period was about to elapse in a matter of a few weeks. We can breathe a sigh of relief for now. I know it is difficult, but this case will require patience. We shall see what happens going forward.
GLTA
Here is the latest version
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=39272322
CEMJQ Calendar of Events Updated 07/04/2009
Wednesday, July 8, 2009 – Meeting of the Creditors (MOC) and OxyChem’s response to the summons for a pretrial hearing is due. Judge will also rule on motion to extend the exclusivity period to July 28, 2009.
Monday, July 13, 2009 – 2015.3(a) report due (basically it is a Report of Financial Information on Entities in Which a Chapter 11 Estate Holds a Controlling or Substantial Interest)
Wed/Thur, July 15/16, 2009 – June Monthly Operating Report is expected
Thursday, July 16, 2009 – Reorganization plan is due (Original 120 day exclusivity period lapses. The current motion to extend exclusivity would push this date out to November 13, 2009).
Tuesday, July 21, 2009 – Court hearing for the Lyondell leases.
Thursday, July 23, 2009 – Deadline to file an objection to the motion to extend exclusivity up to November 13, 2009.
Tuesday, July 28, 2009 – Omnibus Hearing - Pretrial hearing for the OxyChem adversary proceeding, fate of the BP hedging contracts ($800k per month cost savings) and various other issues. Judge will rule on the motion to extend the exclusivity period to November 13, 2009.
Friday, November 13, 2009 – Proposed date for the “Exclusive Filing Period” to lapse
Tuesday January 12, 2010 – Proposed date for the “Exclusive Solicitation Period” to lapse.
The filing of the motion to extend the “exclusive filing period” was made by the debtors on behalf of itself and the “statutory committee of unsecured creditors.” With that in mind, it is not likely to be met with much resistance as all “parties in interest” realize this is both necessary and beneficial for all stakeholders to realize maximum value for their stake. If, by chance, there are any objections, they would most likely be filed in support of the debtors motion with a “Limited Objection” stating some stipulation that they would like added.
Since some of these dates and other references may seem a bit confusing I will attempt to provide some additional commentary. To begin, we have two dates related to “exclusivity.” The first of which is the “exclusive filing period” and this relates to the period of time during which only the Debtor may file a plan of reorganization. The second exclusivity period is the time during which only the Debtors may solicit approval from the court and other parties in interest. Where the distinction would come in is if the Debtor’s filing exclusivity period lapsed on November 13, 2009 and a plan was not yet affirmed, then another party in interest could file a plan on November 14, 2009 but the other party could not solicit approval of their plan for another 60 calendar days, which would be January 12, 2010 if the current motion is upheld. The debtors can both submit their plan and solicit approval of the court at any time, but the period of time during which they are the only party that has the exclusive right to do so would elapse in November and January respectively.
Now what might also be confusing is that there are now two dates for which the Debtors have requested extending the exclusivity to. The July 28, 2009 date comes in because that is the next omnibus hearing, or court date where many other motions will be heard. Since the current exclusivity period elapses before this July 28, 2009 hearing they have requested a bridge order that the Judge will consider on July 8, 2009. So the July 8, date will not be a court date just the date that the Judge will consider upholding extension to July 28, 2009. The period between now and July 23rd is the time that other parties have to object to the motion to extend exclusivity to November 13, 2009 which will be ruled on at the July 28 hearing date.
Happy 4th of July to yourself and all of the other board members. Take time to enjoy your families and remember to reflect on what it means to have the freedoms we enjoy and the sacrifices that others made for our benefit.
BTW, Cowboy, my guess would be that when you first saw the clouds part and everything brightened up and cool breezes started to blow occurred at about the same time as the motion to extend exclusivity was filed ;)
GLTA
I agree. Some would argue that the ratings agencies are now a contrarian indicator because they are backward looking and because they have been so far off. What use are they when they come in with a downgrade after a 99% decline in the price. I want to know where were the downgrades before this happened. I am not speaking just about this stock, but for thousands of debt and equity securities that have taken a nosedive during this recession.
The way I look at it is that a downgrade now indicates that the selling has probably just about reached capitulation and it is near time to buy. An upgrade to me indicates that the boat may be overweight and it would be prudent to watch for signs of a coming decline. This is not necessarily true in 100% of cases but this type of thinking has been widely discussed among some pretty savvy financial folks that I pay attention to.
I would think that anyone who has followed the court filings on a regular basis and one who also understands that this is a very complex case will fully understand that the motion to extend exclusivity was a necessity. 120 days is simply not enough time to restructure an entity of this size and complexity. They have, by their own admission, over 30,000 creditors, 4000 executory contracts and leases, many litigation claimants, thousands of patents, ongoing attempts to divest assets and a large global footprint. In understanding this, it should have been expected that this case would not be settled in 120 days.
