Seeking Alpha


Send Message
View as an RSS Feed
View crimsonbey's Comments BY TICKER:
Latest  |  Highest rated
  • Independence Realty Trust, Inc.: This 8% Yielder Has A Lot More Coming Its Way [View article]
    the overhang ... in short term liabilities. Won't be fixed until they dispose of properties in question and apply it to the IFC below. You are essentially telling me that their profile shifting from 50% debt to 70+ with restrictive debt while they sell stuff does not increase risk?...
    For the duration and until they actually pay the 120 mil back the company is a completely different risk profile than it was. Before it had more or less amortizing debt without large chunk short term overhang. After it will have two 120 and the other credit line thats ~280m 3yrs, chunks of debt in place that would require significant resources to manage. Both due with 3 years... For a company their size this is a major change.

    your taking more risk for less return...

    from the 8k below
    "Also on August 31, 2015, IRT OP received an amended and restated commitment letter (the “Interim Facility Commitment Letter”) from KeyBank NA and KeyBanc Capital Markets, pursuant to which, subject to the terms and conditions set forth therein, KeyBank NA has committed to lend to IRT OP up to $120 million through an interim term loan facility (the “Interim Facility” and, together with the Senior Facility, the “KeyBank Facilities”). KeyBanc Capital Markets will act as lead arranger for the Interim Facility.

    The Interim Facility is structured as a 364-day secured term loan facility (with a maturity extension option for an additional six months under certain circumstances) available in a single draw. IRT OP may prepay the Interim Facility, in whole or in part, at any time without fee or penalty (other than as provided in a separate fee letter among IRT OP, KeyBank NA and KeyBanc Capital Markets), except for breakage costs associated with LIBOR borrowings. The Interim Facility will be secured by pledges of certain of the equity interests of IRT OP’s current and future subsidiaries and joint ventures (on a best-available basis to the extent such equity interests can be pledged pursuant to IRT’s existing debt agreements) and a pledge of the proceeds of all equity issuances by IRT."

    "At IRT OP’s option, borrowings under the Interim Facility will bear interest at a rate equal to either (i) the LIBOR rate plus a margin of 500 basis points, or (ii) a base rate plus a margin of 400 basis points. If IRT OP elects to extend its maturity, at IRT OP’s option, the Interim Facility will bear interest at a rate equal to either (i) the LIBOR rate plus a margin of 650 basis points, or (ii) a base rate plus a margin of 550 basis points. The Interim Facility requires monthly payments of interest only. IRT OP is required to reduce the principal amount outstanding under the Interim Facility to no greater than $100.0 million within six months of closing and must apply 100% of all net proceeds from equity issuances, sales of assets, or refinancings of assets towards repaying the Interim Facility."

    If interest rates go up by 1% they are instantly impacted by a much larger amount since the libor would adjust faster than the treasuries. But the risk is not the rate but the access to refinance the overhang of funding needs if/when these come due. If you argue that they could re-mortgage the properties they get from TSRE or refinance those that would be somewhat true but it would require expenses on both ends financing wise. The rate at which they are buying TSRE 9-10% simply does not carry much impact after you take out OPEX from it.

    For REITs their debt waterfall profiles is a very very big part of risk. Paying those back as they come due is always problematic because their cash flow is not as larger as waterfall payments when they are due so they almost always refinance. The problem is when your leveraged to the hilt and anything goes against you and that chunk of debt is due in 12-18 months you have very limited choices.

    I simply feel that it isn't being compensated for via the return they are giving right now that is all.
    Sep 3, 2015. 10:43 PM | Likes Like |Link to Comment
  • Independence Realty Trust, Inc.: This 8% Yielder Has A Lot More Coming Its Way [View article]
    the terms of the bridge aren't good, them divesting is a good thing but it adds a large element of risk and you have no idea what they may get for the properties. Them saying they would get $50 for 3 properties they plan to divest is interesting but its' less than half of the bridge.

    If they sell two more properties from TSRE perhaps they get to the goal line say another 25-30, but the problem is they still need another 30.

    None of this makes any difference to me. Because the costs of the debt they take on isn't fixed nor resolves the overhang of the financing. Imagine in 5 months the market implodes and credit costs go up by 2-3% their keybank line and the bridge would be so painful with no relief in sight even if they sell the properties they targeted.

    essentially they are leveraging to the hilt but the problem is the payback on the overhang they create.
    Sep 3, 2015. 07:22 PM | Likes Like |Link to Comment
  • Independence Realty Trust, Inc.: This 8% Yielder Has A Lot More Coming Its Way [View article]
    the bridge loan terms are very harsh look at them
    but i will listen to the cc for curiousity
    Sep 3, 2015. 04:24 PM | Likes Like |Link to Comment
  • North Atlantic Drilling's Second Quarter Results Were Excellent But Many Challenges Remain [View article]
    The political aspects vis a vis Russia will get solved hopefully sooner rather than later.

