Cemjq Quarterly Report
Wednesday, September 30, 2009
Tuesday, September 29, 2009
CEMJQ DAILY CHART 9.29.09
CEMJQ CHART...STILL TRADING WITHIN ITS CHANNEL...STRONG AS A ROCK!You will see that despite the sell off, she didn't go below the trading channel...support held..
What is Fresh Start Accounting?
Here is a great video interview explaining what Fresh Start Accounting is, and how it applies to companies who are in Chapter 11.
http://businessfinancemag.com/video/what-fresh-start-accounting-0101
http://businessfinancemag.com/video/what-fresh-start-accounting-0101
Monday, September 28, 2009
CEMJQ BONDS VS PDGPDQ BONDS
Here are some rough comparisons with regard to the bond activity between CEMJQ and PGPDQ.
The CEMJQ bonds are at record highs, and this points to the fact that behind closed doors, somebody knows something. These bonds are trading like a sale has been leaked, and the only bond not above $1 is the 2026 bond which is thinly traded.
The 2009 bond is 102
The 2016 bond is 104.75
The 2026 bond is 81.
http://cxa.marketwatch.com/finra/BondCen...
Compare Chemtura's bonds to Pilgrim's bonds on 9/2/2009 before the news leaked that they were being bought.
The 2013 bond last traded at 74.25 (CHX.GO)(7/22/09). This bond is also thinly traded.
The 2015 bond last traded at 100 (CHX.GE)
The 2017 bond last traded at 91 (CHX.GF)
On 9/3/2009 the pilgrims bonds all closed above a dollar.
The 2013 bond last traded at 101.25.
The 2015 bond last traded at 106.
The 2017 bond last traded at 107.
The CEMJQ bonds are at record highs, and this points to the fact that behind closed doors, somebody knows something. These bonds are trading like a sale has been leaked, and the only bond not above $1 is the 2026 bond which is thinly traded.
The 2009 bond is 102
The 2016 bond is 104.75
The 2026 bond is 81.
http://cxa.marketwatch.com/finra/BondCen...
Compare Chemtura's bonds to Pilgrim's bonds on 9/2/2009 before the news leaked that they were being bought.
The 2013 bond last traded at 74.25 (CHX.GO)(7/22/09). This bond is also thinly traded.
The 2015 bond last traded at 100 (CHX.GE)
The 2017 bond last traded at 91 (CHX.GF)
On 9/3/2009 the pilgrims bonds all closed above a dollar.
The 2013 bond last traded at 101.25.
The 2015 bond last traded at 106.
The 2017 bond last traded at 107.
Sunday, September 27, 2009
Pilgrim's Pride to File Plan of Reorganization and Disclosure Statement with U.S. Bankruptcy Court
Pilgrim's Pride to File Plan of Reorganization and Disclosure Statement with U.S. Bankruptcy Court
JBS to Purchase Majority Equity Stake in Reorganized Company; Emergence from Chapter 11 Expected in December
Press Release
Source: Pilgrim's Pride Corporation
On Wednesday September 16, 2009, 8:30 am EDT
Buzz up! 0 Print.Companies:PilgrimS Pride Corporation
PITTSBURG, Texas, Sept. 16 /PRNewswire-FirstCall/ -- Pilgrim's Pride Corporation (Pink Sheets: PGPDQ - News) and six of its subsidiaries (collectively, the "Debtors") that are debtors and debtors in possession in the Chapter 11 cases pending in the United States Bankruptcy Court for the Northern District of Texas today announced that they will be filing a joint plan of reorganization and disclosure statement under Chapter 11 of the Bankruptcy Code.
Pilgrim's Pride and JBS have agreed to a transaction representing an enterprise value of approximately $2.8 billion. Under the terms of the plan of reorganization, Pilgrim's Pride has entered into an agreement to sell 64% of the new common stock of the reorganized Pilgrim's Pride to JBS S.A., through its JBS USA Holdings, Inc. subsidiary (JBS U.S.A.), for $800 million in cash.
Proceeds from the sale of the new common stock of the reorganized Pilgrim's Pride to JBS will be used to fund cash distributions to allowed claims under the plan. Under the terms of the plan, all creditors of the Debtors holding allowed claims will be paid in full, either in cash or by issuance of a new note. All existing Pilgrim's Pride common stock will be cancelled and existing stockholders will receive the same number of new common stock shares representing 36% of the reorganized Pilgrim's Pride in aggregate.
The plan also calls for an exit facility for senior secured financing in an aggregate principal amount of $1.75 billion to be provided by a group of lenders arranged by Joint Lead Arrangers CoBank, ACB and Rabobank.
Pilgrim's Pride said that it anticipates the plan to be confirmed by the Bankruptcy Court in time for the Debtors to emerge from bankruptcy before the end of December.
"Over the past 10 months, we have fundamentally restructured Pilgrim's Pride as a market-driven company clearly focused on delivering the best service, selection and value to our customers as efficiently as possible," said Don Jackson, president and chief executive officer. "Thanks to the shared commitment and hard work of our employees, we believe that Pilgrim's Pride is positioned to emerge from bankruptcy as a stronger, more efficient competitor. We have returned to profitability, the quality of our asset base has improved significantly and we are gaining additional business. While we recognize that some of the changes made during our restructuring have been painful for our employees and contract growers, these decisions were absolutely necessary in helping Pilgrim's Pride to operate more efficiently while protecting the greatest number of jobs in the long-term. As a result of the improvements achieved this year, we believe we have been able to maximize the value of our company through our plan of reorganization that achieves what precious few restructurings can: full repayment of allowed creditor claims and substantial retained value for existing stockholders."
"Looking ahead, we are truly excited about the strategic growth opportunities available with JBS as our majority shareholder," Dr. Jackson added. "JBS has a well-earned global reputation for operational and service excellence in beef and pork production. We are confident that our plan will earn the support of all stakeholders and provide the foundation for sustained, profitable growth in the years ahead."
"We believe our reorganization plan will pave the way for Pilgrim's Pride to emerge from bankruptcy before the end of the year and mark a new beginning for this proud company, one that I fully support and endorse," said Lonnie "Bo" Pilgrim, senior chairman. "While the past year has been a difficult time for everyone involved in our restructuring, I take pride in knowing that we have a plan in place to pay back our creditors in full and preserve a great deal of value for our existing stockholders."
"Two years ago, JBS acquired Swift & Company, a U.S. beef and pork company, with a goal of managing its strong assets and turning it into a well-managed, efficient and profitable company. We believe the company's performance demonstrates our continued success in meeting this goal," said Wesley M. Batista, president and chief executive officer of JBS USA Holdings. "In 2008, we acquired Smithfield Beef and Five Rivers Cattle Feeding to strengthen our beef platform and provide synergies to our existing operations. As a U.S. beef and pork company, we are proud to now enter into the U.S. poultry industry with the acquisition of Pilgrim's Pride. We look forward to working with Pilgrim's management to increase the company's competitiveness both domestically and internationally. As we have accomplished with our beef and pork platforms, we will utilize our existing assets and strong management to grow Pilgrim's poultry business. We are excited about the opportunity to work with Pilgrim's employees, contract growers, customers, vendors and shareholders to enhance value."
The plan and the proposed disclosure statement have not yet been approved by the Bankruptcy Court and are subject to further negotiations with stakeholders. As a result, the plan and the proposed disclosure statement may be materially modified before approval.
The proposed disclosure statement includes a historical profile of the Company, a description of proposed distributions to creditors, and an analysis of the plan's feasibility, as well as many of the technical matters required for the solicitation process, such as descriptions of who will be eligible to vote on the plan and the voting process itself.
Lazard acted as sole investment banker to Pilgrim's Pride in connection with its financial restructuring and transaction with JBS. CRG Partners Group, LLC acted as chief restructuring officer. Baker & McKenzie LLP and Weil Gotshal & Manges LLP served as legal advisors. Rothschild and Rabo Securities USA, Inc. acted as exclusive financial advisor to JBS U.S.A. and Shearman & Sterling LLP as its legal advisors.
In addition to customary Chapter 11 proceedings, the completion of the transaction is subject to Hart-Scott-Rodino and other antitrust reviews and customary closing conditions.
Information about Pilgrim's Pride's restructuring is available at Pilgrim's Pride's website www.pilgrimspride.com or via Pilgrim's Pride's restructuring information line at (888) 830-4659 (888) 830-4659.
This release is not intended to be, and should not in any way be construed as, a solicitation of votes on the plan. The information contained in the proposed disclosure statement should not be relied on for any purpose until a determination by the Bankruptcy Court is made that the proposed disclosure statement contains adequate information.
As previously announced, the Debtors filed voluntary Chapter 11 petitions on December 1, 2008. The Chapter 11 cases are being jointly administered under case number 08-45664. The Company's operations in Mexico and certain operations in the United States were not included in the filing and continue to operate as usual outside of the Chapter 11 process.