I generally avoid making daily price predictions, if for no other reason than to say that my time horizon for ultimate realization of value extends beyond the daily fluctuations in price. However, that is a personal decision that everyone must make for themselves. I do pay attention to the court filings and I constantly scour for related news on a daily basis to see how they might affect the price. There is simply no one that can say with any degree of certainty what the daily price movement might bring.
There is an old adage that says markets can stay irrational longer than investors can stay solvent. That saying suggests that many investors have lost money (or missed opportunities on the upside), not because they were wrong, but because they failed to be right within the right timeframe. Anyone trying to market-time this or any other security does so at the risk of incurring an opportunity cost if news breaks one way or another. This is true on both the long and short side of any trade.
Unfortunately, my crystal ball is broken. Even if it worked, I am one to shy far away from any price predictions. I will offer up that in recent pre-BK history this company has traded at .75 to 1.00 times book value. See the post below for a discussion on that topic.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=38738305
The reason they have requested the extension is to protect the "Right of Exclusivity." In essence, it allows the Debtor to formulate and submit their plan without the involvement of other parties in interest. In that respect, they are trying to keep control of the company. The original exclusivity period is for 120 days from the petition date. When that time elapses, they no longer have the exclusive right to formulate the plan because other parties in interest can submit plans. Extensions of this date require prior approval of the court and other parties have to be allowed time to file objections.
This is why I mentioned a few weeks ago that we would know well in advance of the reorg due date if that date would be extended because it is not exactly the type of motion that Judges look favorably upon if brought at the 11th hour. If the court grants this extension into November it gives the company more breathing room and IMO, improves the overall chances of successful emergence from BK.
Chapter 11 Bankruptcy is a very powerful institution. This is a fact not lost the company or its counsel.So rest assured they are using the BK process to their advantage. Here is a quote from docket #707 "Since the Petition Date, the Debtors have worked diligently to stabilize their business operations and move forward with their reorganization, and, where necessary, using the bankruptcy process to their advantage."
No decisions have been made or released, as far as I am aware.
Thanks for the link.
It is not necessarily a bad thing and it is not a surprise at all. This filing was expected as this case is too large and complicated to play out in 120 days. Under this scenario it gives the company time to return to profitability and potentially negotiate a sale of one of its business lines. Look at it this way, if they had filed their plan of reorganization on July 16 with not enough cash to pay off all the debt then my suggestion is that they would most likely have to dilute the equity base substantially, absent a massive debt renegotiation. Just divide the outstanding debt by the price per share to see how many shares that would come to. This gives the company time to breathe a bit, rework contracts, settle litigation and time for the markets and the chemical sector to potentially improve.
GLTA
Motion to Extend Exclusivity Period
http://www.kccllc.net/documents/0911233/0911233090702000000000011.pdf
Not sure if this was posted yet but the link above is to the Debtor's motion to extent the date by which it has to file its plan of reorganization. They now seek to file the plan by November 13, 2009. The Judge will hear the motion on July 8, 2009.
Time for dinner now.
Given enough information we can perform a pro forma for the balance sheet and income statement and get pretty close. As soon as information becomes available, that will move to the top of my "to do" list.
Decomposition of Chemtura’s Revenues by Business Segment
Took the following info from the 12/31/08 10-K. Thought it might be useful to have as a quick reference in the event we get an asset sale as it will show us the impact on revenues going forward if one of these business lines were to be sold off.
Polymer Additives – 48%
This business line includes Antioxidants, Brominated products, Flame Retardants, Fumigants, Polymerization Additives & Initiators, PVCs & Surfactants)
Performance Specialties – 28%
This business line includes Petroleum & Urethanes.Our urethane chemicals business provides key products to global polyurethane processors. The urethane chemicals business is comprised of two product lines: Fomrez® saturated polyester polyols and Witcobond® polyurethane dispersions. We are a global manufacturer and marketer of high-performance additive components used in transport and industrial lubricant applications. We are the global leader for alkylated diphenylamines antioxidants (“ADPAs”), which are marketed as Naugalubes® and used predominately in motor oils.
Consumer Products – 15%
This business line includes pool chemicals and other multipurpose cleaners. Pool and spa related brands include BioGuard®, Aquachem®, Pooltime®, Omni®, Bayrol®, Poolbrite®, Miami®, and Crystal®. Multipurpose cleaners are marketed under the name of greased Lightning®.
Crop protection – 11%
Our Crop Protection business focuses on specific target markets in six major product lines: seed treatments, fungicides, miticides, insecticides, growth regulants and herbicides.
Other – 2%
The Other segment consists of our non-core businesses. In 2008, this category included industrial water additives and rubber chemicals.
