Peabody Energy Corporation (BTU)

[LouisDesyjr]

Shares are probably worthless

The schedules have not been filed yet. BTUUQ asked for an extension to file the schedules, so they should be filed any day now. Once that happens, we will be able to see if the market value of the assets will cover all of the liabilities with anything left over for the common shares.

At this time, I am expecting that there will not be enough to cover all of the unsecured liabilities, meaning that the common shares will end up worthless. The unsecured bonds are trading like they are going to suffer large losses, meaning the common shares would get wiped out.

While the stock has been up from its post filing lows, I think that is based on the retail market thinks the company is going to be saved and not reading the current situation properly.

I had been waiting for the common shares to fall below $0.50, and then going to play any bounces, since I have some JUNE 2016 $0.50 put options that would protect the trade, but it looks like they are going to never be in the money with what the shares are doing. Fortunately, I sold the $2 and $1.50 puts on the first day, instead of trying to wait for 'lower prices'.

I do find it alarming that the retail market is almost trading the stock back up to the point it was at just prior to filing BK; it is like the retail market is saying the filing Chap 11 is a 'non event' when the truth is the common shares are probably going to be wiped out.

Louis J. Desy Jr.

Disclosure: Still holding JUNE $0.50 puts