About Pilgrim's Pride
Pilgrim's Pride Corporation employs approximately 41,000 people and operates chicken processing plants and prepared-foods facilities in 12 states, Puerto Rico and Mexico. The Company's primary distribution is through retailers and foodservice distributors. For more information, please visit http://www.pilgrimspride.com.
About JBS S.A.
JBS S.A. is currently the world's largest beef producer and exporter with a daily harvesting capacity of 73,900 head of cattle and the largest global exporter of processed beef. The company's operations include 25 plants located in 9 Brazilian states and 6 plants located in 4 Argentine provinces, in addition to 16 plants in the U.S., 10 in Australia and 8 in Italy. Additionally, JBS S.A. is the third-largest pork producer in the U.S., with a harvesting capacity of 48,500 head per day. In 2008, JBS S.A. generated net revenue of R$30.3 billion. Its brands "Friboi," "Swift," "Swift and Company," "La Herencia," "1855 Swift Premium," "Maturatta," "Cabana Las Lilas," "Organic Beef Friboi," "Anglo," "Mouran," "Plata," "King Island," "Beef City," "AMH," "Inalca," "Montana" and "Ibise" are widely recognized as symbols of quality. More information about JBS S.A. is available at www.jbs.com.br/ir/.
JBS U.S.A. Holdings
JBS U.S.A. Holdings is a wholly owned subsidiary of JBS S.A.
Forward-Looking Statements
Statements contained in this press release that state the intentions, plans, hopes, beliefs, anticipations, expectations or predictions of the future of Pilgrim's Pride Corporation and its management, including expectations as to the Debtors' emergence from Chapter 11, reorganization of the Debtors' business and finances to resolve its operational and liquidity issues, expectations to emerge from Chapter 11 by December 2009 stronger and more competitive, anticipated authorizations being requested of the Bankruptcy Court, the liquidity to be provided by the proposed exit financing, and expectations that the plan should be supported by the Debtors' major constituencies, are forward-looking statements. It is important to note that the actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from those projected in such forward-looking statements include: the Debtors' ability to obtain court approval with respect to its motions in the Chapter 11 proceedings and the disclosure statement; the ability of the Debtors to obtain confirmation of, and consummate, the Plan; risks associated with third- party motions or objections in the Chapter 11 proceedings, which may interfere with the Company's ability to obtain confirmation of, and consummate, the Plan; the potential adverse effects of the Chapter 11 proceedings on the Debtors' liquidity or results of operations; matters affecting the poultry industry generally; continued compliance with conditions for funding under the debtor-in-possession financing facility and the proposed exit financing; the ability to execute the Debtors' business and restructuring plan to achieve desired cost savings and additional capital to improve liquidity; future pricing for feed ingredients and the Debtors' products; additional outbreaks of avian influenza or other diseases, either in Pilgrim's Pride's flocks or elsewhere, affecting its ability to conduct its operations and/or demand for its poultry products; contamination of Pilgrim's Pride's products, which has previously and can in the future lead to product liability claims and product recalls; exposure to risks related to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate; management of cash resources, particularly in light of Pilgrim's Pride's substantial leverage; restrictions imposed by, and as a result of, Pilgrim's Pride's substantial leverage; changes in laws or regulations affecting Pilgrim's Pride's operations or the application thereof; new immigration legislation or increased enforcement efforts in connection with existing immigration legislation that cause the costs of doing business to increase, cause Pilgrim's Pride to change the way in which it does business, or otherwise disrupt its operations; competitive factors and pricing pressures or the loss of one or more of Pilgrim's Pride's largest customers; currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; disruptions in international markets and distribution channels; and the impact of uncertainties of litigation as well as other risks described under "Risk Factors" in the Company's Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Pilgrim's Pride Corporation undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Media Contacts: Ray Atkinson, Pilgrim's Pride
(903) 434-1811 (903) 434-1811
Chandler Keys, JBS U.S.A.
(202) 907-4253 (202) 907-4253
Investor Contacts: Gary Rhodes, Pilgrim's Pride
(903) 434-1495 (903) 434-1495
Andre Nogueira, JBS U.S.A.
(970) 506-7500 (970) 506-7500
Jerry O'Callaghan, JBS SA (Brazil)
+55 (11) 3144-4147 +55 (11) 3144-4147
JBS to Purchase Majority Equity Stake in Reorganized Company; Emergence from Chapter 11 Expected in December
Press Release
Source: Pilgrim's Pride Corporation
On Wednesday September 16, 2009, 8:30 am EDT
Buzz up! 0 Print.Companies:PilgrimS Pride Corporation
PITTSBURG, Texas, Sept. 16 /PRNewswire-FirstCall/ -- Pilgrim's Pride Corporation (Pink Sheets: PGPDQ - News) and six of its subsidiaries (collectively, the "Debtors") that are debtors and debtors in possession in the Chapter 11 cases pending in the United States Bankruptcy Court for the Northern District of Texas today announced that they will be filing a joint plan of reorganization and disclosure statement under Chapter 11 of the Bankruptcy Code.
Pilgrim's Pride and JBS have agreed to a transaction representing an enterprise value of approximately $2.8 billion. Under the terms of the plan of reorganization, Pilgrim's Pride has entered into an agreement to sell 64% of the new common stock of the reorganized Pilgrim's Pride to JBS S.A., through its JBS USA Holdings, Inc. subsidiary (JBS U.S.A.), for $800 million in cash.
Proceeds from the sale of the new common stock of the reorganized Pilgrim's Pride to JBS will be used to fund cash distributions to allowed claims under the plan. Under the terms of the plan, all creditors of the Debtors holding allowed claims will be paid in full, either in cash or by issuance of a new note. All existing Pilgrim's Pride common stock will be cancelled and existing stockholders will receive the same number of new common stock shares representing 36% of the reorganized Pilgrim's Pride in aggregate.
The plan also calls for an exit facility for senior secured financing in an aggregate principal amount of $1.75 billion to be provided by a group of lenders arranged by Joint Lead Arrangers CoBank, ACB and Rabobank.
Pilgrim's Pride said that it anticipates the plan to be confirmed by the Bankruptcy Court in time for the Debtors to emerge from bankruptcy before the end of December.
"Over the past 10 months, we have fundamentally restructured Pilgrim's Pride as a market-driven company clearly focused on delivering the best service, selection and value to our customers as efficiently as possible," said Don Jackson, president and chief executive officer. "Thanks to the shared commitment and hard work of our employees, we believe that Pilgrim's Pride is positioned to emerge from bankruptcy as a stronger, more efficient competitor. We have returned to profitability, the quality of our asset base has improved significantly and we are gaining additional business. While we recognize that some of the changes made during our restructuring have been painful for our employees and contract growers, these decisions were absolutely necessary in helping Pilgrim's Pride to operate more efficiently while protecting the greatest number of jobs in the long-term. As a result of the improvements achieved this year, we believe we have been able to maximize the value of our company through our plan of reorganization that achieves what precious few restructurings can: full repayment of allowed creditor claims and substantial retained value for existing stockholders."
"Looking ahead, we are truly excited about the strategic growth opportunities available with JBS as our majority shareholder," Dr. Jackson added. "JBS has a well-earned global reputation for operational and service excellence in beef and pork production. We are confident that our plan will earn the support of all stakeholders and provide the foundation for sustained, profitable growth in the years ahead."
"We believe our reorganization plan will pave the way for Pilgrim's Pride to emerge from bankruptcy before the end of the year and mark a new beginning for this proud company, one that I fully support and endorse," said Lonnie "Bo" Pilgrim, senior chairman. "While the past year has been a difficult time for everyone involved in our restructuring, I take pride in knowing that we have a plan in place to pay back our creditors in full and preserve a great deal of value for our existing stockholders."
"Two years ago, JBS acquired Swift & Company, a U.S. beef and pork company, with a goal of managing its strong assets and turning it into a well-managed, efficient and profitable company. We believe the company's performance demonstrates our continued success in meeting this goal," said Wesley M. Batista, president and chief executive officer of JBS USA Holdings. "In 2008, we acquired Smithfield Beef and Five Rivers Cattle Feeding to strengthen our beef platform and provide synergies to our existing operations. As a U.S. beef and pork company, we are proud to now enter into the U.S. poultry industry with the acquisition of Pilgrim's Pride. We look forward to working with Pilgrim's management to increase the company's competitiveness both domestically and internationally. As we have accomplished with our beef and pork platforms, we will utilize our existing assets and strong management to grow Pilgrim's poultry business. We are excited about the opportunity to work with Pilgrim's employees, contract growers, customers, vendors and shareholders to enhance value."
