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I liked this part of the 2010 KEIP
"As with the 2009 KEIP, the Debtors once again sought input from advisors to the Creditors’ Committee; in addition, the Debtors have consulted with advisors to and members of the Equity Committee, as well as advisors to their bank lenders and an ad hoc committee of bondholders. The Debtors’ discussions with these constituencies have spanned approximately three weeks and, in the case of each Committee, resulted in counterproposals, lengthy and sometimes contentious discussions, and ultimately meaningful modifications to the proposed 2010 KEIP.
At this time, advisors to both Committees (as well as the other creditor constituencies identified above) have indicated that Committees are supportive of the 2010 KEIP, although the Equity Committee has asked the Debtors to consider an additional compensation component for certain senior executives that would be based on a metric tied to, among other things, equity recovery. The Debtors are in discussions with the Equity Committee regarding this additional compensation and, to the extent any such additional compensation is agreed to by both Committees, the Debtors will supplement this Motion accordingly prior to the deadline for objections hereto."
You were trying to get people to petition the judge to have a Trustee court "Appointed" which is different that having one assigned to oversee the case. There is always a trustee "assigned" to the case from day one. If you had even bothered to read my first post you would have seen that the "appointment" of a Trustee means that the Trustee takes over the operations of the company and submits the POR. That is the difference and that is why, at some point, someone would need to step in and make sure that people are not being led astray.
If you are afraid of having open discourse on the points of resistance that you will get from parties in interest that are ahead of you in the priority scheme then it is your motives that are in question. I never encouraged anyone to abandon the EC effort, I simply provided some insight to those that wanted to stay in the game and fight for one.
This will be my last post here.
Best wishes to the rest of you.
The timing isn't odd but the attempt to request the appointment of a trustee is. It was brought to my attention that this was going on so I stopped by to see what it was all about. There are no motives here other than to be helpful to those who wish to stay in the game and pursue the EC route. I thought those that wished to pursue this route might want to know where the resistance points might lie from the parties that will be opposing your efforts (debtors & creditors) from someone who has been through the process. I certainly wished that I had some source to bounce ideas off when I first began dealing with the Chemtura EC effort. I had to learn the hard way after hours and hours of prior case research and formulating arguments and rebuttals to the opposition that was coming in from all sides.
There are 2 types of reactions you can have to my prior post; one would be to discount my musings as one of a know-nothing basher and ignore the realities of the situation and the task that lies ahead or another would be to recognize it as an attempt to help the more than a dozen people who have privately asked for my opinion. I stayed silent until now because until now there wasn't anyone contemplating making a huge misstep that would derail your efforts. At the very least, I can tell you that a one paragraph letter politely asking for an EC will not get it done on any case or in any court. These things have to be well thought out and you have to have to be able to successfully rebut all counterpoints. Submitting a letter without giving consideration to the statutory requirements for the formation of an EC would be as big a waste of time as questioning the motives of someone trying to help.
I can almost guarantee you that I have more hours of research into this name that 95% of those that currently hold the stock. I was contemplating a purchase of the bonds of this company below 2% of par before most people that are still here even knew the stock existed. I wasn't successful in finding a seller so I moved on to other names. There are many people posting and lurking here that can attest to that.
best wishes
Appointment or Election of a Case Trustee
Although the appointment of a case trustee is a rarity in a chapter 11 case, a party in interest or the U.S. trustee can request the appointment of a case trustee or examiner at any time prior to confirmation in a chapter 11 case. The court, on motion by a party in interest or the U.S. trustee and after notice and hearing, shall order the appointment of a case trustee for cause, including fraud, dishonesty, incompetence, or gross mismanagement, or if such an appointment is in the interest of creditors, any equity security holders, and other interests of the estate. 11 U.S.C. § 1104(a). Moreover, the U.S. trustee is required to move for appointment of a trustee if there are reasonable grounds to believe that any of the parties in control of the debtor "participated in actual fraud, dishonesty or criminal conduct in the management of the debtor or the debtor's financial reporting." 11 U.S.C. § 1104(e). The trustee is appointed by the U.S. trustee, after consultation with parties in interest and subject to the court's approval. Fed. R. Bankr. P. 2007.1. Alternatively, a trustee in a case may be elected if a party in interest requests the election of a trustee within 30 days after the court orders the appointment of a trustee. In that instance, the U.S. trustee convenes a meeting of creditors for the purpose of electing a person to serve as trustee in the case. 11 U.S.C. § 1104(b).
