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jaxstraw, you are correct in saying the audit firm will have to be certified by the PCAOB. However, there are a few more firms than the ones you listed. The list on the website shows the firm's home office location. So the ones you listed below have home offices in Pittsburgh. However, the largest CPA firms have offices practically everywhere. Take Pricewaterhousecoopers for example, thier home office is in NY but they also have a Pittsburgh office that would be able to perform the audit.
I am sure the company has engaged attorneys who are well versed in the legal requirements of public companies. This is a specialty area that not all law firms deal with. The company would no doubt get a list of a half dozen or so CPA firms that their attorney has worked with in the past and then solicit bids for the audit work. Typically the bids would be for a three year period. The first year audit will cost an arm and a leg but the subsequent years will be more reasonable. That's why it's fairly common to solicit a 3 year bid.
EthicalInvestor3 you use the black scholes formula to calc the warrant value. For "volatility" or "standard deviation" as for formula calls it, I ran numbers using 25% on the low end and 40% on the high end. For the "risk free interest rate" I used the current 7 year t-bill rate.
ethicalinvestor3 - some answers - the epa essentially hadcuffed the entire process with the intent on taking as much of the value for themselves as they could. having said that, this is actually a much better deal for stockholders. we get warrants for 7.6 percent of the company with no dilution vs 5% after dilution, 7yr instead of 2yr, some warrants at an EV of 1.4b instead of all at EV 1.5b
a valuation fight likely would only end up with more money in the hands of the EPA and quite possibly could cause tronox to lose sales and/or customers due to the delay in exiting bk. so i suspect the EC negotiated the best deal they possibly could under the circumstances mgmt put them in.
whatever shares or warrants mgmt gets will clearly be too many in my book. I believe they admitted in court that they weren't skilled in corp reorganizations. I think they totally botched the environmental negotiations.
stock and warrant info
http://www.kccllc.net/documents/0910156/0910156101105000000000023.pdf
The issuance of the New Common Stock by Reorganized Tronox Incorporated, including pursuant to the
Rights Offering, and options, restricted stock or other equity awards reserved for the Management Equity Plan, is
authorized without the need for any further corporate action or without any further action by the Holders of Claims.
On the Effective Date, 6,819,857 shares of New Common Stock shall be issued pursuant to the Rights Offering
Procedures and 7,634,554 shares of New Common Stock shall be issued to the GUC Pool for Distribution as
described in Article III.B.3 above.
Holders of Class 8 Equity Interests in Tronox Incorporated will now receive their pro rata
share of an improved warrant package, consisting of two series of warrants struck at
different valuation levels, which consideration will be distributed regardless of whether
or not the class of equity interests votes in favor of the Plan
New Series A Warrants to acquire, in the aggregate, 544,041 shares of New Common
Stock (which represents 3.5% of the New Common Stock issued and outstanding on the Effective Date, together with all New Common Stock issuable upon exercise of the New
Series A Warrants) for an exercise price of $62.13 per share, based on an implied total
enterprise value for Reorganized Tronox of $1.4 billion; and
• New Series B Warrants to acquire, in the aggregate, 672,175 shares of New Common
Stock (which represents 4.1% of the New Common Stock issued and outstanding on the
Effective Date, together with all New Common Stock issuable upon exercise of the New
Warrants) for an exercise price of $68.56 per share, based on an implied total enterprise
value for Reorganized Tronox of $1.5 billion.
NOTE - Values reflected in this summary assume a high end $1.3 billion total enterprise valuation for Reorganized
Tronox, (b) $468 million in funded debt on the effective date of the Plan and (c) 15,000,000 shares outstanding
prior to any warrant exercise, which translates into a price of $55.46 per share at a $1.3 billion total enterprise
valuation
Uhlmant, savannah is shut down and will go to the govt, germany is gone too, tiwest we only get 50% of production.
