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I agree the common shares are a bad investment, exactly because the management can print shares. But you cannot use that argument as a reason to avoid the preferred shares. That is debt not equity. Moreover, those preferreds continue to accrue interest even if they stop paying the dividend. The fact that management owns so much of the preferred suggests to me they won't stop the dividend.
Those officers own lots of the preferred shares. What is their interest in losing that money?
Is there any stock forum board online that has an active discussion on LTS? No one has posted a real comment in this thread in a year.
Here is a typical support question:
"For two years, I have been trying to get my account on S.C.A.N. to be confirmed by your system so I can participate in discussions. I never receive any email from your system to confirm my email address. Can someone help me with this?"
Your response further confirms to me that there are people that stockcharts.com deliberately ignores, simply because the person either asks too many questions or is seen as too opinionated. I found two old time posters on the prior S.C.A.N. system who also complain they cannot get new registrations confirmed.
They have such nice charting software, so it's a shame to be treated so horribly.
Is anyone else being ignored by support? Are any of you ever getting confirmations that support ever receives your support requests, submitted through the stockcharts online support ticket form?
Unfortunately, stockcharts.com never talks to customers by phone. They hide behind a web form to submit support requests. Unfortunately, I only get a response one times out of 10. They claim they respond to every ticket, but I have our mail server log - before there is any spam filtering performed - and they are not sending any emails at all nine times out of 10. At very least, you would expect a company to generate a support ticket number and tell you what that is. They do not do this.
They have a new discussion forum as well. You register for that but many of us never get any confirmation of the registration, and therefore you never can post in the forum. Since there is no phone number to call, no support email or support form for the forum, and since the main support personnel do not respond, you never have any way to resolve the problems.
I distinctly get the impression that there are some users that stockcharts intentionally targets in the above ways, so it is less about ignoring everyone than it is about ignoring people that they see as troublesome in any way, for any reason.
If stockcharts is really this overworked, couldn't they resort to having a system where you spend $25/support ticket and then get a higher level of service? There has to be a way for them to pay some of their support costs without just abandoning users for years on end?
If anyone has any insight on how to get support from this company please share.
Illegal_alias said
"Do you think the lawsuits are dragging the price down?"
I think the problem is two fold:
1) The company got rid of its most profitable business. How much money can they actually earn now? I am now sure anyone knows, but based on Dec 2014 quarter it is not a lot. I think that puts them into a mode where they get revalued against unknown future earnings.
2) They have more lawsuits now than before and that does represent some risk.
I chose to sell out and take a loss. I will wait for another earnings release and let's see if they are reasonably valued against the new earnings.
I do believe this ends up with a buyout, and management is finally onboard about that.
What can't GNE suspend exploration and just focus on their wholesale and retail businesses until commodity pricing improves?
Thank you for the great summary glass.
I would like to see you address the extra lawsuits that were just added. It looks like legal exposure has climbed another $6M in just one quarter. They apparently did some bad deals and are getting sued for it, and the total exposure is now around $22M by your summary. What's the merit of those cases?
In addition, to support a move to NASDAQ, didn't they get rid of at least one of their most profitable businesses? That's why the Dec 2014 earnings are substantially lower than any recent quarter. That raises the question what are their sustainable earnings moving forward.
I haven't reviewed the Tronox bankruptcy for a long time now. Can someone summarize how did the Class 4 claims end up voting on the plan of reorganization.
When I last reviewed the case, the Class 4 claims were something between $1B and $2B of potential value. Some of these claims were duplicates so the exact number was never clear to me.
If the Class 4 holders voted to reject the plan, that triggered a dilution event that would effectively wipe out the Tronox bondholders. Tronox bonds are at 125% of par, so obviously either Class 4 accepted, or no one is worrying about that scenario very much.
Can someone bring me up to speed on these specific issues?
Amazing how small this group is. GM is one of the largest market cap companies in the US, yet there is such little interest here in discussing it.
