Today - Thursday, July 2, 2015
- Chesapeake Energy’s (CHK +1.3%) decision to sell some assets to privately-held FourPoint Energy for $840M gets a thumbs-up from Wunderlich’s Jason Wangler, who says the deal should help improve the balance sheet while keeping the upside potential on CHK’s core assets.
- The deal likely reduces the balance and payments of its CHK Cleveland Tonkawa, Wangler says, as three tranches of payments come in as the deal is completed, and pricing looks "decent" given the current environment.
- Wunderlich says it likes CHK’s execution and believe so much has been made of the potential pitfalls that many forget the potential catalysts that could drive value, such as accretive acquisitions using the strong liquidity position, potential sales to further improve the balance sheet, and reducing its gathering and takeaway costs.
- In a preliminary opinion, a Munich court has ruled Joline GmbH, Signus Medizintechnik GmbH and PanMedical infringe Marathon's (MARA +2.8%) '260 European patent.
- The decision follows a June 19 ruling upholding the validity of the patent's claims, following a challenge by Stryker. Marathon says it's seeking "an equitable licensing agreement, much like the one just executed with Maxxspine Limited, which involves a lump sum royalty payment for products already sold, as well as a running royalty rate for future sales."
- Shares are up moderately. They tumbled last month after a Delaware jury ruled against Marathon partner Bridgestone in an infringement suit.
- In a report interestingly completed prior to Greece calling for a referendum on further austerity, closing its banks, and defaulting (excuse me, going into "arrears"), the IMF says the country would need another €50B in assistance - with about two-thirds coming from the eurozone and the rest from the IMF.
- Even with better terms on possible future loans, Greece's debt-to-GDP ratio would decline to just 150% of GDP in 2020 from 175% today, says the IMF (the 2020 target set at the 2012 bailout was 124%).
- Dow -0.15%.
- 10-yr +0.42%.
- Euro +0.34% vs. dollar.
- Crude +0.86% to $57.45.
- Gold -0.58% to $1,162.50.
- Union Pacific (UNP +0.5%) told investors this week it will impose a $1,200 per-car surcharge on oil shippers that move crude in older railcars, becoming at least the second U.S. railroad to charge extra amid widespread safety concerns, according to a Reuters report.
- In a revised tariff taking effect Aug. 1, UNP posted rates that will charge shippers more if they use DOT-111 railcars, which are not as strong as cars built to a higher standard the industry adopted in October 2011.
- For DOT-111s carrying an average of 700 barrels of crude per car, a $1,200 surcharge would add an additional cost of $1.71 per barrel shipped.
- Earlier this year, BNSF imposed a similar $1,000 per DOT-111 surcharge on shippers.
- MCG Capital (MCGC) sets August 14 as the date for a special meeting for shareholders to vote on the company's sale to PennantPark Floating Rate Capital (PFLT -0.1%).
- PFLT is offering roughly $4.75 in cash and stock. HC2 (HCHC -1.6%) is offering about $5.30 in cash and stock, but appears to be out of bullets in its bid to win MCG from PFLT.
- SEC Schedule 14A
- Most of the usual suspects are part of a group of 15 global banks under investigation by Brazil antitrust watchdog Cade over alleged currency rigging.
- This new investigation comes just weeks after six lenders agreed to pay $5.8B to the U.S. to settle similar charges.
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
- SunEdison (SUNE -1.5%) has announced an MOU with Spanish wind turbine maker Gamesa (OTCPK:GCTAF) to create a 50/50 JV to build up to 1GW of wind plants globally by 2018.
- The deal calls for Gamesa to supply turbines and be responsible for plant operations & maintenance (O&M); the company might also provide engineering, procurement, and construction (EPC) services. SunEdison will buy the plants from the JV once they're finished, and also buy additional wind turbines from Gamesa.
- The TerraForm Power (TERP -0.3%) YieldCo is expected to have call rights for wind plants developed by the JV. A "definitive agreement" for the JV is expected by year's end.
- The MOU follows news SunEdison has obtained $360M in financing for, and begun construction on, a 185MW Maine wind project. TerraForm recently disclosed it's in talks to buy up to $2.6B worth of wind plants.