This whole discussion is good. The next thing I want to figure out is at what EV does tronox need to be valued at in order for the bondholders to be made whole assuming 2 years of accrued interest.
everett7 all I'm trying to say is KRO just did a share offering with the stated intent of buying TiO2 production facilities. The stock had a major run to 40 where the offering was priced. Their sales are going to go up with the additional capacity they buy. This is likely already priced into their stock. I figure KRO is trading about 10x current EBITDA. After the increase in production that multiple will probably drop. For Tronox, 7 times EBITDA is probably more reasonable. Plus, remember, the idustry is at the top of it's cycle right now. Look at the Tronox projections for a couple years out, EBITDA drops from about 195m to 155m.
Once the "when issued" stock starts trading we'll have a much better idea how the market will value Tronox that's for sure.
You're killin' me here. Okay. KRO net sales for Q ended Sept 30 was $1,076.4m.
http://www.sec.gov/Archives/edgar/data/1257640/000005925510000180/kwi3rdqtr10q.htm
Tronox net sales for 9 months ended $529.9
http://www.kccllc.net/documents/0910156/0910156101020000000000008.pdf
The more you can make, the more you can sell.
thewind, yes thank you, this increase will add 20 metric tonnes of production capacity for Tronox. Now, with this increased TiWest capacity do you know what Tronox's capacity will be? When you figure that out you will have your answer as to why KRO and Tronox aren't an apples to apples comparison. Keep in mind that KRO recently sold shares to raise cash to buy TiO2 production facitlities. That increase in value for KRO is likely priced into the stock already. So the 532 tonne capacity for KRO will be increasing.
everett7, KRO's production capacity I believe is about 532 metric tonnes annually. What is the capacity of Tronox?
Okay, seriously, when was the last time we were BOTH wrong at the same time?? LOL
Well, how about this page then?
http://www.dtinterpreting.com/links.html
Includes a link to the SEC. I doubt that was there in May.
Not sure if this info is correct but....
http://en.wikipedia.org/wiki/Pink_Sheets
The Pink Sheets is not a stock exchange. To be quoted in the Pink Sheets, companies do not need to fulfill any requirements (e.g. filing financial statements with the SEC). With the exception of foreign issuers, mostly represented by ADRs, the companies quoted in the Pink Sheets tend to be closely held, extremely small, thinly traded, or bankrupt. Most do not meet the minimum U.S. listing requirements for trading on a stock exchange such as the New York Stock Exchange. Many of these companies do not file periodic reports or audited financial statements with the SEC, making it very difficult for investors to find reliable, unbiased information about those companies.
So.....we are at the mercy of the company apparently.
I hope you're right about the ability of this stock to weather a market storm. I was just speculating that there are still a lot of shares out there with a very low basis that will panic and sell to take profits if the whole market dumps. I bot my first shares at 34 cents so I'm certainly not in the low basis group unfortunately.
bd I fear that if the market breaks south hard it could get really ugly here with no news
I think we need to understand better perhaps why they wanted to go public in the first place. Did they completely understand what would happen after they went public? Are they restricted from selling their shares? If so then for how long? To me all evidence points to a very small group of people who have built a very successful business over the last 10 years or so. We know the owners are about 60 years old. I suspect they want to lighten their ownership in the company. If they tried to sell a minority stake as a private company there would be a huge discount in the selling price. So why not go public and then it should be easier to sell some of their stake without diluting the price. Now the have to have an audit. Hmmm, that's taking some time so I'm guessing they didn't already have audited statements which in turn tells me they probably have little or no debt. This is good IMO. They're probably restricted from selling, what 6 months? 12 months? Anyone with a feel for how long? So, let's say they're restricted for a year. Granted, I'm making several assumptions here but if they went public to sell some insider stock and they're restricted for a year what's the rush in their minds to issue a press release? Their all day meeting might just have been to discuss what type and when they're REQUIRED to release info.
