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  • GCVRZ Forum [View instapost]
    if they "breached" the agreement wouldn't the a) b) and c) not apply for redemption, before they would have to cure the breach?
    Aug 1, 2015. 09:07 PM | Likes Like |Link to Comment
  • Sanofi Lemtrada Sales Disappoint: CVR Milestones Will Not Be Achieved [View article]
    I do not see an argument of why things are looking bad or good just a statement. Not sure if you laid out a cogent aspect of why things changed.
    Aug 1, 2015. 08:37 PM | 1 Like Like |Link to Comment
  • North Atlantic Drilling's Recent Contract Extension Is Unimpressive [View article]
    Volume decline has been fairly large.
    It is possible that capitulation is in more or less.
    It has flatlined.

    West Venture is likely not to be extended but could happen.

    West Rigil is the most likely contract that is discounted by the market.

    West Navigator is the biggest problem they have, it would be the biggest driver short-mid term if they could get work that would pay for at least operations/survey granted very unlikely. It is theoretically possible for them to sell it to Seadril and have enough to pay/finance Rigil, it would actually improve the position net/net outflows provided the price is not too drastically out of favor. Doubt it happens.

    What I am wondering about is the derivative losses going down and receivable collection, both should boost cash somewhat. If they could get 70-100mil in q2+q3 and have around 2-230 mil it would bring confidence up somewhat. Something is missing in the sense that realization of a contract or change in ability to self-finance is not valued at all since assumptions are so negative. All this vis a vis what I mentioned up top, volume.
    In some sense if they cash-flow a $1 ex-debt repayments sooner or later it should count.
    Jul 16, 2015. 04:17 PM | Likes Like |Link to Comment
  • Pernix Therapeutics: Prescriptions Stabilizing, Athyrium To Stop Dumping Stock Soon [View article]
    perhaps it has to drop in half first to get to your target?...

    Debt levels never go down quickly, this just doesn't happen. What does happen if they have growth and cash flow grows enough is they could re-finance. For that to happen time must pass so it won't occur quickly.

    Theoretically they could impair the assets they bought if traction is not fast enough in regard to their expectations/assumptions. Problem with this is it would undermine trust placed in those assets and render all prior objectives more or less imaginary until reached, which is what objectives are anyway.
    Jul 15, 2015. 04:41 PM | Likes Like |Link to Comment
  • North Atlantic Drilling Gets Contract Extension At Reduced Rate For West Phoenix Rig [View article]
    The amount of traded volume ex-hft games is funny...
    it is one major contract(if it happens) away from hilarious.

    W.Rigel is not as important as, West Navigator is far more important. If sanctions end in December W.Rigel would probably go to Rosneft next year.

    Any contract no matter how short term 3-6months for W.Navigator would change the dynamic of the company, perception and sustainability wise.
    Jul 10, 2015. 02:36 PM | 1 Like Like |Link to Comment
  • Column: Why investors should short oil majors [View news story]
    oh yah at the absolute minimum secular low there is a call for shorting... rrright...

    you gotta really like the logic, the resource is scarce so hard to extract mineral areas are targeted thus one should get out since the supply demand is so out of favor for those in the space today and replacement reserves are hard to get.

    logic is stunning, reserves should go up in price because they are tough to replace long term thus you should get out now from those whom have them due to costs today... absolute genius reasoning
    Jul 9, 2015. 07:44 PM | 9 Likes Like |Link to Comment
  • North Atlantic Drilling - New Lows Ahead [View article]
    I agree with you on that. The problem is I do not think there will be an offer, it makes no sense for them to consolidate the company.

    From various points of view there are reasons not to do that. Exxon and others have subsidiaries that are formed precisely for the reason to participate in Russia and other places where the risk is higher, even though those are fully consolidated they are subs. Here the sub is already on the market with own issued debt, consolidating it may force certain debts to come due. Ergo what you are looking at is not reasonable. Yes debt-holders would have a jump in value but what they would also get is a potential to force cures of covenant breeches at the future. {the debts would be due not due to change of control but due to covenants that would apply to the entity and could be forced to curage within the combined entity in my view}

    They could make a share purchase but I think it is very unlikely.
    Jul 8, 2015. 03:18 PM | 1 Like Like |Link to Comment
  • North Atlantic Drilling - New Lows Ahead [View article]
    your looking at it through the prism of global supply/demand for rigs in udw or shelf.

    they are a North sea/Norway/Russia play essentially. HE (Harsh Environment) will carry a premium and considering that Russia is sanctioned out for a bit demand is somewhat curtailed.
    The amount of players that could bid for Snorre field work is limited to depth and HE combination

    There is a major oil company interested unfortunately they can't drill in Russia for a bit.

    Snorre / Castberg thoughts
    optimal scenario would be for them to sell it(or part there of) to Exxon and for Exxon to re-develop it a bit. They are essentially being told to go ahead with development but they do not want to or cash wise it is an inopportune time vis a vis other factors.

    The reason I use this as an example is because infrastructure is there. They are arguing with gov't is over drilling and some more infra upkeep essentially vis a vis payback and promised obligations
    Jul 7, 2015. 10:24 PM | Likes Like |Link to Comment
  • North Atlantic Drilling - New Lows Ahead [View article]
    your looking at it as a glass half empty kinda thing.

    We don't know if the West Rigel could be pushed back or not.
    We have no idea if they will actually have any new bids on fields in the near future since Norwegian gov't is pushing for development.