Has anyone heard anything regarding when and how the old GM bondholders will receive stock and warrants in the new GM? I know the amounts of stock that were reserved for the bondholders, but what is totally unclear is why is that stock being held back and not given to bondholders yet?
I've never seen a bankruptcy like this one. The government's inability to make good on even its own harmful promises to bondholders is disgraceful.
Which Bonds Still Exist?
What are the bonds / bank debts that play into this Chapter 11?
1) On FINRA's web site, I only see a 10% bond maturing in 3/31/2012 with CUSIP 978093AF9. FINRA is indicating $121.5M initial issuance and the same amount still outstanding. I see recent December trades for the bond on the FINRA site 978093AF9.
2) The first day filing mentions a 15% Senior Secured note due 2012. On FINRA's site, I see no mention of this bond. Does this 15% bond have a CUSIP?
3) I found one article on the web that indicates the 15% bond is the result of a restructuring of two 10.5% bonds. I don't see either of those bonds on FINRA either.
Can someone help me to make sense of the above?
Effect of Chapter 11 on EBITDA
Can someone explain the potential effect on EBITDA of this Chapter 11? If I subtract away 100% of the interest expense on the last 10K I could find, you still have negative earnings.
How Did They Issue Senior Secured Bonds?
The senior unsecured bonds GAJTQ have a provision in the prospectus that does not allow the company to mortgage properties. This is referenced on page 80 of the 10K as well.
How is it that the company was able to issue the 11% senior secured bonds without violating that provision?
Which Data Vendors Display Symbol Changes Fastest?
Occasionally a company will very suddenly delist, or declare bankruptcy, and without warning the old symbol will stop trading and a new one will be constructed. My question is which sites display intraday charts for *new* symbols the *fastest*?
I have been having problems with all of my vendors in these situations. As one example, there is a bond that trades like a stock with symbol GAJ. The parent company went Chapter 11 over the weekend and on Monday the symbol suddenly changed to GAJTQ and was quickly delisted from NYSE.
I had placed an order with my broker on the weekend for the symbol GAJ hoping to pick up some of these senior bonds on the cheap, and the broker simply cancelled my order without even notifying me. Since the symbol no longer existed, they felt they had to cancel the order and apparently felt no obligation to transition the order to the new trading symbol.
Monday was complete chaos for the new symbol GAJTQ. OTC bulletin boards' web site was not showing a time graph. My broker was not showing a time graph. My normal data provider stockcharts.com was not displaying a time graph. I feel totally let down by all of my vendors.
The next time I want to be better prepared for the event. Which vendors act the fastest in such cases to start displaying the data, or feeding the data, when there is a sudden symbol change due to delisting, bankruptcy, etc?
Web Site for Time Graph of GAJTQ
Most of the charting web sites are slowing coming up to speed and displaying intraday data for GAJTQ. My question is which sites display intraday charts for *new* symbols the *fastest*. Monday was complete chaos. OTC bulletin boards' web site was not showing a time graph. My broker was not showing a time graph. My normal data provider was not displaying a time graph.
The next time I want to be better prepared for the event. Which vendors act the fastest in such cases to start displaying the data, or feeding the data, when there is a sudden symbol change due to delisting, bankruptcy, etc?
Recovery Percentage of GAJTQ
I am trying to evaluate recovery potential for GAJTQ (formerly GAJ). This is one of four unsecured bonds of Great Atlantic.
Apparently the unsecured bonds are debt guaranteed by subsidiaries. Questions are:
1 - Are the four bonds recourse debt to the parent, or is it guaranteed exclusively by the subsidiary?
2 - The prospectus for GAJ goes on for pages about the difference between restricted and unrestricted subsidiaries. Which of the four unsecured bond series attach to restricted and which attach to unrestricted? What is key implication of belonging to either class?
Until those issues are addressed, it is difficult to see how any residual value in the parent after covering the DIP financing and secured debt might be applied to the unsecured bonds.