Bottom line here is that I think we have a nice gain ahead of us. When, I don't know.
bd I honestly don't think these guys will release anything until they have the audited financials done. They've told callers including myself that they're not going to hype the stock so I think they wait until there is something substantial to report.
Jaxs I haven't even had an offer on the car...lol
November 22, if I'm right I win if it comes before...I win...
oops, it was Snigierburger who reported calling the company yesterday. my bad.
oh, I am guessing there will eventually be a storm, bd. when is anybody's guess. when you mentioned that they were going to look into when the audit needed to be completed that told me they obviously didn't know which told me that info was not coming soon.
This could actually be good long term because I am thinking now that perhaps they have no debt. If they had debt they probably would already have an audit and it would just need to be updated for public reporting. With no debt the audit would be brand new and most likely they'd need to go back 3 years in reporting. That will take a bit of time for the auditors. No debt would be very good in my opinion.
"all in a meeting" might just be good
Perhaps while we wait (and wait some more) we should be building a valuation model to use when the numbers do come out. I honestly have no idea how to value this company. Multiple of EBITDA? what multiple to use? PE ratio? With no comparable companies what are everyone's thoughts here?
Its gotta be the people who bot early and are getting impatient. Who knows where it will stop? 5 million shares traded on September 15 with prices ranging from 2.5 to 9 cents. So I suspect there are quite a few holders with a sub 10 cent basis.
jaxs don't forget about the "spinner" wheels it has...
bd I have the same problem with my car. I have had no offers. LOL
Well, I think they probably are and it is cumbersome. It wouldn't surprise me in the least if they didn't think of some things, like this, before the RM. So, that could impact the timing of their release of information.
Just to keep the board active while we wait I'll throw this out there. I have a car. Anyone want to buy it? How much will you give me for it? LOL
Are these guys going to be subject to Sarbanes Oxley?
Ha! Until some other impatient seller comes along...
I've never been much of a T/A guy. I've referred to it as "witchcraft" in the past. However, over time I have grown to understand it's uses and now believe that it has a place in the timing of your stock trades.
Having said all that I really wonder out loud about the value of T/A right now seeing as the stock has been trading with ZERO fundamental information. On the other hand I could see the argument that with zero fundamental info T/A is the ONLY thing this stock is trading with.
Bottom line for me right now is to not get too uptight with the daily swings in price and just sit tight and wait for the financials. It's really hard for me to blame a guy who bot a stock essentially sight unseen and who is up perhaps 2x or 3x on his money to want to lighten up a bit.
It'll all work out just fine if the financials come in as we all hope they will.
jaxstraw I think you can lower the float further once we know how many shares the Deaf-Talk guys have. But, keep in mind also that the new guys are likely to issue themselves more shares too.
Which makes me ask out loud if they want to keep the share price low so they can issue themselves cheap stock options?
jaxstraw, thanks for contacting them. It sounds to me like they are more confident in the timing of some sort of press release ("real soon, hopefully this week") than the timing of the financials ("will release them in a timely fashion upon completion").
methinks some brainiac put in a market order to sell 25,000 and the MMs filled the first 5k at the going bid of 31 then got out of the way and took the rest at 25. just a guess.
so lets assume it was the old shareholders selling the first few days. of course we don't know the turnover so hard to figure exactly how many shares were sold. what would your guess be? I really don't know. would 3 or 4mm shares account for the trades on the 14th and a week or so later? If I pull 3.5mm shares out of thin air as a guess then 3.5/14.3 o/s equals almost 25% of the outstanding shares. wouldn't that seem like a high amount for the former shell owners to have of the new company?
bobby, I'm here. Any idea where those 5mm shares that traded on the 15th came from? Selling from new shareholders aka the Deaf-Talk people wouldn't make any sense at that price, plus they might be restricted. MMs shorting so many shares doesn't make much sense either. So I am thinking it must have come from the prior MGQG shareholders who perhaps were delighted just to get SOMETHING. Your thoughts?
giabull I have a sneaky suspicion that there are quite a few people out there with $1000 in their Ameritrade accounts who might just make such a trade.