Interesting article
Appears they are privately owned now.
http://www.lyondellbasell.com/InvestorRelations/LettertoFormerLyondellMillenniumShareholders/
One of the pending issues we have with them is that they are trying to get out of a lease we have with them in Louisiana. They shuttered operations at one of their plants a few years ago but had to continue providing services to Chemtura. Based on the article I posted earlier DOW has shut down 3 plants there as well. Not sure what all that means for us other than the competition is leaving the state.
I wish I knew the answer to that one. Don't follow too many OTCBB stocks but on the other one I follow (WAMU), NITE dominates it as well. They represent 53% of the share volume on that one. Maybe you can get your IT friend to do some snooping around and do a little investigative DD for us. ;)
It would be interesting to see how CEMJQ.PK would respond if NITE decided to take the day off.
Monthly Share Volume Report - From OTCBB
http://www.otcbb.com/asp/tradeact_mv.asp?SearchBy=issue&Issue=cemjq&SortBy=volume&Month=6-1-2009&IMAGE1.x=18&IMAGE1.y=1
Take a look at the volume of shares flowing through NITE relative to other MMs.
Year to date: 49% of total volume
May 2009: 49%
June 2009: 42%
Chemical Industry Articles (Dow & Lyondell)
Lyondell’s CEO-To-Be Set To Rake In Millions
http://blogs.wsj.com/bankruptcy/2009/06/30/lyondell%e2%80%99s-ceo-to-be-set-to-rake-in-millions/
Dow Chemical to Close 3 Louisiana Plants
http://www.google.com/hostednews/ap/article/ALeqM5gvOS2UksoJzQUQkqtAmagwvkQczgD995LTOO0
Diacetyl Litigation Temporary Restraining Order Granted
http://www.kccllc.net/documents/0911233/0911233090626000000000015.pdf
Missed this one over the weekend. The court ruled that the Diacetyl claimants would have to temporarily cease collection efforts on their claims until the Judge rules on the matter at a later time. Also ruled that Chemtura and one litigant "Campbell" could negotiate to settle before their scheduled trial date of August 31.
One of the reasons that the company gave in support of the TRO was that it was chewing up a lot of their valuable time dealing with 4 year old tort claims while they were trying to restructure. This should free up management and our legal teams to focus on restructuring efforts while time is of the essence.
You'll get no arguments from me!
I hope I am not going too far out on a limb to say that most here are less interested in what it does tomorrow and more interested in where it is one month to 2 years from now :)
It's all good. Count yourself among the few who would actually admit publicly that they were wrong. No offense, but for all our sakes, I hope you stay wrong. Standup post by you!
CEMJQ Calendar of Events Updated 06/29/2009
Haven't posted here in a while, just lurking ever so quietly. Feels good to be back in the "Q". Just a friendly, heads up because it is time to put CEMJQ back on your radar, if it wasn't already. The next month is huge for us.If we get the Equity Committee, this week will be huge! GLTA
Tuesday, June 30, 2009 – Creditor’s response to requests for an Equity Committee due to be filed with the U.S. Trustee’s Office
Wednesday, July 1, 2009 – U.S. Trustee’s decision on the fate of the Equity Committee is expected. Public announcement expected “shortly thereafter.” (per phone conversation with Trustees Office).
Wednesday, July 8, 2009 – Meeting of the Creditors (MOC) and OxyChem’s response to the summons for a pretrial hearing is due.
Monday, July 13, 2009 – 2015.3(a) report due (basically it is a Report of Financial Information on Entities in Which a Chapter 11 Estate Holds a Controlling or Substantial Interest)
Wed/Thur, July 15/16, 2009 – June Monthly Operating Report is expected
Thursday, July 16, 2009 – Reorganization plan is due (120 day exclusivity period elapses).
Tuesday, July 21, 2009 – Court hearing for the Lyondell leases.
Tuesday, July 28, 2009 – Omnibus Hearing - Pretrial hearing for the OxyChem adversary proceeding, fate of the BP hedging contracts ($800k per month cost savings) and various other issues.
You may very well be correct. My interest and experience with bonds is just from a casual observer perspective. I tend only to watch the individual bonds of companies I own stock in, to get a feel for how the creditors view the prospects of collectibility. I am just looking forward to the days when manipulation is no longer an issue, on the bond and equity side.
I didn't try to match the orders from Friday to today but the 49.60 trade today was a Broker buying from a client, so it was the client that took the $10 haircut not the broker. At least that is according to the glossary privided on the FINRA site. I am no bond expert, just trying to interpret based on the info available.
GLTA
On that front, I did email the Trustees Office (around 4:30 P.M. Central) today to follow up on the unanswered questions from last week but being so late in the day they were probably closed. The unanswered questions were regarding who would have access to the debtor/creditor responses and whether the Trustee's decision would be made publicly available this week.
I am trying to give them their space so as not to become a nuisance. I usually give them a full business day to respond to any inquiries because I am sure they are busy with the Chrysler, Chemtura and GM cases all in the same court!.
GLTA