Does anyone here have insight on those issues?
Recovery Percentage of GAJTQ
I am trying to evaluate recovery potential for GAJTQ (formerly GAJ). This is one of four unsecured bonds of Great Atlantic.
Apparently the unsecured bonds are debt guaranteed by subsidiaries. Questions are:
1 - Are the four bonds recourse debt to the parent, or is it guaranteed exclusively by the subsidiary?
2 - The prospectus for GAJ goes on for pages about the difference between restricted and unrestricted subsidiaries. Which of the four unsecured bond series attach to restricted and which attach to unrestricted? What is key implication of belonging to either class?
Until those issues are addressed, it is difficult to see how any residual value in the parent after covering the DIP financing and secured debt might be applied to the unsecured bonds.
Does anyone here have insight on those issues?
I had stopped tracking this Chapter 11 back when I made this post, based on my concerns that if the Class 4 tort claims rejected the plan that they would overwhelm the bondholders for claims on the to be issued new equity.
Can someone tell me have the Class 4 tort claims already voted on the plan? If not, when do they vote to accept or reject?
Are you a lawyer?
I guess what concerns me as much as the potential size of the claims is that they could spend a YEAR just trying to figure out the relative value of each of those claims in order to assign stock to the class. That could get really ugly and eats up Tronox resources staying in Chapter 11.
You are probably right. The reason they are saying "Unknown" is because some number of those $2B claims are duplicates.
But isn't quantification of those Class 4 claims now the single determinant of the value of the entire deal for bondholders? If $2B of claims is really only $900M of claims, it still basically wipes out the value of the bonds if the Class 4 holders reject the plan. And I think they will for the reasons I outlined.
And if my reading of the Class 4 claims is even ballpark correct, the Tronox bondholders are in much much more serious trouble than anything discussed in that article you posted:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=52171957
Oh what a shock. Whoever would have guessed that the government might come after Tronox for more money:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=51744868
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=51793679
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=51843768
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=51921921
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=51960934
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=51968646
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=51977577
I mean I only said it about 10 times weeks before this article was printed. :)
Not sure what you meant by that response. I am guessing that "Liabilities subject to compromise" of $436M means the bondholders plus some allowed portion of Indirect Environmental Claims.
This plan may be in trouble.
I came into this as a potential bondholder. I was reading through the 7/7/2010 draft Disclosure Statement for the reorg plan, and simultaneously building a model in a spreadsheet, to measure returns buying the bonds, given the new dilution, new debt structure, etc.
I guess it was bad enough that the United States has not accepted the environmental claim limit proposed by Tronox. You can read the details of that negotiation on pp 32-33 of the Disclosure Statement regarding the plan. I was pretty much spot on in my earlier post in guessing that they Tronox might need to pony up another $150M to cover the environmental claim:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=51952594
Note that the government is trying to get Tronox to pay $295M. I'll admit I was lucky on that call, but it's annoying that the only responses I got said I was being negative and was trying to "scare people out of shares".
But the above are details, and we can calculate the effect of those, and we just need to pay a different price for the bonds. That's what the market did and they took the bonds down to 70% of par, then to 80% of par, and I think if the environmental claim were at $295M that is about right, given the new dilution and the way they are restructuring the debt.
That's when I got to page 25, and my jaw dropped. Class 4 are the tort claims. And page 25 documents that these claims are around $2 BILLION dollars. How, please tell me, are $2B of claims going to be satisfied by a 12% stake in the environmental claims lawsuit? Page 25 shows the environmental claims at $4.9B.
Even if Anadarko loses a lawsuit for $4.9B, the 12% share in that is around $590.7M.
