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  • U.S. halts new coal mining leases on public lands  [View news story]
    If they canceled the ACI leases, I would think it would require payment back to Arch by the government. It would also make the remaining leases (mainly BTU and CLD) more valuable as well as transfer volumes to these producers. Arch creditors would fight this for sure, since it essentially amounts to a liquidation at depressed prices.
    Jan 15, 2016. 02:04 PM | 1 Like Like |Link to Comment
  • TransCanada’s $15B NAFTA claim a slight credit positive, Moody's says  [View news story]
    Surprised, on a Clinton lying? Hiliar..y Clinton is a habitual liar and was proven so at the Benghazi hearing as well as to the families of the fallen patriotic retired American soldiers who were killed saving other Americans at the compound. Watch the interviews of their family members and what they say they were told by her, who seems more credible and more importantly, who has more to lose by telling the truth.

    As many parents have told their children, always tell the truth since one lie leads to 10,000 lies, the Clinton lies number in the thousands.
    Jan 8, 2016. 09:38 AM | Likes Like |Link to Comment
  • Bank Of America Is Dumped By Fidelity; Sell This Puppy Now  [View article]
    If I read this correctly, the redemption would seem to be a positive. The realized charge of $600 million is a non cash and is a result of the acquisition of Merrill Lynch in 2009 and purchase accounting. The trust preferred were Merrill issues and consolidated at the time of merger/acquisition at discounts, therefore the charge for redemption at par. Also, since they no longer can count towards regulatory capital it makes sense for BAC to replace them, whether forced too or not. The average weighted interest rate for the three issues is 7.143%, I think BAC should be able to replace this with lower cost regulatory capital.
    Jan 8, 2016. 09:11 AM | 3 Likes Like |Link to Comment
  • Peabody Energy: Blockbuster News  [View article]
    From the 8K:

    "The Transaction Discussions also included disclosure of ongoing discussions with certain holders of its 6.00% Senior Notes due 2018 (the "2018 Notes") regarding potential instruments and related structures that could be used to effect exchanges for other securities of Peabody and/or or its subsidiaries. Peabody expects to continue to have discussions with holders of our outstanding indebtedness."

    The related structures is interesting, what if the structure is an offshore "SPV" (remember Special Purpose Vehicles famously misused by banks last decade) owned by Peabody and the recent buyer of their depressed debt (or just Peabody the buyer really doesn't need to be an owner). Peabody could fund it with the new debt raised it states in 8k and/or some cash from the western coal sales and then buy back existing debt from the aforementioned holders or in open market. The SPV could even issue debt to large holders of existing unsecured debt, recent buyers of the debt at depressed prices come to mind for example, then buy that debt at a small premium (say 25 cents on the dollar) with the sellers of the debt profiting and then relending the profits back to the SPV at a negotiated rate of interest that is in essence free cash flow to the investors who would participate in this structure.

    Just thinking out loud, and not even sure of the legality of this structure and/or if covenants would allow it, but it would be an outside the box attempt to provide an ongoing structure to lower debt and interest rate expense. Also, when the final lease payments are made and the hedges roll off, Peabody could use some of the increased cash flow to retire/pay down any debt issued by SPV, providing enough of the existing unsecured has been retired (freeing up additional cash flow) and the term loan is covered for repayment (via cash and revolver).
    Dec 19, 2015. 02:56 PM | Likes Like |Link to Comment
  • Paris climate deal sinks coal stocks  [View news story]
    86% of global energy production is fossil fuels. The Paris deal is irrelevant, voluntary and unenforceable. It is almost as though global leaders throwing Obama a meaningless bone (remember, he stated he views leadership as leading on climate change when asked why he doesn't lead the fight against radical Islam), there is nothing on/in it and he can go bury it with the rest of his failed legacy. However, it doesn't mean he won't try to give U.S. taxpayer money to the developing world, hence the laughable $100 billion pledge to promote "green energy" to developing countries so they can bypass using coal.