The case trustee is responsible for management of the property of the estate, operation of the debtor's business, and, if appropriate, the filing of a plan of reorganization. Section 1106 of the Bankruptcy Code requires the trustee to file a plan "as soon as practicable" or, alternatively, to file a report explaining why a plan will not be filed or to recommend that the case be converted to another chapter or dismissed. 11 U.S.C. § 1106(a)(5).
Upon the request of a party in interest or the U.S. trustee, the court may terminate the trustee's appointment and restore the debtor in possession to management of bankruptcy estate at any time before confirmation.11 U.S.C. § 1105.
http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter11.html#casetrustee
Please don't ask if I own the stock, I'm only here because this has been painful to watch. Please just do a little research before you motion the court for something. You file an official motion as in "Motion for the Appointment of a Trustee" #1 know what that actually means and #2 know that an official motion requires your attendance in the courtroom, otherwise your motion is thrown in the garbage and the objectors prevail. The appointment of an Official Trustee means that the Trustee takes over the debtor's business. There is always a Trustee assigned to the case but rarely is one "Appointed". I hope you haven't sent those "motions" in yet.
I don't want to discourage anyone from acting to protect their rights and interests, just want to encourage a little more thought before action. Another thing you need to consider is how you are going to defend or explain away the following (because your request for an EC will be met with these and many other roadblocks):
1. Prove that the stock trading at $0.05 which is a market cap of less than $4 million and Bonds trading at 6.8% of par does not accurately reflect the true value of the company.
2. Successfully argue that goodwill and intangibles (which make up 64% of assets) should not be written to zero.
3. Show how the Unsecured Creditors are failing to represent your interests. How could an EC serve you better?
4. Successfully argue that there is a better offer out there for the company that exceeds the $50 Million offer for 61% of the new company remembering that this current offer was the best out of the 150 or so parties that were approached concerning a potential buyout. If there is not a better offer out there then show how the company can successfully restructure without a buyout.
5. Show how the $50 million dollar deal will pay off all secured parties in addition to the $180 million and all other unsecureds that sit in front of equity. As of July 4, 2009 there was about $440 million, (if not more by now) in front of an equity recovery between the debt and negative working capital. These guys in front would love to have an equity recovery because it would pay them in full. So far they have been unsuccessful in preventing the DIP lenders from hijacking the bankruptcy case. The original DIP terms called for a complete divestiture of the business within 90 days of the DIP. That amounts to a fire sale and that is what is going on right now. Look to some of the other manufactured home companies that went bankrupt in the last 18 months and see what kind of deals they got for their assets. Use that to assess your own expectations of what the company should sell for and whether the "stalking horse bid" is fair or not. Right now that Stalking horse bid in CJHBQ's does not even include one penny of recovery for the bonds or equity so you need to find a recent deal that did, so that you can argue there might be one out there for CJHBQ.
6. Show whether industry EBITDA multiples and current CJHBQ EBITDA levels suggest a "meaningful recovery" for equity in the event a sale cannot be consummated that preserves equity value.
If you look into and address some or even all of these issues in your request letters for an EC you will go much farther than just stating that you would like an EC while offering no proof as to whether it is warranted under statute, prior case law or current industry/market conditions. Having dealt with this for about 7 months before finding success in Chemtura's case and having written as many letters to the trustee as I did in re Chemtura, I can assure you the task before you is much bigger than saying "pretty please".
Best wishes.
The auction will be held on February 22nd and the court hearing to approve the winning bidder will be held the following day.
If DEC 2009 EBITDA ($54 million) was the best and Jan 2010 EBITDA ($2 million) was the worst then the average would be about $28 million per month. $28 million per month on an annual basis is $336 million EBITDA. It only takes $33.33 per month average to get to the $400 million annualized EBITDA target that I would like to see and we are already on the doorstep of the $350 million target. Neither the January nor the December numbers should be indicative of what is to come, too extreme. The truth lies somewhere in between but not directly in between. My contention is that the average will be slanted towards the December numbers so I still hold firm to my $350 to $400 million targets
You have to consider that there were probably some orders coming in during December 2009 in advance of the price increases going into effect soon or it could just be a matter of inventory rebuilds or it could have been some combination of the two that cannibalized January orders. The 10-k may give some insight there. You also have to remember that the company agreed to that $240 million EBITDA number (as of the 12 months ended Dec. 2010) being the number at which they would be in breach of their DIP terms. They would have already known the January numbers when making that deal. If they thought the January 2010 performance was going to continue into the future they would not have set the DIP loan breach of covenant level at $240 million.