The plan and the proposed disclosure statement have not yet been approved by the Bankruptcy Court and are subject to further negotiations with stakeholders. As a result, the plan and the proposed disclosure statement may be materially modified before approval.
The proposed disclosure statement includes a historical profile of the Company, a description of proposed distributions to creditors, and an analysis of the plan's feasibility, as well as many of the technical matters required for the solicitation process, such as descriptions of who will be eligible to vote on the plan and the voting process itself.
Lazard acted as sole investment banker to Pilgrim's Pride in connection with its financial restructuring and transaction with JBS. CRG Partners Group, LLC acted as chief restructuring officer. Baker & McKenzie LLP and Weil Gotshal & Manges LLP served as legal advisors. Rothschild and Rabo Securities USA, Inc. acted as exclusive financial advisor to JBS U.S.A. and Shearman & Sterling LLP as its legal advisors.
In addition to customary Chapter 11 proceedings, the completion of the transaction is subject to Hart-Scott-Rodino and other antitrust reviews and customary closing conditions.
Information about Pilgrim's Pride's restructuring is available at Pilgrim's Pride's website www.pilgrimspride.com or via Pilgrim's Pride's restructuring information line at (888) 830-4659 (888) 830-4659.
This release is not intended to be, and should not in any way be construed as, a solicitation of votes on the plan. The information contained in the proposed disclosure statement should not be relied on for any purpose until a determination by the Bankruptcy Court is made that the proposed disclosure statement contains adequate information.
As previously announced, the Debtors filed voluntary Chapter 11 petitions on December 1, 2008. The Chapter 11 cases are being jointly administered under case number 08-45664. The Company's operations in Mexico and certain operations in the United States were not included in the filing and continue to operate as usual outside of the Chapter 11 process.
About Pilgrim's Pride
Pilgrim's Pride Corporation employs approximately 41,000 people and operates chicken processing plants and prepared-foods facilities in 12 states, Puerto Rico and Mexico. The Company's primary distribution is through retailers and foodservice distributors. For more information, please visit http://www.pilgrimspride.com.
About JBS S.A.
JBS S.A. is currently the world's largest beef producer and exporter with a daily harvesting capacity of 73,900 head of cattle and the largest global exporter of processed beef. The company's operations include 25 plants located in 9 Brazilian states and 6 plants located in 4 Argentine provinces, in addition to 16 plants in the U.S., 10 in Australia and 8 in Italy. Additionally, JBS S.A. is the third-largest pork producer in the U.S., with a harvesting capacity of 48,500 head per day. In 2008, JBS S.A. generated net revenue of R$30.3 billion. Its brands "Friboi," "Swift," "Swift and Company," "La Herencia," "1855 Swift Premium," "Maturatta," "Cabana Las Lilas," "Organic Beef Friboi," "Anglo," "Mouran," "Plata," "King Island," "Beef City," "AMH," "Inalca," "Montana" and "Ibise" are widely recognized as symbols of quality. More information about JBS S.A. is available at www.jbs.com.br/ir/.
JBS U.S.A. Holdings
JBS U.S.A. Holdings is a wholly owned subsidiary of JBS S.A.
Forward-Looking Statements
Statements contained in this press release that state the intentions, plans, hopes, beliefs, anticipations, expectations or predictions of the future of Pilgrim's Pride Corporation and its management, including expectations as to the Debtors' emergence from Chapter 11, reorganization of the Debtors' business and finances to resolve its operational and liquidity issues, expectations to emerge from Chapter 11 by December 2009 stronger and more competitive, anticipated authorizations being requested of the Bankruptcy Court, the liquidity to be provided by the proposed exit financing, and expectations that the plan should be supported by the Debtors' major constituencies, are forward-looking statements. It is important to note that the actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from those projected in such forward-looking statements include: the Debtors' ability to obtain court approval with respect to its motions in the Chapter 11 proceedings and the disclosure statement; the ability of the Debtors to obtain confirmation of, and consummate, the Plan; risks associated with third- party motions or objections in the Chapter 11 proceedings, which may interfere with the Company's ability to obtain confirmation of, and consummate, the Plan; the potential adverse effects of the Chapter 11 proceedings on the Debtors' liquidity or results of operations; matters affecting the poultry industry generally; continued compliance with conditions for funding under the debtor-in-possession financing facility and the proposed exit financing; the ability to execute the Debtors' business and restructuring plan to achieve desired cost savings and additional capital to improve liquidity; future pricing for feed ingredients and the Debtors' products; additional outbreaks of avian influenza or other diseases, either in Pilgrim's Pride's flocks or elsewhere, affecting its ability to conduct its operations and/or demand for its poultry products; contamination of Pilgrim's Pride's products, which has previously and can in the future lead to product liability claims and product recalls; exposure to risks related to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate; management of cash resources, particularly in light of Pilgrim's Pride's substantial leverage; restrictions imposed by, and as a result of, Pilgrim's Pride's substantial leverage; changes in laws or regulations affecting Pilgrim's Pride's operations or the application thereof; new immigration legislation or increased enforcement efforts in connection with existing immigration legislation that cause the costs of doing business to increase, cause Pilgrim's Pride to change the way in which it does business, or otherwise disrupt its operations; competitive factors and pricing pressures or the loss of one or more of Pilgrim's Pride's largest customers; currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; disruptions in international markets and distribution channels; and the impact of uncertainties of litigation as well as other risks described under "Risk Factors" in the Company's Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Pilgrim's Pride Corporation undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Media Contacts: Ray Atkinson, Pilgrim's Pride
(903) 434-1811 (903) 434-1811
Chandler Keys, JBS U.S.A.
(202) 907-4253 (202) 907-4253
Investor Contacts: Gary Rhodes, Pilgrim's Pride
(903) 434-1495 (903) 434-1495
Andre Nogueira, JBS U.S.A.
(970) 506-7500 (970) 506-7500
Jerry O'Callaghan, JBS SA (Brazil)
+55 (11) 3144-4147 +55 (11) 3144-4147
CEMJQ - Solvent But Faced Liquidity Issues Early this Year.
CEMJQ is a solvent company with "liquidity" issues. Chemtura, like General Growth Properties and many other companies, felt the credit squeeze in early 2009, and instead of being able to refinance existing debt or rolling it over into new terms, they were faced with Chapter 11 because banks quit lending money. No more money to lend meant that many companies like Chemtura and General Growth Properties were forced into cost cutting measures that would have otherwise been handled outside of Chapter 11. Like General Growth Properties, Assets are greater than Liabilities, and both companies still have tremendous value and growth potential.
Chemtura was also trying to sell some assets, but in the midst of the economic downfall of late last year and earlier this year, there were no solid offers, and they weren't going to just give away parts of the company for pennies on the dollar.
Another company that felt the credit pinch earlier this year was Pilgrim's Pride. That company's stock plummeted to under $1 price per share earlier this year, but has rebounded nicely to around the $7 mark with the recent announcement of its plan to emerge from bankruptcy. Pilgrim's plan includes one huge announcement: Common Equity would be saved.
What does this mean? Basically a deal was put into place where the common equity, ie people who bought Pilgrim's Pride Stock, would would not see there shares wiped out when Pilgrim's emerges from bankruptcy. The reason this is a big deal for shareholders is because in many instances the "commons" or "common shareholders" of a company's stock gets wiped clean or canceled and new shares are issued for purchase. Remember GM earlier this year?
The Pilgrim's Pride deal also included some shareholder dilution, which essentially means they are just making the total number of shares bigger, but the existing holders of the shares don't lose their investment. Think of it as diluting a big stew. You still get your portion, it just might be a little more watery for a while before more goodies - $$$$$ - are added later on.
The following was taken from an interesting article from Gurufocus, which sheds some light on General Growth Properties troubles, but also it can be used to see what may happen to Chemtura later this year:
Took the evening to digest the General Growth Properties (GGP) news. Here is what I came up with for to affirm the investing thesis of the equity (stock).
First, here is the news (linked for those who have already read it):
So, why invest in the common stock, doesn't bankruptcy destroy it, why aren't lenders forcing it, will it be a Chapter 11 (reorganization) or Chapter 7 (liquidation)?
The answers are all tied up and related so let's go through it:
If (when) there is a bankruptcy filing, why 11 and not 7? The simple answer is having the second largest mall operator go into liquidation and throwing 200 million square feet of retail space up for sale would destroy the commercial real estate market. Why? The sudden supply of properties without bidders (loans still are very tough to get) would mean they would have to be placed on the market below "fire sale" prices to sell. Because of that, all other operators real estate values would fall, dramatically, and in turn, causing debt covenants for them to be tripped. That would create a cascading effect on the whole industry. For those not sure, this would be a very, very bad thing. You think you have seen write-downs in home mortgage loans at banks? Force liquidation of GGP and as the saying goes "you ain't seen nothing yet".