    Coal/energy stocks are weak because of tax selling as well as the time tested action of cutting the losers and puffing the winners at yearend. No professional money manager wants to answer to their clients why they have big positions (overweight or even market weight) in the worst sector of the year when yearend reports/meetings are issued and held.
    Dec 14, 2015. 03:29 PM | 8 Likes Like |Link to Comment
  • Peabody Energy's Senior Unsecured Debt Can Be Undermined By Secured Lenders  [View article]

    Realized that it is added back, just seemed to be an oxymoron, I am used to term operating profit or "adjusted operating profit" if you like, given the other add backs in this example. Also, while depreciation is a non-cash expense, cap-ex is not and a rule of thumb is that depreciation is a decent indicator of needed cap-ex. Although, in Peabody's case cap-ex has been cut, and is now less then one third of depreciation.
    Dec 8, 2015. 10:36 AM | 1 Like Like |Link to Comment
  • Peabody Energy's Senior Unsecured Debt Can Be Undermined By Secured Lenders  [View article]
    you should read other SA contributors work on BTU, way more detailed and informative. Also covenants can be changed/negotiated. Finally, why do you have in your first table "adjusted EBITDA" with depreciation added back, by definition EBITDA excludes depreciation.
    Dec 7, 2015. 04:54 PM | 7 Likes Like |Link to Comment
  • Alberta to cap oil sands emissions, phase out coal  [View news story]

    So true, coal is the only true reliable base load supply. Natgas pipelines can be interrupted. When I drive by coal fired plants and see the piles of coal ready to burn, it seems very unlikely they would ever be interrupted by unplanned events.

    I read you description and saw you are type 1 diabetic, my son was diagnosed at age 13 (now 18). The University of Missouri breakthrough (link below) using stem cells to regenerate the blood vessels of the pancreas, reportedly enables the pancreas to start producing insulin again. Combined with a drug called Ig-GAD2 seems allow the pancreas to function normally, thereby potentially eliminating insulin injections. Hopefully, this leads to a cure.

    My brother-in-law's son is type 1 as well (now in his 40's) and told his father that the condition likely help drive him to success in his career (an aeronautical engineer) since it made him more focused and disciplined.

    I hope my son sees the cure someday, but admire the strength, success and determination those managing the condition exhibit. I believe battles like yours and my nephews helped and helps my son realize the disease won't dictate his life. I plan on showing him your bio when he comes home for Thanksgiving break from university.

    God bless you and Happy Thanksgiving.
    Nov 23, 2015. 10:23 AM | 7 Likes Like |Link to Comment
  • Peabody Energy to sell New Mexico, Colorado assets for $358M  [View news story]
    Bowie Resources LLC

    Then go to "global customers" and click on Galena Asset Management under management and partners and Trafigura.

    Looks like Swiss money, this deal is solid and closing, no worries.
    Nov 23, 2015. 09:26 AM | 1 Like Like |Link to Comment
  • Alberta to cap oil sands emissions, phase out coal  [View news story]
    From the press release:

    Electricity and renewables
    •Alberta will phase out all pollution created by burning coal and transition to more renewable energy and natural gas generation by 2030.
    •Three principles will shape the coal phase-out: maintaining reliability; providing reasonable stability in prices to consumers and business; and, ensuring that capital is not unnecessarily stranded.
    •Two-thirds of coal-generated electricity will be replaced by renewables – primarily wind power – while natural gas generation will continue to provide firm base load reliability.
    •Renewable energy sources will comprise up to 30 per cent of Alberta’s electricity production by 2030.

    "providing reasonable stability in prices to consumers and business; ensuring that capital is not unnecessarily stranded" Wow that sounds expensive to rate payers and who defines "unnecessarily stranded". Sounds like one term for Notley.
    Nov 23, 2015. 08:54 AM | 3 Likes Like |Link to Comment
  • Peabody Energy to sell New Mexico, Colorado assets for $358M  [View news story]

    Clueless may be a bit harsh, since most analysts are intelligent and provide decent analysis on financials.

    I recall before I retired (was a position trader at a major investment bank) we had one analyst who we nicknamed "wrong way", nearly every time he put a sell on one stock (I was the trader for it) we would buy it that day (from clients) and then sell the next day at a profit. It worked the other way as well, when he said buy, we would short it and cover the next day at a profit. It got to the point that trading accounts (hedge fund clients) we told about it would put the trade on as well (they loved it).