Sometimes you have to look at several court documents together to get the full picture. That's why it pays to read any and all of them you can find time for.
Best wishes.
MESAQ Bonds Previously Converted to Equity
If you look at page 18 of the 06/30/09 10-Q, it states that in February 2009, Mesa issued 117 million shares and paid about $6.7 million in cash to satisfy $116 million of outstanding bonds at par. In subsequent SEC filings (which we have previously discussed) they revealed that about 28 million shares and undisclosed cash considerations were issued to satisfy an additional $20 million in bonds at par in the months of August 2009 and November 2009. All told, out of the 175 million currently outstanding shares, 145 million (83%) were issued in 2009 to satisfy bondholders.
Chemtura's Potential Equity Value in Reorganization
http://chemturaresearch.blogspot.com/2010/02/chemturas-potential-equity-value-in.html
Huntsman accused of TiO2 price fixing
They wouldn't do that AND try to steal Tronox would they?
http://www.courthousenews.com/2010/02/11/24601.htm
Post-Hearing Briefs in the Chemtura vs. Canada NAFTA suit
http://chemturaresearch.blogspot.com/2010/02/post-hearing-briefs-in-chemtura-vs.html
I think there is that possibility, if for no other reason than management stated that they intended to preserve value for shareholders in their press release that was issued to announce the bankruptcy filing. This is in BK because the 51% equity infusion deal was shot down by the U.S. Government. If/when a new buyer or partner is found, assuming it is similar to the one that was cancelled, then this should return to previous trading levels.
I wouldn't have spent the time putting the materials together if I thought I was buying something that did not have a chance of survival. That's just not my approach.
FGOCQ Firstgold Corp. Bankruptcy Case Summary
Firstgold Corp. (FGOCQ.PK) is largely a development stage mining company with one previously productive property. The operations were shuttered a few years ago when gold prices declined. Now they need more money to continue production at the previously producing site as well as money to inject into the other leased sites. They did not have production during 2008 and 2009 but this is not necessarily a 100% development stage company. It has some production capacity at its Relief Canyon Mine but no funds to go and get the gold out of the ground. It looks like the setup and exploration costs were more than anticipated which created too much debt load too early.
The company looks bad on paper ($17 mill assets vs. 26 mil debt) but they are actively shopping the company for a buyer or a partner. They just had a deal with a Chinese company (Northwest Nonferrous International Investment Company) to inject $26 million into the company (some cash, some debt assumption) for a 51% stake but the Committee on Foreign Investment in the United States (CFIUS) shot the deal down on Dec. 21, 2009 because the mines were too close to a military installation, which raised national security concerns. The termination of this deal is what prompted the BK filing as the company needs more time to find a buyer or partner. They have been converting their note holders to equity and have been paying vendors/contractors with equity for a while now, to the tune of about 100 million shares over the past year. There are a little less than 200 million outstanding.
In its press release concerning the BK filing the company expressed its intentions to preserve equity value for stockholders. When they say that they intend to preserve value for the shareholders I am guessing it is because the people they owe money to and the contractors that work for them have been paid in shares as opposed to cash. There are a lot of stock warrants in the $0.15 and $0.40 range that were issued with certain debt taken out recently so there are people who, at least there were recently, people who believed in this company’s prospects for extracting some gold or other minerals (they also have clearance to extract a variety of minerals, including Zinc & Uranium) out of its 4 mining operations. The company filed for BK on Jan 27, 2010 and there has been almost no selloff (volume wise) relative to the 200 million o/s. The price, however, has come down dramatically.
This case will not be on KCCLLC or EPIQ (free court document services) so PACER (pay per use service) is the only way to go.
There are probably about 80% of the current shareholders that are sitting on losses in the 70% range based on recent price/volume action. The corollary here is that if there was going to be a mass selloff, it would likely have already occurred. During the period following the bad news of December 21, 2009 (this was not the bankruptcy day but it was the day that it became imminent) there has been nearly 50 days that have elapsed since that time. In that span of time, only about 41 million of the nearly 200 million outstanding shares changed hands or roughly 20%. This is hardly a capitulation event. Either the collective shareholder base believes a recovery is in the offing and this is a temporary setback or there just is no conviction to sell at this price level.
You will see some language in the 10-Q about having recently raised the authorized shares to 900 million from 250 million. I am guessing the increased share count was to effect the transfer of half the O/S over to Northwest and the other portion may have been in anticipation of further converting debt or accounts payable to equity.