It also means the banks holding the loans on the properties would then be forced to take pennies on the dollar, very bad for them. In a Chapter 7, shareholders, debt holders and the industry as a whole suffer. No one wins.
So, if we rule out liquidation. What happens in Chapter 11? Who wins there? Here is what Bill Ackman said yesterday in the WSJ:
Some investors, however, consider a bankruptcy filing likely. Among them is activist investor Bill Ackman of Pershing Square Capital Management LLC, who bought 7.5% of General Growth's stock in recent months and put another 18% under swap contracts in a bet that the company's equity will survive a bankruptcy unscathed. Mr. Ackman also expects to soon get a seat on General Growth's board.
"We think the company will ultimately have to file for bankruptcy, but we think that it's a wholly solvent company with a liquidity problem," Mr. Ackman said in an interview Monday. "I don't think they'll need to dilute shareholders. All they need to do is extend the maturities [in bankruptcy court] and they can refinance those debts as they come due."
Now, one must know that Ackman took his stake AFTER GGP's troubles were known. This is not a situation where we have an investor trying desperately to save a bad investment. He bought in knowing this scenario we now face was likely.
The typical bankrupcty is forced because the liabilities (debt) outsize the assets. In this case the common shareholders are wiped out. But, we know that the assets GGP has are in excess of the liabilities. In this case, even in a worse case Chapter 11, shareholders are not wiped out.
But, this goes even further. Again from Ackman “Most of the time, insolvent companies go bankrupt,” Ackman said. “It’s rare for a solvent company to go bankrupt. This is a solvent company with a liquidity problem.”
General Growth is not losing money. Rents are stable, occupancy rates are over 90% and FFO (funds from operations) remain healthy. What is the problem? Credit. GGP has loan due that they typically just rollover into longer maturities. With the current credit "lock down", they cannot do that. That means bulk payment come due and the cash is not there. It should be noted that this is not an odd situation, this is what REIT's typically do with their debt.
With a Chapter 11 debt holders are put in a room and told by a Judge, "we can pay you all 100% but we need to change and lengthen maturities OR we can liquidate and you can pick up scraps for pennies on the dollar". Here are the new terms. The choice is rather obvious
The banks all recognize this too. This is the reason they have not been paid a dime since late last year and have not forced a Chapter 11 filing. They do not want to take the risk of writing down loan portfolio's. Remember, our mark-to-market world means they just do not just write down GGP loans, they then have to write down ALL of them on their books. Again, this is very bad. So we get endless extensions to pay.
Why? The banks are riding this out. If we get MTM changes in Congress then we may see the log jam break. In that case a Chapter 11 would not have a cascading effect on their whole portfolio and restructuring the loans to again begin receiving payments makes perfect sense. They may be hoping for an economic turnaround late this year that enables GGP to sell some property to pay them off. They may all be playing a waiting game hoping someone restructures and set the bar for the rest of them that is better than a bankruptcy judge will do.
Who knows the exact reason why for each lender. We do know what they don't want right now, a Chapter 11 filing. If they wanted it they could force it easily.
Because of the financial situation of GGP, there is no need to convert debt to equity. Restructuring the loans would allow for payments to be made, equity holders would remain intact, the banks again have performing loans on their books and everyone is happy.....VERY happy.
I think the specter of Ackman going on the board must give the banks pause and perhaps want them to restructure sooner rather than later. Then knowing he wants a Chapter 11 I am guessing will bring people to the negotiating table a bit faster...
Disclosure ("none" means no position):Long GGP
Todd Sullivan
valueplays.blogspot.com
Chemtura was also trying to sell some assets, but in the midst of the economic downfall of late last year and earlier this year, there were no solid offers, and they weren't going to just give away parts of the company for pennies on the dollar.
Another company that felt the credit pinch earlier this year was Pilgrim's Pride. That company's stock plummeted to under $1 price per share earlier this year, but has rebounded nicely to around the $7 mark with the recent announcement of its plan to emerge from bankruptcy. Pilgrim's plan includes one huge announcement: Common Equity would be saved.
What does this mean? Basically a deal was put into place where the common equity, ie people who bought Pilgrim's Pride Stock, would would not see there shares wiped out when Pilgrim's emerges from bankruptcy. The reason this is a big deal for shareholders is because in many instances the "commons" or "common shareholders" of a company's stock gets wiped clean or canceled and new shares are issued for purchase. Remember GM earlier this year?
The Pilgrim's Pride deal also included some shareholder dilution, which essentially means they are just making the total number of shares bigger, but the existing holders of the shares don't lose their investment. Think of it as diluting a big stew. You still get your portion, it just might be a little more watery for a while before more goodies - $$$$$ - are added later on.
The following was taken from an interesting article from Gurufocus, which sheds some light on General Growth Properties troubles, but also it can be used to see what may happen to Chemtura later this year:
Took the evening to digest the General Growth Properties (GGP) news. Here is what I came up with for to affirm the investing thesis of the equity (stock).
First, here is the news (linked for those who have already read it):
So, why invest in the common stock, doesn't bankruptcy destroy it, why aren't lenders forcing it, will it be a Chapter 11 (reorganization) or Chapter 7 (liquidation)?
The answers are all tied up and related so let's go through it:
If (when) there is a bankruptcy filing, why 11 and not 7? The simple answer is having the second largest mall operator go into liquidation and throwing 200 million square feet of retail space up for sale would destroy the commercial real estate market. Why? The sudden supply of properties without bidders (loans still are very tough to get) would mean they would have to be placed on the market below "fire sale" prices to sell. Because of that, all other operators real estate values would fall, dramatically, and in turn, causing debt covenants for them to be tripped. That would create a cascading effect on the whole industry. For those not sure, this would be a very, very bad thing. You think you have seen write-downs in home mortgage loans at banks? Force liquidation of GGP and as the saying goes "you ain't seen nothing yet".
It also means the banks holding the loans on the properties would then be forced to take pennies on the dollar, very bad for them. In a Chapter 7, shareholders, debt holders and the industry as a whole suffer. No one wins.
So, if we rule out liquidation. What happens in Chapter 11? Who wins there? Here is what Bill Ackman said yesterday in the WSJ:
Some investors, however, consider a bankruptcy filing likely. Among them is activist investor Bill Ackman of Pershing Square Capital Management LLC, who bought 7.5% of General Growth's stock in recent months and put another 18% under swap contracts in a bet that the company's equity will survive a bankruptcy unscathed. Mr. Ackman also expects to soon get a seat on General Growth's board.
"We think the company will ultimately have to file for bankruptcy, but we think that it's a wholly solvent company with a liquidity problem," Mr. Ackman said in an interview Monday. "I don't think they'll need to dilute shareholders. All they need to do is extend the maturities [in bankruptcy court] and they can refinance those debts as they come due."
Now, one must know that Ackman took his stake AFTER GGP's troubles were known. This is not a situation where we have an investor trying desperately to save a bad investment. He bought in knowing this scenario we now face was likely.
The typical bankrupcty is forced because the liabilities (debt) outsize the assets. In this case the common shareholders are wiped out. But, we know that the assets GGP has are in excess of the liabilities. In this case, even in a worse case Chapter 11, shareholders are not wiped out.
But, this goes even further. Again from Ackman “Most of the time, insolvent companies go bankrupt,” Ackman said. “It’s rare for a solvent company to go bankrupt. This is a solvent company with a liquidity problem.”
General Growth is not losing money. Rents are stable, occupancy rates are over 90% and FFO (funds from operations) remain healthy. What is the problem? Credit. GGP has loan due that they typically just rollover into longer maturities. With the current credit "lock down", they cannot do that. That means bulk payment come due and the cash is not there. It should be noted that this is not an odd situation, this is what REIT's typically do with their debt.
With a Chapter 11 debt holders are put in a room and told by a Judge, "we can pay you all 100% but we need to change and lengthen maturities OR we can liquidate and you can pick up scraps for pennies on the dollar". Here are the new terms. The choice is rather obvious
The banks all recognize this too. This is the reason they have not been paid a dime since late last year and have not forced a Chapter 11 filing. They do not want to take the risk of writing down loan portfolio's. Remember, our mark-to-market world means they just do not just write down GGP loans, they then have to write down ALL of them on their books. Again, this is very bad. So we get endless extensions to pay.
Why? The banks are riding this out. If we get MTM changes in Congress then we may see the log jam break. In that case a Chapter 11 would not have a cascading effect on their whole portfolio and restructuring the loans to again begin receiving payments makes perfect sense. They may be hoping for an economic turnaround late this year that enables GGP to sell some property to pay them off. They may all be playing a waiting game hoping someone restructures and set the bar for the rest of them that is better than a bankruptcy judge will do.