    Of course he eventually had the stock removed from his coverage list and he ultimately departed the firm. This also was before research was required to show graphs depicting buy/sell ratings changes in relation to the stock price. It is much harder now for analysts to keep horrendously bad track records going before they are removed from covering names that they can't seem to get right.
    Nov 21, 2015. 02:36 PM | 1 Like Like |Link to Comment
  • Peabody Energy to sell New Mexico, Colorado assets for $358M  [View news story]
    Agreed, and likely closer to $5 per ton when calculating the interest payments saved by retiring debt early. I wonder if they had any Letters of Credit as collateral for the $300 million in self bonding that will now be free to add to the firepower for debt buybacks or at least offset the cash collateral they said will be needed this quarter for Australia bonding requirements.

    Also, nice call by UBS this week in going to sell on BTU. It never ceases to amaze me how clueless some analysts are on stock entry and exit points. Factor in tax loss selling that likely has been going on as well (it is that time of year), meaning a lot of sellers in BTU for tax reasons are now probably done or will pull back and watch. A price back into the low $20s (or higher) Monday seems probable and if the news flow continues positive, let the real squeeze begin.
    Nov 20, 2015. 10:58 PM | 12 Likes Like |Link to Comment
  • Peabody Energy's Restructuring Plan Could Be Announced After VEBA Issue Is Resolved  [View article]

    The green movement is a joke, unfortunately as you state with the skinny one as POTUS they are able to exert disproportionate power via administrative courts of law. They sue over perceived injustices to their furry friends, changing atmosphere (blaming mankind even though they are part of it) and polluted water (ask the EPA politburo about that one) while all the time demanding payments in the name of nature conservation. It used to be a cottage industry that has grown like a malignant tumor under this idiot we have as POTUS. The Corleone family would recognize the method and be envious of their political connections.

    As one member of this syndicate states above about England closing a coal plant, see the link below to see what they substituted the generation with, as the old Guinness commercial used to say, Brilliant! In essence, they complied with all renewable energy laws and succeeded in creating a dirtier biomass plant that now operates.

    Also, with Germany's plan to close their nuclear industry after Japan's Tsunami (a rash decision if here ever was one) the country has increased the burning of coal (link below), despite the heavy subsidies they throw at renewable energy. The country is actually building new coal capacity, so disregard the wacko green enviros who live in an alternate universe with POTUS.
    Nov 19, 2015. 07:40 PM | 4 Likes Like |Link to Comment
  • Peabody Energy agrees with NY AG to greater disclosure of financial risks  [View news story]
    Two year investigation that makes Peabody admit their crystal ball on the future demand of their product may not adequately capture the destructive nature of a misguided regulatory policy based on questionable science? Wow, what a waste of time, New York actually wastes resources paying for this garbage? No wonder businesses and people leave that state.
    Nov 9, 2015. 11:19 AM | 5 Likes Like |Link to Comment
  • Peabody Energy: The Bears Can't Have It Both Ways  [View article]

    Yes natgas is a byproduct of oil drilling and will always be sold if the infrastructure is there to capture and transport it, rather then flare/burn it off.

    However, many shale fields are natgas rich and not oil rich. The Marcellus field is an example (link below). Capping wells/production in these fields to limit supply makes sense until prices rise with increasing demand. The oil/gas majors can do this if they control these fields, currently they do not.

    Natgas is not in backwardation and is in contango (second link) and has been for as long as I can remember. I am a retired position trader from a major investment bank, didn't trade actual natgas commodity (traded European oils/industrials for eight years as well as U.S. small/midcap energy materials for a couple of years), but followed the oil and gas commodity movements daily and produced reports on the weekly EIA oil and natgas storage reports for sales force and clients. Contango usually exists when there is ample supply, which certainly is the current environment.

    Finally, as you likely know, there is still much debate on the depletion rates from shale wells (both oil and gas) with many believing that these wells deplete faster then conventional wells. Fact or fiction (time will tell), one certainty is that shale fields require more wells to be drilled, at additional expense.
    Nov 5, 2015. 08:08 PM | 2 Likes Like |Link to Comment