As the case now stands, the Debtor’s are seeking to obtain a DIP loan of $350,000 at 12%. The terms also call for the subscribers to enjoy equity conversion rights as well as rights to purchase gold reserves at $500 per ounce for each $150 subscribed. Here are some of the items of note from the filing:
“The DIP Facility provides for the extension of credit in a maximum post-petition amount of $350,000, by issuance of Gold Notes in the form attached hereto as Exhibit "A". Although the Gold Notes indicate that the total proceeds to be raised are $500,000, Debtor raised $150,000 in cash pre-petition under the Gold Notes, and requests authorization at this time to borrow an additional sum not to exceed $350,000 post-petition.
Furthermore, even though the notes are styled as Secured Exchangeable Promissory Notes they are not secured by any collateral and are in actuality unsecured notes. Due to the immediate cash needs of the Debtor, the Debtor has already obtained an additional $100,000 advance under the Gold Notes post-petition on February 4, 2010.”
“Use of Proceeds - The DIP Facility will be available to finance the Debtor's ongoing business operations, pursuant to the Cash Requirements Budget attached hereto and incorporated herewith as Exhibit "B".”
“Subject to regulatory approval, the promissory note shall be exchangeable at the option of the holder into either (i) common shares of Firstgold Corp. at a price of $0.036 cents per share or such other lower price if Firstgold should accept or issue equity at anytime before December 31 2012 at a price lower than $0.036 per share.”
“FGD has the right to call the promissory note and the gold rights. By paying 4.33 times the original promissory note amount in FGD shares at $0.036 per share with a maximum profit of $500 per ounce.”
The secured creditors have opposed the DIP citing windfall profits for the subscribers to the tune of about a 400% return. The debtors contend that funds are needed immediately to preserve the value of their permits and to continue maintaining the properties until more permanent financing can be obtained or until a buyer or equity partner can be found.
FGOCQ Firstgold Corp. Bankruptcy Case Summary
Firstgold Corp. (FGOCQ.PK) is largely a development stage mining company with one previously productive property. The operations were shuttered a few years ago when gold prices declined. Now they need more money to continue production at the previously producing site as well as money to inject into the other leased sites. They did not have production during 2008 and 2009 but this is not necessarily a 100% development stage company. It has some production capacity at its Relief Canyon Mine but no funds to go and get the gold out of the ground. It looks like the setup and exploration costs were more than anticipated which created too much debt load too early.
The company looks bad on paper ($17 mill assets vs. 26 mil debt) but they are actively shopping the company for a buyer or a partner. They just had a deal with a Chinese company (Northwest Nonferrous International Investment Company) to inject $26 million into the company (some cash, some debt assumption) for a 51% stake but the Committee on Foreign Investment in the United States (CFIUS) shot the deal down on Dec. 21, 2009 because the mines were too close to a military installation, which raised national security concerns. The termination of this deal is what prompted the BK filing as the company needs more time to find a buyer or partner. They have been converting their note holders to equity and have been paying vendors/contractors with equity for a while now, to the tune of about 100 million shares over the past year. There are a little less than 200 million outstanding.
In its press release concerning the BK filing the company expressed its intentions to preserve equity value for stockholders. When they say that they intend to preserve value for the shareholders I am guessing it is because the people they owe money to and the contractors that work for them have been paid in shares as opposed to cash. There are a lot of stock warrants in the $0.15 and $0.40 range that were issued with certain debt taken out recently so there are people who, at least there were recently, people who believed in this company’s prospects for extracting some gold or other minerals (they also have clearance to extract a variety of minerals, including Zinc & Uranium) out of its 4 mining operations. The company filed for BK on Jan 27, 2010 and there has been almost no selloff (volume wise) relative to the 200 million o/s. The price, however, has come down dramatically.
This case will not be on KCCLLC or EPIQ (free court document services) so PACER (pay per use service) is the only way to go.
There are probably about 80% of the current shareholders that are sitting on losses in the 70% range based on recent price/volume action. The corollary here is that if there was going to be a mass selloff, it would likely have already occurred. During the period following the bad news of December 21, 2009 (this was not the bankruptcy day but it was the day that it became imminent) there has been nearly 50 days that have elapsed since that time. In that span of time, only about 41 million of the nearly 200 million outstanding shares changed hands or roughly 20%. This is hardly a capitulation event. Either the collective shareholder base believes a recovery is in the offing and this is a temporary setback or there just is no conviction to sell at this price level.