Now consider what happens if Class 4 rejects the plan. Page 6 of the Disclosure Statement documents that if Class 4 rejects the plan then they are at that point rolled into the general unsecured claims (GUC). And $2B of unsecured tort claims would completely overwhelm the $470.6M of general unsecured claims documented on page 6, the current Class 3. If $2B of unsecured claims are allowed to enter the GUC pool, the bondholders end up with 14.7% of the company pre-dilution and the Class 4 tort holders end up with 81.3% pre-dilution. I calculated Class 4 would be around 59% of the new equity post-dilution (from the preferred stock, Tranche A/B warrants, equity warrants, management warrants, and 5% extra dilution thrown in for margin of error).
Give Tronox a 6.5 EBITDA multiple on $150M EBITDA, $300M for working capital adjustment, and I get to around $608M of equity value of which the Class 4 holders would get about $359M.
Now step up Tronox to an 11 EBITDA multiple on $170M, and $375M for working capital adjustment, and I calculate the Class 4 holders would recover $931M.
Now if you were a holder of those Class 4 tort claims, would you risk four years in court against Anadarko, with a very optimistic upside being that you take $590.7M (and I am not deducting from that the $100M+ in legal fees during those four years!) and your downside being that you get NOTHING? Your alternative is to reject the plan, and you very quickly get $359M to $931M. Your overall recovery improves. Your time to recovery improves. You quickly stop your losses to lawyer fees.
If $2B is the correct number for the size of Class 4 claims, the Class 4 holders will certainly reject the reorg plan. And at that point the bondholders are screwed.
The key here is what is the size of the Class 4 claim that will be used in calculating the ownership percentage of the GUC pool. Does someone have an insight into this? Page 25 says the filed claims are $2B but the Estimated amount is "unknown".
If Class 4 rejects the plan, how many more months do we spend in Chapter 11 arguing with those claim holders about their actual claim value?
None of this information appears to be in the price of the bonds. Am I missing something? If I'm even ballpark correct on these numbers, the bondholders are in deep deep trouble.
In the Clear Harbor position paper dated 4/20/2010, Clear Harbor continually uses an item in their valuation named "Liabilities subject to compromise" of $436M. I don't see good documentation for what this item includes, nor for how it is calculated.
Was it Clear Harbor's intent that this $436M was to cover payments to Class 4 Tort claims?
Any clarification is appreciated.
I'm no lawyer, but the way I have heard it expressed is that Anadarko would need to show extreme negligence on the part of BP to escape its liability. Anadarko has been arguing that in the public press. How long does it take to play that out in court?
I wasn't so interested in trying to game Anadarko's total liability as I was in understanding the degree to which that liability might interfere with Tronox's environmental settlement agreement for $115M.
I am not saying Tronox is on the hook for $900M. I am asking will they be on the hook for anything more than $115M if APC is unable to pay because of its own Chapter 11.
Since I am trying to calculate a *worst case*, then when presented a range of $400M to $900M in costs, I use $900M because that is the worst number. I never said that was the most likely number. But it is a worst case.
As a bondholder, I would be asked to fund the cleanup reserve since the money they raise from the bondholders will pay off most of the $115M settlement. If that $115M moves up a little bit, I assume its the bondholders who will be asked to fund the difference. If the liability pops up later on, then that affects the value of the common shares I am given for providng funding. So understanding how this environmental liability is likely to change over time is absolutely critical to calculation of your rate of return on the bond investment.
Maybe this is really just a legal question and not well suited for this group.
Ironically enough, I find that distressed debt investing involves a lot less uncertainty than equity investing. You generally can calculate with reasonable certainty a range of outcomes and your rate of return. I have never felt in any one of those debt investments that I was either guessing or speculating. You hope for the best case, but generally you should go into it having calculated and understanding your worst case, and you don't ever want that worst case to be a wipe out.
In the case of Tronox, there is a $900M environmental liability cloud overhead. The $115M settlement they have is a nice protection from that cloud. But I hope it is reasonable to simply ask in what circumstances could that $115M settlement be moved aside, and the parties come back and ask Tronox for more.
That's not being negative. That's called doing your homework.
Distressed debt investing is all about calculating your upside and measuring carefully your downside. I am not negative for simply wanting to calculate that downside.