On the other hand if the MMs are short, and quite frankly I wonder if they are, then they might print a 200 share trade at the ask and then drop the ask to say .28 to make it look like there are sellers.
But in this case it appears that there are ready buyers in the mid to low 20s so I am not sure how successful the MMs would be in getting cheaper shares at the bid. More likely they will give up and wait until buyers come in hot and heavy and then short into the buying to raise their average short selling price. Then when the buying dies down they can try to walk the price back down to cover.
I am dying to know where the 5mm shares came from that traded on the 15th. I'm just as anxious to see the reported number of shares short as of Sept 30. That data should be out soon.
everett7 you could be correct. My guess however is that any change to the debtors plan as presented will be very minor. In the interest of fairness I will also say that I have sold most of my shares based on my current thinking.
Looking back, I continue to kick myself for seeing the obvious selling from $1.45ish on down and not acting upon it. My guess is that the real turning point for equity was when the EPA came back to the debtor and wanted to renegotiate the deal they made in December. I don't know when that was exactly but I do remember a comment in a Bloomberg article about taking a discussion into chambers during court one day so as to not have news affect the markets. At the time we speculated what that might be and what markets might be affected. Now I think the reason for the chambers discussion was due to the EPA coming back to the table and the fear (correctly so) was that the news would affect both the equity and debt prices. The bonds if you recall were trading in the high 130's for awhile. The EPA essentially squashed everyone.
All this is just my current take on things. I've been wrong before...obviously.
jaxstraw I think the "riskless principal" transaction that the market makers utilize can go both ways. Whether the customer's order is to buy or sell there will always be a short sale component of the riskless principal trade. So honestly, I don't think you can infer much information at all from the daily RegSHO numbers. Although, I would argue that a high % of short sales vs total sales would be indicative of a very thin market assuming that the short sales are riskless principal transactions and not pure short sales. In our case here I really can't fathom a true short sale occurring but I suppose it's possible.
A302.1: For purposes of OTC transaction reporting requirements applicable to equity securities, a "riskless principal" transaction is a transaction in which a member, after having received an order to buy (sell) a security, purchases (sells) the security as principal and satisfies the original order by selling (buying) as principal at the same price (the offsetting "riskless" leg). Generally, a riskless principal transaction involves two orders, the execution of one being dependent upon the receipt or execution of the other; hence, there is no "risk" in the interdependent transactions when completed. See NTM 99-65 (August 1999).
madclown I agree 100%
Madclown, visteon and chemtura didn't have environmental concerns who refused to let equity participate in a recovery. I place the blame squarely on tronox mgmt who didn't negotiate a proper settlement with the environmentals. The ECs hands appear to have been tied by the poor mgmt team who admitted in court that they have no restructuring experience. However, having said this, I wonder if the EC could have forced their way into that negotiation rather than sitting passively by and letting it happen.
GGP option play update -
If anyone followed Madclown's GGP option play it's getting close to the OCT option expiration. Here was Madclown's original post:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=48827415
Today those OCT 15 strike options Madclown sold for 2.63 back in April are now going for about 88 cents on the ask. They expire in two weeks and you could just let them expire and sell your stock at 15 if you wish. Would be almost a 13% gain for the 6 1/2 month hold.
One option to consider would be to roll those OCT 15s out to JAN 15s. You buy back the OCT 15 calls and simultaneously sell the JAN 15 calls. This should result in a net credit of 60 to 75 cents depending on the execution. Lets be conservative and just use the 60 cents. At your current basis of $13.29 per share an addional 60 cents works out to about 4.5% for an additional 3 month hold. Your new effective basis drops to $12.69 and you are obligated to sell your shares at 15 in January.
Then we will revisit the position again the first week of January to see what we want to do.