You will see some language in the 10-Q about having recently raised the authorized shares to 900 million from 250 million. I am guessing the increased share count was to effect the transfer of half the O/S over to Northwest and the other portion may have been in anticipation of further converting debt or accounts payable to equity.
As the case now stands, the Debtor’s are seeking to obtain a DIP loan of $350,000 at 12%. The terms also call for the subscribers to enjoy equity conversion rights as well as rights to purchase gold reserves at $500 per ounce for each $150 subscribed. Here are some of the items of note from the filing:
“The DIP Facility provides for the extension of credit in a maximum post-petition amount of $350,000, by issuance of Gold Notes in the form attached hereto as Exhibit "A". Although the Gold Notes indicate that the total proceeds to be raised are $500,000, Debtor raised $150,000 in cash pre-petition under the Gold Notes, and requests authorization at this time to borrow an additional sum not to exceed $350,000 post-petition.
Furthermore, even though the notes are styled as Secured Exchangeable Promissory Notes they are not secured by any collateral and are in actuality unsecured notes. Due to the immediate cash needs of the Debtor, the Debtor has already obtained an additional $100,000 advance under the Gold Notes post-petition on February 4, 2010.”
“Use of Proceeds - The DIP Facility will be available to finance the Debtor's ongoing business operations, pursuant to the Cash Requirements Budget attached hereto and incorporated herewith as Exhibit "B".”
“Subject to regulatory approval, the promissory note shall be exchangeable at the option of the holder into either (i) common shares of Firstgold Corp. at a price of $0.036 cents per share or such other lower price if Firstgold should accept or issue equity at anytime before December 31 2012 at a price lower than $0.036 per share.”
“FGD has the right to call the promissory note and the gold rights. By paying 4.33 times the original promissory note amount in FGD shares at $0.036 per share with a maximum profit of $500 per ounce.”
The secured creditors have opposed the DIP citing windfall profits for the subscribers to the tune of about a 400% return. The debtors contend that funds are needed immediately to preserve the value of their permits and to continue maintaining the properties until more permanent financing can be obtained or until a buyer or equity partner can be found.
More MESAQ Institutional ownership reported today
As of 12/31/09:
Parametric Portfolio Associates - 1,124,681 shares
Farmers & Merchants Investment - 20,000 shares
Hang in there Slick. This is exactly the emotion that the folks who are perpetrating this takedown want to instill in the stockholders. This move from the $1.70's to the $1.20's is not happening on any kind of volume. There is no conviction to participate in the selloff. Let these computers have their fun and reset their charts and fundamentals will drive this thing back to where it belongs. In the end, earnings, profitability, EBITDA, etc. will be the ultimate determinant of value.
MESAQ Institutional Ownership Updates:
In recent 13f-hr filings the following entities reported owning Mesa Air Group common stock as of 12/31/09:
SSI Investment Management - 637,850 shares
California Public Employees Retirement System – 706,100 shares
Commonwealth of Pennsylvania – 389,000 shares
Research Affliliates – 44,118 shares
Firstgold FGOCQ Motion to Obtain DIP Loan
http://www.scribd.com/doc/26498348
Debtor’s are seeking to obtain a DIP loan of $350,000 at 12%. Here are some of the items of note from the filing:
“The DIP Facility provides for the extension of credit in a maximum post-petition amount of $350,000, by issuance of Gold Notes in the form attached hereto as Exhibit "A". Although the Gold Notes indicate that the total proceeds to be raised are $500,000, Debtor raised $150,000 in cash pre-petition under the Gold Notes, and requests authorization at this time to borrow an additional sum not to exceed $350,000 post-petition.
Furthermore, even though the notes are styled as Secured Exchangeable Promissory Notes they are not secured by any collateral and are in actuality unsecured notes. Due to the immediate cash needs of the Debtor, the Debtor has already obtained an additional $100,000 advance under the Gold Notes post-petition on February 4, 2010.”
“Use of Proceeds - The DIP Facility will be available to finance the Debtor's ongoing business operations, pursuant to the Cash Requirements Budget attached hereto and incorporated herewith as Exhibit "B".”
“Subject to regulatory approval, the promissory note shall be exchangeable at the option of the holder into either (i) common shares of Firstgold Corp. at a price of $0.036 cents per share or such other lower price if Firstgold should accept or issue equity at anytime before December 31 2012 at a price lower than $0.036 per share.”
“FGD has the right to call the promissory note and the gold rights. By paying 4.33 times the original promissory note amount in FGD shares at $0.036 per share with a maximum profit of $500 per ounce.”