Who knows the exact reason why for each lender. We do know what they don't want right now, a Chapter 11 filing. If they wanted it they could force it easily.
Because of the financial situation of GGP, there is no need to convert debt to equity. Restructuring the loans would allow for payments to be made, equity holders would remain intact, the banks again have performing loans on their books and everyone is happy.....VERY happy.
I think the specter of Ackman going on the board must give the banks pause and perhaps want them to restructure sooner rather than later. Then knowing he wants a Chapter 11 I am guessing will bring people to the negotiating table a bit faster...
Disclosure ("none" means no position):Long GGP
Todd Sullivan
valueplays.blogspot.com
How Big Money Can Get a Seat at the Table
The following article was printed earlier this year, but tells a very telling story of how big money interests circumvent the rules to acquire large stakes of companies in regard to option strategies. They do this in order to get a seat at the table and become a major player inside the company. We could be seeing a similar play here with CEMJQ, except not with options, but rather BONDS.
Why are CEMJQ's Bonds doing so well? A chapter 11 company with Bonds trading at premium above par value? Makes one wonder what's going on. This is pure speculation, but it is my opinion that we are seeing big money interests buying up CEMJQ's bonds and driving the prices up in order to have a seat at the table. Check the resurrection of CEMJQ's BONDS from their earlier pitfalls this year. A story is unfolding here, folks.
Please read the following and start connecting the dots...
Icahn, Peltz Used Morgan Stanley to Take Motorola, Heinz Stakes
By Miles Weiss
May 6 (Bloomberg) -- Billionaire investors Carl Icahn and Nelson Peltz are taking stakes in public companies through an options strategy employed by corporate raiders and challenged by regulators during the 1980s.
By using options contracts, often provided by the investment bank Morgan Stanley, Icahn, 76, and Peltz, 65, can invest in companies without actually holding enough shares to subject them to U.S. antitrust laws. In 1988, the Federal Trade Commission sued three clients of Bear Stearns Cos., including Donald Trump, for belatedly reporting that they made similar options deals before attempting hostile takeovers.
In the past three years, hedge funds managed by Icahn and Peltz have revived the practice without triggering FTC lawsuits. They used options to acquire millions of shares in Motorola Inc., H.J. Heinz Co. and Wendy's International Inc. Other investors took positions in Southern Union Co. and James River Coal Co. through options. The strategy avoids FTC-mandated filings that would tip off the targets and reduces the amount of cash needed.
``If you can build up a stake and launch a sneak attack, you have a huge strategic advantage,'' said Henry Hu, a corporate and securities law professor at the University of Texas Law School in Austin.
Icahn Capital LP and Trian Fund Management LP, the New York- based hedge funds run respectively by Icahn and Peltz, have used the options strategy to make initial investments in at least eight of their largest targets, according to filings with the U.S. Securities and Exchange Commission. The two have used these stakes to push for changes they say will increase share value, including stock buybacks, spinoffs and asset sales.
Both men and Mary Claire Delaney, spokeswoman for New York- based Morgan Stanley, declined repeated requests by phone, letter and e-mail to comment for this article.
Matched Options
The 1988 cases and the more recent arrangements by Icahn and Peltz both involved the use of ``matched'' put and call options. Call options are contracts providing the future right to buy stock at a predetermined price. Similarly, put options are contracts that give the right to sell shares at a set price.
In general, an investment bank would write call options on a stock for a client and then acquire actual shares in the open market. Simultaneously, the bank would purchase put options from the investor that obligate him to either buy the stock at its original price if the market value declines or reimburse the brokerage in cash for the difference.
Here's how the strategy worked last year when Icahn took a stake in Motorola, the world's third-biggest maker of mobile phones. In a proxy statement dated March 12, 2007, Icahn disclosed that he paid Morgan Stanley $184 million for options to buy 35 million Motorola shares at $13.50 each between Jan. 19 and 31, 2007. The stock closed between $18.31 and $19.58 during that period.
Icahn's Motorola Options
Purchasing the actual shares, a 1.4 percent stake in the Schaumburg, Illinois-based company at the time, would have cost $657 million, based on Motorola's closing prices in the last two weeks of January. Icahn would have had to put up about $329 million of his own money under standard margin requirements, or almost twice as much as he paid for the options.
``Carl is always trying to figure out the cheapest way to own stock with the least amount of risk,'' said Walter Blasberg, who worked for Icahn as an options trader in the 1970s. Blasberg is now vice president of alternative investment development at Conning & Co., a Hartford, Connecticut, money management firm.
On Jan. 30, 2007, CNBC reported that Icahn had acquired a 1.4 percent stake in Motorola and was seeking a board seat, based on an interview with the financier. The stock jumped 7 percent to close at $19.58.
`Parking the Stock'
Icahn purchased call options on 12.6 million more shares from Morgan Stanley during the first two weeks of February, paying $76 million. On the last day of that month, Motorola disclosed it received notice of an FTC filing by his funds.
The billionaire sold the call options back to Morgan Stanley on April 3. Exercising them would have brought his total outlay to $18.96 a share, including the cost of the options and the $13.50 exercise price. The stock closed that day at $17.67. Icahn reported purchasing 56.1 million Motorola shares on April 3, without disclosing the price or saying where he bought them.
``It has the same effect as parking the stock,'' said Kurt Wulff, an independent energy analyst who advised Icahn on proxy fights in the 1980s, when provided with a description of the matched options. Morgan Stanley and the other investment banks that provide the options to Icahn and Peltz ``appear to be facilitating a potentially unfriendly deal.''
FTC Posture
After a yearlong fight, Motorola said April 7, 2008, that it agreed to name two Icahn nominees to the board and solicit his advice on the mobile phone unit. Icahn, the holder of 6.4 percent of the company, agreed to end a proxy contest for four seats. His funds paid $2.08 billion for 144.56 million shares, or $14.41 each, based on a March 26 filing. The stock closed yesterday at $9.90.
The arrangement permits the hedge funds to delay triggering the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which doesn't apply to option holders until they decide to exercise the purchase rights. In 1988, the FTC ruled that these matched put- call agreements passed ``beneficial'' ownership of the underlying shares from Bear Stearns to its clients, making them immediately subject to the rule.
``We looked at it back in the 1980s and, rightly or wrongly, concluded at the staff level that this should not be allowed,'' said Jeffrey Zuckerman, director of the FTC's Bureau of Competition when the 1988 enforcement cases were brought. The agency staff revisited the issue around 2005 and ``concluded it's not a problem, and it has been used since then by various types of investors,'' said Zuckerman, who now works in the Washington office of the law firm Curtis, Mallet-Prevost, Colt & Mosle LLP.
Voting Rights
Roberta Baruch, deputy assistant director for compliance in the FTC's competition bureau, said in an e-mail that the agency has reviewed put-call options used during the past several years that don't transfer ownership ``to the same extent'' as those covered in the 1988 cases. ``It's certainly been a hot issue,'' she said in an interview.
Icahn and Peltz may not have any voting rights under the option agreements, a factor the FTC considers when determining whether a filing is necessary, said Sandy Pfunder, a former FTC attorney who helped write the Hart-Scott-Rodino rules and now works for the law firm Gibson, Dunn & Crutcher LLP in Washington. Moreover, when Morgan Stanley purchases stock at the same time it writes options for a hedge fund such as Trian, the firm may be seeking to reduce its own risk as opposed to stockpiling shares for the investor.
$63 Million Threshold
``Technically, Morgan Stanley is hedging a position,'' said David Krein, the president of DTB Capital LLC, a New York firm that advises hedge funds on structured transactions. ``Trian can decide later on down the road whether they want to take delivery of the shares'' or simply settle the contracts through cash payments, he said.
Passive investors, defined by the FTC as buying shares for investment only, can purchase as much as 10 percent of a company before coming under the antitrust rules. In contrast, active investors such as Icahn who are planning to influence management or seek control must make a filing when the value of their holdings reaches a dollar threshold, now set at $63 million.
On reaching that point, an activist investor must stop buying shares until receiving FTC clearance, which can take as long as 30 days. He must also notify the target. Some companies respond by bolstering anti-takeover defenses or disclosing the stake, triggering a run-up in the shares while the investor is awaiting FTC approval.
``There is always some group of investors interested in not having to file,'' the FTC's Baruch said. ``They don't want to tell the target, or they don't want to wait.''
Morgan Stanley's Role
The FTC rule in practice can force an investor to reveal a stake much sooner than the disclosure requirements set by the SEC. Icahn and Trian fully report their option holdings under the SEC rules, which require active investors to file a disclosure when their stakes reach 5 percent of shares outstanding.
