Replies to post #63627 on Chemtura Corp (fka CHMT)

[alectric]

I guess it all depends on what pre-petition means, shares issued before the BK filing or shares bought before the bankruptcy filing. I took it to mean bought. In my mind, that's the only one that makes sense. I mean if all shares are pre-petition (i.e. issued before BK), why add the term in the second POR vis-a-vis the first? The only reason that I can think of is that the debtors wanted to make sure equity supported their POR. Knowing that most of the shares were bought by speculators after the bankruptcy filing and that these shareholders would not approve the debtor's POR, the debtor's found a clever way to exclude them with the pre-petition qualifier. Moreover, since many of the pre-petition shares were in employee's 401-K plans, they knew they could count on their support. Presto, a majority pre-petition shareholders now support the POR.

Indeed, if any of you hold pre-petition shares, it makes them that much more valuable. For example, let's just say that only 10% of the existing shares were bought prior to the BK filing. Then 5% of shares in the new company are not divided up among 243M old company shares, but rather 24.3M old company shares. Thus the shares are not worth .27 each, but rather .27x10 = $2.70 each. The post-petition shares are worth nothing.

This is just my opinion. I could be wrong, but that's the way I read it. To me it's totally unfair, since they don't make that same distinction with the bond holders (pre vs post-petition). Too bad the EC didn't even bring up this point in the court hearing. If I were you, I'd press them to do it ASAP.

[BBalls-N-CowTown]

Chemtura has some very profitable niche businesses in a sector that is screaming right now. If you compare the market capitalization to the "peer" companies listed by the brokerage houses, all of those companies are $2 to $4.5 billion with PE's around 18, whereas Chemtura is under $89 million right now, classing it as a small cap stock. Chemtura has not had the earnings because of write-downs and restructuring etc... which will disappear when we leave BK. They are in a very strong position for growth, with what is functionally a monopoly in some strategic areas. Consequently, in recognition of that, the PE multiple should probably go higher than those peers in time and the $.27 will become a multiple of that with patience.


WS was right about SVP and Canyon, those guys are really going to have to evolve or die with respect to the structure of the POR, and the creditors and debtor are also really in the same position. I am not a lawyer, just an humble working-stiff engineer who is trying to get 3 sons further along in life by working in a little investing in his sparse spare time. I cannot see or believe that there is any logic in the cancellation or non-conversion of shares bought after the chapter 11 petition. The shares have all been publicly traded and treated in the same way since the filing, all were converted to Q designation. I think the terminology would apply only if any shares had been issued after the petition, and to my knowledge none have been, and if they had, I think they would have been designated in a different class of security. I am glad someone is asking a lawyer for an authorative answer to this question.

I think we are just experiencing the hard turns of navigation through the rocks in getting to a concensual settlement. There are competing interests and each of those interests want, and are using gamesmanship to get all that they can get. As it stands now, the creditors probably know that they aren't going to get the sweetheart deal they crafted, and SVP/Canyon are going to have to deal with the fact that they aren't either and now they need to concern themselves with what is really fair and equitable. As I see it, we private shareholders, individual investors, employees, etc... will be the beneficiary of the changes that those competing interests are going to have to accomodate in order to get this thing past Judge Gerber.

Each should make their own decisions based on their own personal situation. Mine actually is OK even now, as long as the equity isn't cancelled, as even at $.27 I would still be in a profitable position. I actually benefit from the low current share price because I am divorcing a gold-digging shrew that I mistakenly married 2 years ago (divorce filed 8 months ago) and this is beneficial in expediting the goal of getting her claws out of my back at terms more favorable than they might have been at a higher share price. We are all entitled to our own opinions, and for others to respect our right to do that. We each will live with the consequences of our decisions and actions, also. If I am wrong, well, it just means I have to work harder and longer to meet my goals (nothing really changes), and if I am right, I get a lot of freedom, and my sons have a lot of opportunities that I have never had.