It will be interesting to see if the DIP lenders eventually elect to have their debt converted to equity at the $0.036 level. If so, it could signal that they see value for the equity, post-emergence. In its initial BK press release the company said it intended to preserve value for shareholders.
Best wishes to all Q stock harvesters.
Messner Smith Theme Value Investment Management reports owning 22,357 TRXBQ shares on 02/05/2010 as of 12/31/09.
http://www.sec.gov/Archives/edgar/data/883487/000088348710000001/edgarfiling123109.txt
It will be interesting to see if the DIP lenders eventually elect to have their debt converted to equity at the $0.036 level. If so, it could signal that they see value for the equity, post-emergence.
Schedule 13d-1(c) filing shows 12,725,352 owned or 9.7% of FGOCQ by the following group:
This joint filing statement is being filed by 1346049 Ontario Limited ("Holdco"); Trapeze Asset Management Inc. ("TAMI"); Trapeze CapitalCorp. ("TCC"); Randall Abramson ("Abramson"); and the group the above-named persons comprise. Holdco, TAMI, TCC, Abramson and the group they comprise are each sometimes referred to as a Reporting Person and, collectively, referred to as Reporting Persons. Holdco is a parent holding company for its operating subsidiaries, TCC and TAMI. TAMI is a Canadian investment adviser and is also registered as an investment adviser under the Investment Advisers Act of 1940, as amended. TCC is a Canadian investment dealer. Abramson serves as Director, Chief Executive Officer, President, Secretary and Treasurer of Holdco; Director, Chief Executive Officer, President, Chief Executive Officer, Secretary, Treasurer and Portfolio Manager of TAMI;and Director, Chief Executive Officer, President, Portfolio Manager and Compliance Officer of TCC. Holdco owns 100% of the outstanding voting stock of each of TCC and TAMI. Abramson owns 82% of the outstanding capital stock of Holdco.
The report was filed on February 5, 2010 as of 12/31/09.
http://www.sec.gov/Archives/edgar/data/878808/000117891310000340/zk1007859.txt
Firstgold FGOCQ Motion to Obtain DIP Loan
http://www.scribd.com/doc/26498348
Debtor’s are seeking to obtain a DIP loan of $350,000 at 12%. Here are some of the items of note from the filing:
“The DIP Facility provides for the extension of credit in a maximum post-petition amount of $350,000, by issuance of Gold Notes in the form attached hereto as Exhibit "A". Although the Gold Notes indicate that the total proceeds to be raised are $500,000, Debtor raised $150,000 in cash pre-petition under the Gold Notes, and requests authorization at this time to borrow an additional sum not to exceed $350,000 post-petition.
Furthermore, even though the notes are styled as Secured Exchangeable Promissory Notes they are not secured by any collateral and are in actuality unsecured notes. Due to the immediate cash needs of the Debtor, the Debtor has already obtained an additional $100,000 advance under the Gold Notes post-petition on February 4, 2010.”
“Use of Proceeds - The DIP Facility will be available to finance the Debtor's ongoing business operations, pursuant to the Cash Requirements Budget attached hereto and incorporated herewith as Exhibit "B".”
“Subject to regulatory approval, the promissory note shall be exchangeable at the option of the holder into either (i) common shares of Firstgold Corp. at a price of $0.036 cents per share or such other lower price if Firstgold should accept or issue equity at anytime before December 31 2012 at a price lower than $0.036 per share.”
“FGD has the right to call the promissory note and the gold rights. By paying 4.33 times the original promissory note amount in FGD shares at $0.036 per share with a maximum profit of $500 per ounce.”
It is not easy to accumulate a significant position in the stock right now. As few as 10k to 20k shares at the ask can move the ask $0.05 or more, which right now is about 10%. It is just very thinly traded and can move big either way with relative ease. When public confirmation of the equity committee's plan of reorganization hits then the volume will come in. I look forward to seeing what "real news" and volume can do for the stock price.
Newtech made reference to a "bone" being thrown in to expedite restructuring efforts and his point is well taken on that front. Even if the parting gift were as small as $10-20 million (which is a worst case scenario) then the downside here is only about $0.25 to $0.50 while the potential upside is many multiples of the current price. That is a great risk/reward tradeoff and one that is due, in large part, to the presence of the equity committee. These committee's tend to provide a nice floor underneath the equity valuation and stock price.
Best wishes.