It is simply ridiculous to say all bankruptcies have risk, therefore either buy or do not buy. You are working way way way too hard to avoid having an out-in-the-open discussion about potential liabilities. Why?
If I wanted to "scare people out of shares" I would not be asking questions. I would be making demonstrable negative statements and attempting to quantify those. Asking the question about what is the extent of liabilities if Anadarko does a Chapter 11 is just covering my bases. It is not a statement that Tronox does have any liability. It is an attempt to ask "do they have that liability potentially?"
It is a scary question. So what? You yourself say investing involves risk. This is one of those. Deal with it directly instead of constantly trying to hide it.
I'm not disputing that it was fraud. I'm not disputing that KM and Anadarko should bear the responsibility.
What I am saying is that the Gulf Oil Spill may put Anadarko into Chapter 11, if for example it continues another four months. This is not a normal Chapter 11 either. It will be an extremely political circus in which the Obama administration tries to change the legal system and how it operates, inserting their own political priorities in front of people who have rightful legal claims. See what they did to GM bondholders, for example.
In that situation, where Anadarko is held responsible for environmental claims but either cannot - or by Obama administration is not *allowed* to pay - then will they start going after Tronox as the target of next recourse?
It's not that Tronox is equally responsible. It might be that Tronox is the last organization standing that can write a check.
I'm trying to better understand - and quantify - that worst case scenario.
Normally liability suits can draw from any liable party. In the event that APC cannot meet its liability here, I am simply trying to understand if they can come after Tronox as the next most liable "in line".
Saying it isn't so doesn't mean it isn't so.
If Tronox rejects the spinoff contract, does the $100M get released to the government for environmental claims, or does it go to Tronox as income? If the latter, then Tronox obviously doesn't want the tax bill for money it will end up paying out anyway.
In the bigger picture, this contract rejection is not a big deal. The big deal is what if Anadarko is not able to cover $400M in environmental claims and the parties involved try to undo the $115M deal with Tronox and come back to Tronox for more.
I calculated if the bond investors needed to pony up another $150M that the bonds were about 25% overvalued at par. If the claim was for over $500M and Tronox needed to cover all of that, it gets very ugly.
Others here have said the Tronox claims take priority over the Gulf spill claims against Anadarko. But can we really be sure of that given the Obama administration's propensity to bend the law to suit political needs? Look what happened to the GM bondholders.
Assume worst case: that the government and other stakeholders no longer accept Anandarko as solely responsible for the environmental claims. Anandarko might do a Chapter 11 at some point, so that might mean some of the environmental claim comes back to Tronox. Does anyone have a guess about what the maximum exposure to Tronox is?
The claim itself was for $400M and Tronox had negotiated a limitation on that claim of something like $115M and 88% of the litigation against Anandarko.
My assumption was that stakeholders might come back and ask Tronox for up to an additional $150M at some point. Is there a another number I should be using?
Not yet, still hovering just below par.
I'm asking - in your opinion - what are the implications if Tronox accepts or rejects. They have to do one or the other right? It's a yes no decision.
So what are the implications if they accept or reject?
If they accept would the agreement be undone by any of the proceedings against Kerr / Anadarko for fraudulent transfer of liabilities to Tronox?
All of that seems predictable, and it's the only thing I can find that would explain why *both* the Tronix equity and bonds have been in a selloff. The market seems to be discounting some kind of additional financial burden for Tronox.
Personally, I'm going to build my model for the bonds based on an assumption that they need to raise $300M instead of $115M.
madclown, I already understood the equity capital raising is for bondholders who are accredited investors.
My question (just a confirmation) was that the $105M raised buys 70% of the new common shares.
I also didn't see the backstop investors named (I'm sure it is there and I haven't read it yet), but is there any chance they will let bondholders act as a backstop for more than their prorata share in bonds?
Reading page 6 of the Plan Support Agreement, are we paying $105M in the capital raise to buy 70% of the new equity?