- Shares are lower as solar stocks continue to remain under pressure - the group sold off yesterday amid a 3%+ drop in oil prices. SunEdison is still up 50% YTD.
- Past wind deals: First Wind, Atlantic Power, Cental American/Indian firms
- Walter Energy’s (WLT -6.7%) senior creditors are entering confidential talks with the company to reorganize it in bankruptcy court and hand ownership to the lenders, Bloomberg reports.
- The group, which owns WLT’s first-lien bonds and loans, reportedly will submit a draft plan to the coal miner that calls for converting their debt into equity.
- The senior lenders are said to want WLT to file for bankruptcy by July 15, when the grace period on a $19M interest payment due to junior bondholders ends.
- WLT has been discussing a reorganization since April as it struggles with a $3.1B debt load and the coal downturn.
- Thinly traded nano cap Oramed Pharmaceuticals (ORMP +20.8%) jumps on triple normal volume in apparent response to the news that Chinese investment holding firm Guangxi Wuzhou Zhongheng Group will invest $52M in the company for a 10% stake.
- In December 2014, Wuzhou subsidiary Guangxi Wuzhou Pharmaceutical acquired ~696K shares of ORMP for $7.18 per share.
- Scripps Networks Interactive (NYSE:SNI) has wrapped its acquisition of a controlling stake in Poland's TVN, paying about $584M in cash and assuming about $856M in debt for 52.7% interest.
- The move means SNI is legally required to launch a public tender offer to increase its stake to 66% within three months, though the company has said it intends to buy the rest of TVN and delist it, and is ready to do it all at once, if investors accept its price.
- It's put three execs onto TVN's supervisory board: Chief Development Officer Joe NeCastro, President Jim Samples, and Chief Legal Officer Cynthia Gibson.
- Frontline (FRO -6.2%) agrees to acquire Frontline 2012 Ltd. for ~$1.5B, as John Fredriksen reunites two businesses he split three years ago to help gain a greater share of the oil shipping market.
- FRO will buy Frontline 2012 by issuing 584M shares worth nearly NOK12B, with the holder of each share in Frontline 2012 receiving 2.55 FRO shares.
- The combined company says it will become one of the world's leading tanker companies, with a total fleet of ~90 vessels including 25 VLCCs, 17 Suezmax tankers, 16 MR product tankers and 10 LR2 Aframax tankers.
- Analysts say the combination will create a business that is big enough to attract investment for further expansion.
- Micro cap Sunesis Pharmaceuticals (SNSS +8.6%) moves up on double normal volume. Shares are up 50% since the company's announcement on June 12 that data from a late stage study of its lead product candidate Qinprezo (vosaroxin), in combination with cytarabine, in patients with relapsed/refractory acute myeloid leukemia (AML) showed a significant improvement in complete remission rate compared to placebo and cytarabine in patients categorized as late relapse. In the refractory and early relapse group, associated with poorer prognoses, overall survival, complete response rate and event-free survival were all statistically superior in the Qinprezo cohort versus placebo.
- Shares plunged over 50% in October after the company announced that the same late stage study failed to achieve its primary endpoint of demonstrating a statistically valid improvement in overall survival.
- This is still quite a bit of work left for the stock to regain its pre-plunge level of ~$7.50, though. Shares will have to more than double to get there from here.
- Dow +0.07%.
- 10-yr +0.4%.
- Euro +0.44% vs. dollar.
- Crude +1.54% to $57.84.
- Gold -0.58% to $1,162.50.
- Brazil’s federal police have arrested another former Petrobras (PBR +1.8%) executive as part of an investigation into a broader corruption scandal surrounding the company.
- Police arrested Jorge Zelada, the company's director of international operations during 2008-2012; he replaced Nestor Cerveró, who has been convicted of money laundering and sentenced to five years in prison for his role in the widening scandal.
- Prosecutors allege Zelada took bribes from suppliers seeking contracts with PBR and hid some of that money offshore; he is the fourth former PBR exec to be arrested on allegations of bid rigging and bribery.
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