Because the FTC rule is based on the dollar value of a stake rather than the percentage, it kicks in earlier for deals involving large companies. At current prices, for example, Icahn would be able to buy just 0.3 percent of Motorola before triggering the reporting requirements, compared with 5.2 percent of the Vancouver film company Lions Gate Entertainment Corp., one of his other holdings.
Peltz identified Morgan Stanley in regulatory filings as providing matched options for his initial holdings in Heinz and Tiffany & Co. of New York. Merrill Lynch & Co. in New York and UBS AG of Zurich provided such contracts on shares of Cambridge, Massachusetts-based Biogen Idec Inc., according to Icahn's filings, which also show that he obtained matched puts-calls on shares of BEA Systems Inc., a San Jose, California software company that was acquired by Oracle Corp. last month.
Wendy's, Kraft, Chemtura
In other filings, Peltz disclosed that he entered into matched option contracts -- without identifying the counterparty -- for much or all of his initial investment in Wendy's, Kraft Foods Inc. of Northfield, Illinois, and Middlebury, Connecticut- based Chemtura Corp. Morgan Stanley Capital Services Inc., a derivatives unit of the investment bank, was buying millions of shares in each company around the same time that Peltz obtained his options, according to SEC filings.
Hedge fund manager Thomas Sandell of New York has also disclosed the use of matched puts and calls to take stakes in companies such as Houston-based Southern Union Co. and Houston Exploration Co. Thomas Hudson's Pirate Capital LLC in Norwalk, Connecticut, entered put-call agreements with Merrill Lynch on 400,000 shares of Richmond, Virginia-based James River Coal Co. in January 2006, according to filings.
Wendy's Options
The FTC's Baruch said there are ``good financial and other reasons'' for using matched options that ``have nothing to do'' with avoiding agency rules. It uses less cash up front than buying stock, allowing hedge funds to increase potential returns and spread their capital among trading opportunities.
In 2005, Peltz and Sandell purchased 950,000 shares of Wendy's, the Dublin, Ohio, hamburger chain, for $45.8 million between Nov. 7 and 10, according to a filing the following month. That would have brought them close to the $50 million FTC reporting threshold in effect at the time.
On Nov. 11, the two hedge fund groups began buying options with a ``financial institution'' they didn't identify. By Dec. 8, Trian and Sandell had obtained call options entitling their funds to purchase 5.4 million Wendy's shares at an average price of $50 each until Jan. 27, 2006. The filings didn't disclose how much the entities paid for the options.
Shifting the Risk
Meanwhile, Morgan Stanley Capital Services raised its Wendy's stake to 7.59 million shares by the end of 2005, from 227,458 shares at Sept. 30, according to SEC filings.
Trian also sold puts entitling the financial institution to sell 5.4 million Wendy's shares to its funds at the same average price on Jan. 27. The options permitted the institution to shift the risk of a decline in the Wendy's stock to Trian's hedge funds.
On Dec. 13, the two fund managers disclosed their stake, composed mainly of the privately negotiated options, through an SEC filing. After receiving FTC clearance on Jan. 6, 2006, to increase their holding, the funds exercised options on Jan. 17 and purchased 5.4 million shares from the financial institution for $269.7 million, or about $49.79 each.
Morgan Stanley Capital Services later reported that its Wendy's stake declined to 2.01 million shares as of March 31, 2006. And on April 24, 2008, Peltz's Triarc Cos. announced it would buy Wendy's for $2.4 billion.
1988 Cases
In the 1988 cases, which didn't name Bear Stearns as a defendant, the FTC cited a rule barring transactions designed solely to avoid the agency's reporting requirements. In each case, the regulator said investors improperly delayed filing notices on matched option investments.
Trump agreed to pay $750,000 in civil penalties in April 1988 to resolve allegations tied to investments in Holiday Corp. and Bally Manufacturing Corp., both of which ran casinos that competed with his Atlantic City gaming operations.
First City Financial Corp., an investment vehicle for the family of the Canadian Samuel Belzberg, a former corporate raider, agreed to pay a $400,000 penalty related to an investment in Ashland Oil Inc., according to the FTC. Wickes Cos. paid a $300,000 fine linked to a hostile bid for Owens-Corning Fiberglas Corp.
Trump declined to comment. Neither Sanford Sigoloff, the former chairman of Wickes Cos., nor Belzberg returned telephone calls. In all three cases, the FTC said the settlements didn't constitute an admission by Trump, Wickes or First City that they violated the law.
FTC Comments
In June 2006, Bruce Prager and Hanno Kaiser, a pair of antitrust attorneys who worked at Latham & Watkins LLP in New York at the time, published an article in The Deal magazine stating that the FTC staff had changed its longstanding position requiring immediate disclosure of matched options. The agency responded in a June 29 letter that it had always reviewed such transactions case-by-case.
``Put-call agreements and other legal or business arrangements that allocate risk of loss and benefit of gain can raise a number of HSR issues,'' said Marian Bruno, assistant director in the FTC's premerger notification office, in the letter, referring to the Hart-Scott-Rodino act. ``Whether a particular transaction requires a filing will depend on the specific facts involved.''
To contact the reporter on this story: Miles Weiss in Washington at mweiss@bloomberg.net
Last Updated: May 6, 2008 00:01 EDT
Why are CEMJQ's Bonds doing so well? A chapter 11 company with Bonds trading at premium above par value? Makes one wonder what's going on. This is pure speculation, but it is my opinion that we are seeing big money interests buying up CEMJQ's bonds and driving the prices up in order to have a seat at the table. Check the resurrection of CEMJQ's BONDS from their earlier pitfalls this year. A story is unfolding here, folks.
Please read the following and start connecting the dots...
Icahn, Peltz Used Morgan Stanley to Take Motorola, Heinz Stakes
By Miles Weiss
May 6 (Bloomberg) -- Billionaire investors Carl Icahn and Nelson Peltz are taking stakes in public companies through an options strategy employed by corporate raiders and challenged by regulators during the 1980s.
By using options contracts, often provided by the investment bank Morgan Stanley, Icahn, 76, and Peltz, 65, can invest in companies without actually holding enough shares to subject them to U.S. antitrust laws. In 1988, the Federal Trade Commission sued three clients of Bear Stearns Cos., including Donald Trump, for belatedly reporting that they made similar options deals before attempting hostile takeovers.
In the past three years, hedge funds managed by Icahn and Peltz have revived the practice without triggering FTC lawsuits. They used options to acquire millions of shares in Motorola Inc., H.J. Heinz Co. and Wendy's International Inc. Other investors took positions in Southern Union Co. and James River Coal Co. through options. The strategy avoids FTC-mandated filings that would tip off the targets and reduces the amount of cash needed.
``If you can build up a stake and launch a sneak attack, you have a huge strategic advantage,'' said Henry Hu, a corporate and securities law professor at the University of Texas Law School in Austin.
Icahn Capital LP and Trian Fund Management LP, the New York- based hedge funds run respectively by Icahn and Peltz, have used the options strategy to make initial investments in at least eight of their largest targets, according to filings with the U.S. Securities and Exchange Commission. The two have used these stakes to push for changes they say will increase share value, including stock buybacks, spinoffs and asset sales.
Both men and Mary Claire Delaney, spokeswoman for New York- based Morgan Stanley, declined repeated requests by phone, letter and e-mail to comment for this article.
Matched Options
The 1988 cases and the more recent arrangements by Icahn and Peltz both involved the use of ``matched'' put and call options. Call options are contracts providing the future right to buy stock at a predetermined price. Similarly, put options are contracts that give the right to sell shares at a set price.
In general, an investment bank would write call options on a stock for a client and then acquire actual shares in the open market. Simultaneously, the bank would purchase put options from the investor that obligate him to either buy the stock at its original price if the market value declines or reimburse the brokerage in cash for the difference.
Here's how the strategy worked last year when Icahn took a stake in Motorola, the world's third-biggest maker of mobile phones. In a proxy statement dated March 12, 2007, Icahn disclosed that he paid Morgan Stanley $184 million for options to buy 35 million Motorola shares at $13.50 each between Jan. 19 and 31, 2007. The stock closed between $18.31 and $19.58 during that period.
Icahn's Motorola Options
Purchasing the actual shares, a 1.4 percent stake in the Schaumburg, Illinois-based company at the time, would have cost $657 million, based on Motorola's closing prices in the last two weeks of January. Icahn would have had to put up about $329 million of his own money under standard margin requirements, or almost twice as much as he paid for the options.
``Carl is always trying to figure out the cheapest way to own stock with the least amount of risk,'' said Walter Blasberg, who worked for Icahn as an options trader in the 1970s. Blasberg is now vice president of alternative investment development at Conning & Co., a Hartford, Connecticut, money management firm.
On Jan. 30, 2007, CNBC reported that Icahn had acquired a 1.4 percent stake in Motorola and was seeking a board seat, based on an interview with the financier. The stock jumped 7 percent to close at $19.58.