    COSL getting some Okhotsk sea rig contracts is essentially saying that if Europe and others don't provide services someone else will. Perhaps not right away but sooner or later.
    Sep 3, 2015. 04:01 PM | Likes Like |Link to Comment
  • Independence Realty Trust, Inc.: This 8% Yielder Has A Lot More Coming Its Way [View article]
    combine the float to what it will become, add the net income from both companies together divide it, and you will realize they do not cover the current div. Furthermore they still haven't solved the cash portion of the offer for TSRE and that got more expensive since the market tumult.

    your ignoring the fact that if they come up with the cash portion of the offer that has to come from somewhere and if they could have financed it they probably would have before.
    Sep 3, 2015. 03:40 PM | Likes Like |Link to Comment
  • North Atlantic Drilling: Commentary On Q2 Earnings Results [View article]
    Well I am talking about both West Rigel(455m left) and Sevan Developer (425m left). If Sevan Developer gets a contract it would still be hard to pay for it unless they combine.

    Right now a combined firm would have ~170 mil to 200 mil in Cash
    and ~140-160 mil in Ebitda
    Theoretically Sevan could draw down on the credit line before the merger and the combined firm would finance the balance if a contract is secured somewhere. Theoretically by next quarter the Cash balance may improve a little bit.

    Both firms would have a combined backlog of around 2 billion and if they could get a contract and financing for the ready rig they could take delivery and actually improve their cash flow ebitda situation.
    Liquidity for Sevan shareholders would improve if they got Nadl stock.
    Combined debt would be around 4 billion and expand to around 4.2 if they get a contract and take delivery. At that point ebitda may probably improve to 175-200 and debt/ebitda would be around 6-5 times.

    In some sense both firms would benefit since it would give flexibility which rig to take delivery and reduce risk somewhat via different flows of revenue.

    The kicker is the unknown sanctions expiration... If sanctions expire and Nadl can contract their excess capacity fleet to Rosneft, Sevan shareholders also benefit in a combined entity. In addition to this Sevan design actually can be used up north. You could also look at it from the stand point of Nadl giving 10-20% of a company for a 40-50% improvement in Ebitda.
    Aug 31, 2015. 06:33 PM | Likes Like |Link to Comment
  • North Atlantic Drilling: Commentary On Q2 Earnings Results [View article]
    Rosneft agreement makes consolidation/merger with SDRL unlikely since minority shareholders would have a good suit in regards to potential profits lost.

    Theoretically if NADL merged with Sevan the combined company would be able to afford to push back a rig and SDRL would keep a similar/higher percentage of the combined company irrespective of what price it would be conducted at, assuming NADL is the surviving entity. Value wise it would be friendly to shareholders and it would fix certain problems.

    Write down of equity that occurred would be made up in some way within a consolidated entity if there was an equity provision and/or stipulation in the Rosneft agreement. Remember the 400mil+ write down?

    Combined entity would possibly have higher ebitda/debt ratios and may not need guarantees next year.

    Combined entity would possibly be able to push back one rig due to NADL and buy the rig due to Sevan or vice versa depending on contract probability. It would be able to afford to finance the remaining portion to a degree possibly needing a bridge in-between that could be paid back in two quarter or so.

    From a value stand point higher diversity of revenue/ebitda should push share price higher post-merger.
    Aug 31, 2015. 03:11 PM | Likes Like |Link to Comment
  • NYC considering suing Verizon over slow fiber rollout [View news story]
    oh no no no this isn't NYC its' Verizon trying to force bulk buying or connection the problem is the franchise agreement with the city will lapse at which point the will have breached their obligations for which they already received BILLIONS in subsidy from the city, state, federal.
    Aug 28, 2015. 09:17 PM | 3 Likes Like |Link to Comment
  • NYC considering suing Verizon over slow fiber rollout [View news story]
    the problem is that when they do get permission they do not deliver service ... that is the problem its not a landlord issue...

    Verizon gets permission but does not build out that is the problem. They want guaranteed income if they connect that is what the problem is and it won't happen. Landlords can't guarantee VZ customers that is just impossible.

    They already have access they are a utility its' already guaranteed access what they want is access + abrogation of utility obligations + guaranteed customers.

    Those that don't want to connect shouldn't pay that is also true.
    Aug 28, 2015. 09:14 PM | 2 Likes Like |Link to Comment
  • North Atlantic Drilling names Sevan Drilling CEO McReaken as new CFO [View news story]
    interesting development very interesting I think
    Aug 14, 2015. 04:01 AM | 4 Likes Like |Link to Comment
  • Projecting CorEnergy's Future Dividend Increases In Light Of Their Recent Transaction [View article]
    If Exxi goes bankrupt those minimum lease payments will be re-negotiated. If I do not pump oil through your pipeline because it would cost me to rework the well and not be profitable under your structure of minimum leases you do not get paid...

    The derivative risk from Exxi going bankrupt IF it happens is that not only do those minimum lease payments disappear but all the npv financed with debt does so as well at which point this company would follow Exxi's lead.
    Aug 11, 2015. 12:12 AM | 1 Like Like |Link to Comment
  • Pernix Therapeutics: Prescriptions Stabilizing, Athyrium To Stop Dumping Stock Soon [View article]
    news regarding getting out of exclusion list is a big positive, flat-lining scripts negate that quiet a lot

    next quarter is essentially critical in showing if they can push the product

    doubt it makes a difference for the shares until next year
    Aug 10, 2015. 10:15 PM | Likes Like |Link to Comment
  • 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