George D'Angelo II

Value, contrarian
George D'Angelo II
Value, contrarian
Contributor since: 2014
Although this stock seems ridiculously cheap maybe we are all missing something here let's see if there is some insider buying in the stock over the short term.
Your analysis is correct, very little chance of a default on the 16s. CHK is doing everything to hang on,until higher NG and Oil prices reward equity holders
I agree why buy now this thing will go lower, buy the bonds yielding 18-20%.
Good analysis!
Early Retiree, don't you get tired of loosing money and being wrong?
Traveling investor,why don't you pick up a basic finance book, so you don't sound so ignorant when you post your
Unfortunately you just don't understand how the capital structure of the corporation has certain priorities. Good luck with your investments
TWA was a recap, it wasn't the equity holders getting paid at the bondholders expense. This is a stupid example. Unfortunately you've been called out on your stupidity, not sure what your service sells, maybe misinformation?
Thx, not sure what the author is trying to accomplish with this article, but clearly the bondholders have precedent over the equity holders. The equity could be interesting in the event of a substantial rise in NG and oil prices. Actually natural gas has moved a pretty sharply recently where Chesapeake can actually make some money there, the bond prices have recently rallied also.
The covenants are irrelevant at this point, Chesapeake is clearly a distressed company and as one of the other respondents indicated it would be criminal to pay equity out in front of the bondholders at this point.
You are really stupid that's all I can say! I've tried to explain the situation to you but you seem to think that laws concerning corporate issues are irrelevant. It doesn't matter what the covenant say when a company is in distress. Additionally my guess is the covenants on the Chesapeake bonds would prevent this type of looting of a corporation.
You are incorrect, it's not a grey line once a company becomes distressed, which CHK is it is crystal clear that it is illegal. If that were not the case companies would do it all the time, and bondholders would never invest in anything because of this risk. Use a little common sense!
IM not short CHK, I'm long the bonds.
The reason the equity holders can't get paid before a imminent bankruptcy is because it would be considered fraudulent conveyance. A company in distress cannot put the shareholders in front of other creditors, it is illegal. Simple as that, if they were to do this the creditors would sue and they would be able to clawback whatever was paid to the shareholders. This is why your analysis is so flawed. Spend a little time reading up on this.
You have to be kidding me, you have no knowledge of the capital structure of a corporation and the priorities in bankruptcy or reorganization. The bonds are way better bet than the stock. Pick up a copy of finance 101 so you can become a little educated before you write such a poor article
Excellent analysis , but I think your conclusion would lead one to either short the stock or stay away.
Richard, even with the second liens in place the unsecured debt is money good in a reorg unless NG prices drop dramatically from current prices, which is highly unlikely. I have good research depicting this. This is a nobrainer.
Richard, good analysis. I don't care if you're trying to sell your service, so many of the articles on the service are poorly written. It seems to me that the bonds are the best bet here trading in the low 30s. I have seen several reports on Chesapeake's capital structure, that indicate that even in the worst case scenario the unsecured debt is worth at least double where it's trading now.
Your analysis is flawed, why would you buy the stock when you can buy the bonds? If CHK can't pay off the 17s they will have to either file or restructure. I don't think you understand that the bonds are much higher in the capital structure then the common stock and the preferred. The bond holders will end up with most of the equity in a reorg.
I own a number of the maturities recently purchase in the 20s and the 30s.
Good analysis,the bonds are the only way to play this one, much better risk/reward then equity. I actually like all the bonds because there is a high probability they will be made whole even in a restructuring which will come if ng and oil prices don't rally significantly.
SE you are correct, unfortunately all the stupid longs on the site are like cheerleaders. Why would you want to own this piece of crap. The stock has made a nice rally off it lows and it's heading down again. Fundamental value of the enterprise is somewhere between 50 and $60 a share.
You are right
You can buy bonds and $.25on the dollar and recieve 100 if CHK survives that's 300% plus interest. You will never make that on the equity. So why would you buy the stock?
I don't think you understand how this all works. Maybe you should read a basic finance textbook. The 17 bonds trading at $.45 on the dollar indicates that the market thinks this thing goes bankrupt before the maturity date?
Stupid idea, just short NFLX.
You have to be kidding, if the 17 bonds are so safe why do they trad at $.45 on the dollar? Additionally the cash they have will disappear rapidly. They have a $500 million 2016 note due in March and they Will continue to have negative cash flow until natural gas and oil prices rally substantially. You have to be crazy to own the equity here. They probably will have a significant liquidity problem in mid 17 if energy prices don't recover.
excellent analysis, the unsecured bonds seem to be an interesting speculation, in your worst case scenario they're worth about $.40 on the dollar. The equity is toast unless energy prices rise dramatically. Most of the unsecured debt is trading in the high teens or low 20s and they are still paying interest on them.
Good analysis, the bonds are the way to go if you want to play this thing. All you folks that think the bondholders will get screwed and somehow the equity will not are smoking dope.A back of the envelope calculation using current bond prices for the enterprise value of CHK would result in about 8B, using the current stk price of 4. In bankruptcy the equity holders will get little or nothing, and the bond holders will receive most of the value. Even at today's prices the whole company is probably worth at least 10B. This would give bond holders about 80 cents on the dollar in liquidation or BK.
Your analysis is totally flawed. as Luvmybonds points out Who cares where you are in the capital structure if the enterprise is sold. All the secure debt holders and unsecured debt holders will be made whole in a sale if The equity holders get anything. The question is if you are a unsecured debt holder does it make sense to tender into the second lien offering at all. I say no unless you expect CHK to fill BK in next few years, also why would you want to be in equity holder when you can be a bondholder had about $.30 on the dollar. You're more than triple your money on the bonds in a sale or recovery and who knows what you make on the stock.