`Parking the Stock'
Icahn purchased call options on 12.6 million more shares from Morgan Stanley during the first two weeks of February, paying $76 million. On the last day of that month, Motorola disclosed it received notice of an FTC filing by his funds.
The billionaire sold the call options back to Morgan Stanley on April 3. Exercising them would have brought his total outlay to $18.96 a share, including the cost of the options and the $13.50 exercise price. The stock closed that day at $17.67. Icahn reported purchasing 56.1 million Motorola shares on April 3, without disclosing the price or saying where he bought them.
``It has the same effect as parking the stock,'' said Kurt Wulff, an independent energy analyst who advised Icahn on proxy fights in the 1980s, when provided with a description of the matched options. Morgan Stanley and the other investment banks that provide the options to Icahn and Peltz ``appear to be facilitating a potentially unfriendly deal.''
FTC Posture
After a yearlong fight, Motorola said April 7, 2008, that it agreed to name two Icahn nominees to the board and solicit his advice on the mobile phone unit. Icahn, the holder of 6.4 percent of the company, agreed to end a proxy contest for four seats. His funds paid $2.08 billion for 144.56 million shares, or $14.41 each, based on a March 26 filing. The stock closed yesterday at $9.90.
The arrangement permits the hedge funds to delay triggering the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which doesn't apply to option holders until they decide to exercise the purchase rights. In 1988, the FTC ruled that these matched put- call agreements passed ``beneficial'' ownership of the underlying shares from Bear Stearns to its clients, making them immediately subject to the rule.
``We looked at it back in the 1980s and, rightly or wrongly, concluded at the staff level that this should not be allowed,'' said Jeffrey Zuckerman, director of the FTC's Bureau of Competition when the 1988 enforcement cases were brought. The agency staff revisited the issue around 2005 and ``concluded it's not a problem, and it has been used since then by various types of investors,'' said Zuckerman, who now works in the Washington office of the law firm Curtis, Mallet-Prevost, Colt & Mosle LLP.
Voting Rights
Roberta Baruch, deputy assistant director for compliance in the FTC's competition bureau, said in an e-mail that the agency has reviewed put-call options used during the past several years that don't transfer ownership ``to the same extent'' as those covered in the 1988 cases. ``It's certainly been a hot issue,'' she said in an interview.
Icahn and Peltz may not have any voting rights under the option agreements, a factor the FTC considers when determining whether a filing is necessary, said Sandy Pfunder, a former FTC attorney who helped write the Hart-Scott-Rodino rules and now works for the law firm Gibson, Dunn & Crutcher LLP in Washington. Moreover, when Morgan Stanley purchases stock at the same time it writes options for a hedge fund such as Trian, the firm may be seeking to reduce its own risk as opposed to stockpiling shares for the investor.
$63 Million Threshold
``Technically, Morgan Stanley is hedging a position,'' said David Krein, the president of DTB Capital LLC, a New York firm that advises hedge funds on structured transactions. ``Trian can decide later on down the road whether they want to take delivery of the shares'' or simply settle the contracts through cash payments, he said.
Passive investors, defined by the FTC as buying shares for investment only, can purchase as much as 10 percent of a company before coming under the antitrust rules. In contrast, active investors such as Icahn who are planning to influence management or seek control must make a filing when the value of their holdings reaches a dollar threshold, now set at $63 million.
On reaching that point, an activist investor must stop buying shares until receiving FTC clearance, which can take as long as 30 days. He must also notify the target. Some companies respond by bolstering anti-takeover defenses or disclosing the stake, triggering a run-up in the shares while the investor is awaiting FTC approval.
``There is always some group of investors interested in not having to file,'' the FTC's Baruch said. ``They don't want to tell the target, or they don't want to wait.''
Morgan Stanley's Role
The FTC rule in practice can force an investor to reveal a stake much sooner than the disclosure requirements set by the SEC. Icahn and Trian fully report their option holdings under the SEC rules, which require active investors to file a disclosure when their stakes reach 5 percent of shares outstanding.
Because the FTC rule is based on the dollar value of a stake rather than the percentage, it kicks in earlier for deals involving large companies. At current prices, for example, Icahn would be able to buy just 0.3 percent of Motorola before triggering the reporting requirements, compared with 5.2 percent of the Vancouver film company Lions Gate Entertainment Corp., one of his other holdings.
Peltz identified Morgan Stanley in regulatory filings as providing matched options for his initial holdings in Heinz and Tiffany & Co. of New York. Merrill Lynch & Co. in New York and UBS AG of Zurich provided such contracts on shares of Cambridge, Massachusetts-based Biogen Idec Inc., according to Icahn's filings, which also show that he obtained matched puts-calls on shares of BEA Systems Inc., a San Jose, California software company that was acquired by Oracle Corp. last month.
Wendy's, Kraft, Chemtura
In other filings, Peltz disclosed that he entered into matched option contracts -- without identifying the counterparty -- for much or all of his initial investment in Wendy's, Kraft Foods Inc. of Northfield, Illinois, and Middlebury, Connecticut- based Chemtura Corp. Morgan Stanley Capital Services Inc., a derivatives unit of the investment bank, was buying millions of shares in each company around the same time that Peltz obtained his options, according to SEC filings.
Hedge fund manager Thomas Sandell of New York has also disclosed the use of matched puts and calls to take stakes in companies such as Houston-based Southern Union Co. and Houston Exploration Co. Thomas Hudson's Pirate Capital LLC in Norwalk, Connecticut, entered put-call agreements with Merrill Lynch on 400,000 shares of Richmond, Virginia-based James River Coal Co. in January 2006, according to filings.
Wendy's Options
The FTC's Baruch said there are ``good financial and other reasons'' for using matched options that ``have nothing to do'' with avoiding agency rules. It uses less cash up front than buying stock, allowing hedge funds to increase potential returns and spread their capital among trading opportunities.
In 2005, Peltz and Sandell purchased 950,000 shares of Wendy's, the Dublin, Ohio, hamburger chain, for $45.8 million between Nov. 7 and 10, according to a filing the following month. That would have brought them close to the $50 million FTC reporting threshold in effect at the time.
On Nov. 11, the two hedge fund groups began buying options with a ``financial institution'' they didn't identify. By Dec. 8, Trian and Sandell had obtained call options entitling their funds to purchase 5.4 million Wendy's shares at an average price of $50 each until Jan. 27, 2006. The filings didn't disclose how much the entities paid for the options.
Shifting the Risk
Meanwhile, Morgan Stanley Capital Services raised its Wendy's stake to 7.59 million shares by the end of 2005, from 227,458 shares at Sept. 30, according to SEC filings.
Trian also sold puts entitling the financial institution to sell 5.4 million Wendy's shares to its funds at the same average price on Jan. 27. The options permitted the institution to shift the risk of a decline in the Wendy's stock to Trian's hedge funds.
On Dec. 13, the two fund managers disclosed their stake, composed mainly of the privately negotiated options, through an SEC filing. After receiving FTC clearance on Jan. 6, 2006, to increase their holding, the funds exercised options on Jan. 17 and purchased 5.4 million shares from the financial institution for $269.7 million, or about $49.79 each.
Morgan Stanley Capital Services later reported that its Wendy's stake declined to 2.01 million shares as of March 31, 2006. And on April 24, 2008, Peltz's Triarc Cos. announced it would buy Wendy's for $2.4 billion.
1988 Cases
In the 1988 cases, which didn't name Bear Stearns as a defendant, the FTC cited a rule barring transactions designed solely to avoid the agency's reporting requirements. In each case, the regulator said investors improperly delayed filing notices on matched option investments.
Trump agreed to pay $750,000 in civil penalties in April 1988 to resolve allegations tied to investments in Holiday Corp. and Bally Manufacturing Corp., both of which ran casinos that competed with his Atlantic City gaming operations.
First City Financial Corp., an investment vehicle for the family of the Canadian Samuel Belzberg, a former corporate raider, agreed to pay a $400,000 penalty related to an investment in Ashland Oil Inc., according to the FTC. Wickes Cos. paid a $300,000 fine linked to a hostile bid for Owens-Corning Fiberglas Corp.
Trump declined to comment. Neither Sanford Sigoloff, the former chairman of Wickes Cos., nor Belzberg returned telephone calls. In all three cases, the FTC said the settlements didn't constitute an admission by Trump, Wickes or First City that they violated the law.
FTC Comments
In June 2006, Bruce Prager and Hanno Kaiser, a pair of antitrust attorneys who worked at Latham & Watkins LLP in New York at the time, published an article in The Deal magazine stating that the FTC staff had changed its longstanding position requiring immediate disclosure of matched options. The agency responded in a June 29 letter that it had always reviewed such transactions case-by-case.