FGOCQ Here's the recently amended bankruptcy petition. The linked document also includes the BK announcement that Faust referenced.
http://www.scribd.com/doc/26381215
Well, then that makes 3 of us ;)
OT: Blip, the company you are referring to regarding Tronox is Kerr-McGee. Tronox was spun off from the old Kerr-McGee who bundled up all of its old legacy liabilities and sold it to the market as "Tronox". SOme of the liabilities on the balance sheet of Tronox belong to the old Kerr mcGee which was bought out by Anadarko, thus all of the lawsuits.
Most of the legacy liabilities have absolutely nothing to do with Tronox's line of business. To add insult to injury, old Kerr-Mcgee took out some debt in the name of Tronox to cover those legacy liabilities and environmental claims but Tronox did not get access to the funds to pay down that debt (i.e. received no benefit but got stuck with the bill). That's why the debt remains and why there is a great hope that the liabilities will eventually be moved over to their rightful place on the balance sheet of Anadarko-Old Kerr McGee.
The debtholders term sheet for a POR includes giving an 87% interest in the lawsuit proceeds to the government to satisfy these envirnmental claims. The equity committee is working on its own plan of reorganization that is purported to preserve value for shareholders.
I didn't take enough letters with me when I crawled up there, lol.
Most likely the cash is restricted by debt covenants. Not sure about the procedures for obtaining a waiver.
I will dig deeper into this company later this weekend. I have had to put investing on the backburner for the last 2 weeks due to work and other stuff.
They have ceased production because they need capital to operate. I don't know how much cash they have right now but it probably isn't much. The latest financials were as of October 31, 2009, so they are a bit stale right now. They appear to have been paying creditors and contractors with equity as the outstanding shares have increased dramatically over the past year. The deal with Northwest that was cancelled by the Obama Administration in late December was for $26 million, some in cash, some in debt assumption for a 51% stake in the company. This deal would have allowed production and exploration to resume and for all debts to be kept current. When the deal fell through, Chapter 11 became the obvious, if not the only choice. I believe that at some point there were 2 other potential suitors out there but the Northwest deal was the most promising.
This bankruptcy is all about finding a buyer or someone to partner with that will provide an equity injection. The company has made overtures that they intend to find a deal that will preserve value for equity. Remembering that creditors and contractors have been converted to equity in the past year may be the reason to want to find a deal that does preserve equity.
We shall see what happens.
Glad to see everyone is still hanging in there, having fun and not going into panic mode. We know where we've been and we know where we're headed. This board has come a long way since our humble beginnings. It cannot be underscored enough to watch the price/volume ratio. This stock moves big to the upside on volume and tends to drift lower during periods of low volume. Although we've seen almost $0.30 shaved off of the price this week, the volume indicates there is no conviction to sell on the part of the overwhelming majority of stockholders.
The negative sentiment in the broader markets has had an impact on us. Historically, we have not seen this type of broad market sentiment creep in and affect Chemtura's stock price. But guess what, this stock now behaves more like a big board stock than it does a pinksheet. It also has a very large institutional ownership percentage and as such, this stock will now be affected when these guys adhere to stop losses and such. If this downward move was also some kind of attempt to shake loose some shares then it didn't work on this stockholder ;)
Best wishes.
FGOCQ Firstgold Ch.11 Announcement and Amended BK Petition
http://www.scribd.com/doc/26381215
No recent news on the POR. The latest info I have seen was in the Knight Capital Report on Chemtura which you can get to from the link below. Their report discusses the Equity Committee's intentions of putting their own POR together.
To answer the other questions, I hold only the common stock. As far as equity treatment goes, you can expect the unsecured creditors of Chemtura to try and convince the court that the enterprise value is only enough to cover their interests so that they can capture all of the equity on the back end. It is really no different than the Tronox case in that regard.
I strongly believe that the equity constituencies of both Chemtura and Tronox will receive a meaningful distribution upon emergence because they both have motivated equity committees with some strong institutional backing. In Tronox's case, you can rest assured that if Cheever did not feel strongly about his chances of receiving a meaningful distribution then he would not have agreed to serve on the equity committee. To serve on an EC takes a great deal of personal sacrifice, not the least of which requires that you can no longer buy or sell the company's securities while in service. To make that sacrifice, it takes either a great leap of faith or a very strong belief in the endgame. This is not Cheever's first rodeo, he has served on court appointed committees before so he is well aware of what each committee is trying to achieve.