    I am kinda optimistic at this point. Your one contract away from a completely different dynamic, perhaps it could be a cancelled contract then it would be very painful but if it isn't and they get something like Snorre field or something else well. Compared to others their situation is not that bad.

    Right now considering the dynamic of Greece, and other problems they are bouncing off the lows. If one looks at it that sanctions end in December which looks very much like it then every day until then should begin to be positive.
    Jul 7, 2015. 06:58 PM | 2 Likes Like |Link to Comment
  • DryShips Is About As 'Greek' As Papa John's Pizza [View article]
    the benefits of ORIG ownership flow to support DRYS lifeline essentially, as daily rates in drilling reprice and more cashflow is needed to support debt repricing in debt it will weigh on ORIG to pay dividends and the value proposition via contract expiration/renewal optionality.

    The proper thing to do would have been to merge DRYS into ORIG at a premium eliminating the perceived premium when they still had tanker ownership.

    Management interests are completely not aligned with shareholders. Just in time decision making processes is not from lack of strategic thought but because they treat this company as a control holder with no real value ex post debt. My guess is they will do a reverse and once it declines some more a rights issue or a raise at 2.50 or so post 10 for 1 reverse. The whole point is to grow value at ORIG if possible while making DRYS value neutral to negative, you as a shareholder will never benefit from the value at ORIG from both structural and incentive issues. Short term the cycle is against you, long term management is not aligned in your favor.
    Jul 6, 2015. 03:02 AM | 6 Likes Like |Link to Comment
  • A 25% Tax Sheltered Yield: Goodrich Energy Preferred Convertible [View article]
    debt is around 600
    preferred is ~ 300
    common is ~ 100

    but proved assets are around 600

    the problem from several perspectives...
    for a buyer they would still have to prove up a lot of acreage spending money
    as going concern they need higher prices and higher production to cover cash flow
    from management perspective there seems no sense in streamlining preferred layers nor conserving cash, i sort of expect them to stop paying the preferred dividend sooner or later

    in some sense you are making a land play that in the future things prove out and cash flow will carry you through, no matter where you are equity, preferred, debt. I essentially think that unless they start covering interest and some cap-ex it keeps spiraling down.
    Jul 6, 2015. 01:54 AM | Likes Like |Link to Comment
  • Independence Realty Trust, Inc.: This 8% Yielder Has A Lot More Coming Its Way [View article]
    The dividend is not sustainable for the combined entity. Long term structure of debt no matter how it is financed is not sustainable, unless and/or until some of it gets paid back.

    Book drops to ~7-ish after merger without taking into account debt or payback costs. Theoretically it goes to 6 or below depending on debt and terms.

    Nobody can say how if/when they change the debt/equity dynamic to make the risk worth it post merger. The worst possible outcome is the merger with the loan extended and not having long term debt in place, it would imply not being able to finance at market or willing or able to pay market terms, ergo expectations and reality completely different from management 'progrnosis' going forward.
    Jul 2, 2015. 01:20 PM | 2 Likes Like |Link to Comment
  • Pacific Drilling - Shares Trading At Liquidation Values [View article]
    The problem with them is they need funding or a contract, perhaps even two for the flexibility of time to reach value. None of that is available today.

    Theoretically you could argue that even at half-of value which is below debt the company would be in-line with TODAY's values of rigs. What everyone wants is to jump through to the light in the end of the tunnel. But you shouldn't forget that it takes time for rigs to exit the market, oil price to stabilize as declining yields in non-economic fields take time to mature and eventual plug and abandonment occurs, and big companies see the necessity to resume exploration as costs/returns align better.

    The cost of holding through the tunnel is not apparent until the events that wipe out equity completely. Perhaps the cost for me would be below a dollar? perhaps lower, but for others it is higher or lower than mine. What is the real cost someone would be willing to bare if one were to assess the true loss probability as say 1 in 3 or 1 in 2? what sort of a return would you require? because for me it would be very very very high. Thus right now the company is extremely richly valued in my view.
    Jun 30, 2015. 08:37 AM | Likes Like |Link to Comment
  • Independence Realty Trust, Inc.: This 8% Yielder Has A Lot More Coming Its Way [View article]
    you have to know how they finance the merger. if they have to cut div this will get very "dislocated"
    debt theoretically would have some sort of covenants
    Jun 24, 2015. 11:11 PM | Likes Like |Link to Comment
  • Independence Realty Trust, Inc.: This 8% Yielder Has A Lot More Coming Its Way [View article]
    they need 250 mil to bridge gap for their cash portion of the offer and it can't come from properties.
    The other 300 mil or so would go to take out the mortgages on TSRE (i assume). In my view it is very likely that they could assume those but perhaps still pay a point or so for that.

    Mortgages and bonds/notes are different. Notes have higher rates but they do not amortize so cash flow wise it gives you more flexibility.

    A 15/15 year mortgage @4% fully amortizing would cost 8.9% a year in cash flow since you would have to payback a portion with every payment. You also have to pay every month instead of twice a year.

    You have to assume that they cannot borrow 100%+ against properties and the 3.23% you mention is probably because they have a lot of equity in the property if they didn't it would be higher. For the notes the debt/equity portion would be company wise so it would require higher rates.
    Jun 23, 2015. 06:51 PM | Likes Like |Link to Comment