Best wishes
Link to Knight Capital Report:
http://chemturaresearch.blogspot.com/2010/01/knight-capital-initiates-coverage-of.html
I'm very familiar with the case and have been following that whole situation since September 2008 as a shareholder of preferreds and as an interrested observer trying to learn from one of the most complicated BK cases in history. I still find the Judge's line of reasoning to be broad enough for almost every company with an insolvent balance sheet to argue that "hey, since our stock and bonds still actively trade, we're not hopelessly insolvent." I know that she was ruling on the motion to disband but it was her comments that caught my attention. Those comments have implications, going forward, regardless of what the hearing was about or what the motion was. Anyone who regularly reads court documents will likley see those comments pop up again in the future.
Different courts apply the "hopeless insolvency" standard differently. Some have ruled that shareholder's need only prove that the company is not hopelessly insolvent to satisfy that issue. Others have taken a more hard-line stance such as in re: Williams Communications that "hopeless insolvency" is not the issue but whether there was a " substantial likelihood of a meaningful distribution to equity holders." The latter is what was argued by Debtor's counsel in Chemtura's case. So, based on that, I will still contend that we had much tougher hoops to jump through to get where we are.
Nsomniyak, that was a very broad ruling. I was stunned by that narrative. The implications of that ruling could be big, going forward, especially within that district court system. If Judge Walrath were presiding over this case we would likely have had our EC much sooner. Let me assure you that our burden of proof was much larger than the one ultimately required of WAMU.
The proceedings today went as expected. The end result of the "so orderdered" and stipulated surrender of the 20 planes is that RACC becomes an unsecured creditor in the amount of $18,753,103. This is because the outstanding loan amount is $32,753,103 and the agreed upon fair value is $14,000,000. This has the effect of reducing equity by $18.75 million, but this has been known about since day one. The total book value of equity, using the 09/30/09 balance sheet from the first-day motions, would now stand at about $87 million. It is only about $1.25 million more equity erosion than was alluded to in the first day motions. If you look at the last bullet point of the document linked in the sticky post #4946 “Mesa Air Group Bankruptcy Case Summary” you will find the following statement which was accurate as of January 5, 2010:
“The current Book Value of the 20 planes subject to potential return to Raytheon as discussed in the first day motions is $16 million. The related loans total approximately $33.5 million. Raytheon will become an unsecured creditor in the amount of approximately $17.5 million.”
Now Jax, you know today's move was nothing more than manipulation to prevent a MACD crossover, lol. It couldn't possibly have anything to do with being undervalued relative to its potential recovery value ;)
This is all a part of what makes a market. Not everyone will agree at the same time about what the company is worth. Some left at $0.10, some $0.20, $1.00, $1.60 etc. Everyone doesn't need to get so worked up about what one guy thinks. Allow yourself to see other people's opinions without getting inflamed, it may just help you grow in your own analysis. They guy, in his latest update, says that he could see the stock trading as high as $2.00 before emergence, it is not as if he is saying it is game over.
If you saw Knights report, their mid range was $2.50 with a very attainable EBITDA number and a reasonable multiplier. That was their mid range or "in-line" expectations. I have heard from one money manager who thought the price target was $2.00 and others that thought the target was $3.00. I talked to one firm whose target was roughly $3.00 before the latest MOR and now their target has been revised higher. Not everyone I communicate with tells me what their target is but I know of a lot of firms that own the stock that will never have to file with the SEC because they are not large enough to be required to file. Some will look at a particular target and see it as overly conservative and others will look at the same target as a favorable exit point.
These folks who have set targets are not dealing with a complete set of information, because no one has all of the final numbers and assumptions, so people have to use their own assumptions. We're talking about a process that will continue to develop for a number of months to come. Also, these price targets are likely to be revised higher if top line growth continues and EBITDA continues to grow.
See this post:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=45308149
One of the parties was AAR and the other was disclosed as "a major holder".
I don't know what the current institutional holdings are. That picture will not become clear till some time down the road as the institutional holdings reports are due. They did not file for BK until January 5, 2010 so the first round of institutional holdings/divestitures will not be known until a few weeks after January 31, 2010. Many institutions do not have to report their ownership interest until a few weeks after March 31, 2010. Whether or not there is any institutional ownership, right now, is less important than where that level is, down the road. If the prospects for recovery improve, the institutions will buy back in. If they don't improve, they won't.
Chemtura did not have an influx of new institutional buying until around September 2009, some of which has been made public, some of which will never be reported because the firms are not large enough to be required to file their holdings. This is just provided as an example to show that institutional ownership can come along later and some of this type interest and ownership will never be publicly known.