``Put-call agreements and other legal or business arrangements that allocate risk of loss and benefit of gain can raise a number of HSR issues,'' said Marian Bruno, assistant director in the FTC's premerger notification office, in the letter, referring to the Hart-Scott-Rodino act. ``Whether a particular transaction requires a filing will depend on the specific facts involved.''
To contact the reporter on this story: Miles Weiss in Washington at mweiss@bloomberg.net
Last Updated: May 6, 2008 00:01 EDT
CEMJQ Basic Notes on Bankruptcy Filing in 2009
The company's lawyers are Kirkland & Ellis LLP and O'Melveny & Myers LLP.
The Chapter 11 petition by Chemtura listed assets of $3.06 billion against debt totaling $2.6 billion, including $1.02 billion owing on three issues of notes and debentures. Sales in 2008 were $3.5 billion. The subsidiaries outside of the U.S. didn't file.
The case is Chemtura Corp., 09-11233, U.S. Bankruptcy Court, Southern District New York (Manhattan).
The above was extracted from the following article:
Banks and U.S. Trustee object to Chemtura fees
Bloomberg News
Updated: 09/25/2009 09:49:03 PM EDT
The Chapter 11 petition by Chemtura listed assets of $3.06 billion against debt totaling $2.6 billion, including $1.02 billion owing on three issues of notes and debentures. Sales in 2008 were $3.5 billion. The subsidiaries outside of the U.S. didn't file.
The case is Chemtura Corp., 09-11233, U.S. Bankruptcy Court, Southern District New York (Manhattan).
The above was extracted from the following article:
Banks and U.S. Trustee object to Chemtura fees
Bloomberg News
Updated: 09/25/2009 09:49:03 PM EDT
Friday, September 25, 2009
CEMJQ 2026 BOND HITS 82.50
CEMJQ'S 2026 BOND HITS ANOTHER POST BANKRUPTCY HIGH OF $82.50. BEING THAT THIS IS AN UNSECURED BOND, SOMETHING IS BREWING THAT THE PUBLIC IS UNAWARE OF BECAUSE AN UNSECURED BOND OF A COMPANY IN CHAPTER 11 IS HUGE.
2026 CEMJQ BOND INFO:
CK.GE / CUSIP: 977385AK9
LINK:
http://cxa.marketwatch.com/finra/BondCenter/BondDetail.aspx?ID=OTc3Mzg1QUs5
2026 CEMJQ BOND INFO:
CK.GE / CUSIP: 977385AK9
| Original Issue Information | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
| Last Sale | Daily Trade Summary | |||
 | | |||
| Date | 09/25/2009 | High Price / Equivalent Yield | $80.250 / - % | |
| | |||
| Price | $79.000 | Low Price / Equivalent Yield | $79.000 / - % | |
| | |||
| Yield | - | Net Change (Price) | $2.000 | |
| | |||
LINK:
http://cxa.marketwatch.com/finra/BondCenter/BondDetail.aspx?ID=OTc3Mzg1QUs5
Thursday, September 24, 2009
CEMJQ 2016 Bond Activity
Cemjq's 2016 Bond hit a new post bankruptcy high of $104. This bond is currently trading above par value.
HTRA.GA is the symbol for CEMJQ'S 2016 BOND and it hit a high of $104. What does that mean? It is trading above par. What does that mean? It is trading at a premium. What does that mean? Big Money is willing to pay more than face value for that bond, which is a bullish sign and indicator that something is brewing over in Chemtura Land.
Let's see some numbers right off of the FINRA Website:
Link to 2016 Bond Activity:
http://cxa.marketwatch.com/finra/BondCenter/BondDetail.aspx?ID=MTYzODkzQUE4
CEMJQ closed the trading day at .84 on a little over 2 million in trading volume today.
Let's see some numbers right off of the FINRA Website:
| Original Issue Information for HTRA.GA | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
| Last Sale | | Daily Trade Summary For HTRA.GA | ||
| | |||
| Date | 09/24/2009 | High Price / Equivalent Yield | $104.000 / 6.13300% | |
| | |||
| Price | $104.000 | Low Price / Equivalent Yield | $103.500 / 6.22300% | |
| | |||
| Yield | 6.133% | Net Change (Price) | $1.500 | |
| | |||
Link to 2016 Bond Activity:
http://cxa.marketwatch.com/finra/BondCenter/BondDetail.aspx?ID=MTYzODkzQUE4
CEMJQ closed the trading day at .84 on a little over 2 million in trading volume today.
Wednesday, September 23, 2009
CEMJQ - EVEN LARGER CUP AND HANDLE!!!!
Do you see a pattern developing here? Chart patterns can and will repeat themselves within a trend! Here is the bigger picture, as I have already posted the two smaller cup and handle formations that have occurred outside of the LARGER CUP-AND-HANDLE FORMATION. For more information on this bullish chart pattern, please visit our friends over at investopedia. Here's the link:http://74.125.47.132/search?q=cache:_HrD0YT4ahgJ:www.investopedia.com/university/charts/charts3.asp+cup+and+handle+chart&cd=2&hl=en&ct=clnk&gl=us&client=firefox-a
CEMJQ LARGER CUP AND HANDLE FORMATION
As you can see in this illustration of CEMJQ, I have noted the larger cup-and-handle formation to add to the previous post of the smaller cup-and-handle formation. This illustrates that sometimes you can have a pattern within a pattern within the trend.
CEMJQ CUP-AND-HANDLE FORMATION+ CORRECTION
This chart illustrates a classic cup-and-handle chart formation and it's corresponding chart correction. Cup-and-handle formations are chart patterns that develop in a bullish market. If you can spot the trend early enough, you can execute a successful trade. Though CEMJQ is currently in the correction phase, I still believe that is has more gas left in the tank. This stock is not just a technical play in my opinion, but also a fundamental play. The RSI and accumulation/distribution line are cooling off a bit with the chart pattern correction, but as long as the long-term up-trend stays in place, CEMJQ has not finished its northern ascent.
Tuesday, September 22, 2009
Saturday, September 19, 2009
Chemtura Sees Exit from Bankruptcy in Early 2010
This article is from Chemweek and will be out next week
Chemtura Sees Exit from Bankruptcy in Early 2010
10:05 AM EDT | September 21, 2009 | Robert Westervelt
Chemtura expects to emerge from bankruptcy in early 2010 as progress on its reorganization advances. The company filed for bankruptcy in March as sharp demand declines cut down earnings and drained liquidity, and efforts to sell assets and restructure debt faltered in the frozen credit markets of earlier this year.
“We’re working to exit bankruptcy as fast as we can,” says Chemtura chairman and CEO Craig Rogerson says. “We’re on track right now to come out within a year of going in, by [the end of] first-quarter 2010.” The company issued a revised business plan to creditors last month, which included five-year forecasts for each of the company’s businesses. The document will form the basis for a plan of reorganization, which is expected to be filed by mid-December. Core strategies in the business plan revolves around three themes: growth around greener technologies in key businesses; strengthening the company’s global presence, particularly in emerging markets; and making Chemtura an easier company to do business with, Rogerson says.
“We should be a stronger company with a much improved balance sheet,” he says. “There are things you can do in Chapter 11 around legacy liabilities and rejection of contracts, where appropriate, that allow you to come out as a cleaner company and we expect to take full advantage. And we will have clear direction around what we’re trying to accomplish as a company. That will be the biggest benefit because we didn’t have that prior to going into bankruptcy.”
Stronger market conditions are also starting to provide some support. “We think we’re seeing the first indications of improvement,” Rogerson says. “The industrial businesses are showing some signs of improvement, but we are still a long way from where business was in September 2008. As this continues, I’m a little more confident that it is the start of recovery and not just people putting inventory back on the shelves.”
Results are clearer for the company’s seasonal product lines, crop protection and pool and spa chemicals, with the 2009 selling cycle in key markets in the Northern Hemisphere largely complete. Performance in the pool and spa segment will be stronger in 2009 than last year despite a wet and cool summer in parts of the U.S. market, Rogerson says. Crop protection remains strong but results are not likely to match 2008 results, due in part to the impact of credit restrictions in Eastern Europe and Brazil that caused some customers to defer purchases.
Rogerson would not address speculation around specific assets that the company could sell but adds that Chapter 11 makes the need for divestitures less urgent.
Documents filed as part of the bankruptcy proceedings indicate that the company is exploring the possible sale of some assets, including its polyvinyl chloride (PVC) additives business and polyurethane dispersions business. Chemtura has retained Lazard (New York) as investment banker to advise on restructuring and M&A. Chemtura was in discussions with bidders for its agricultural chemical and fuel additives businesses prior to its bankruptcy filing, but it is not clear whether those assets are still being considered for sale.
“In the middle of credit crunch, you’re faced with having to sell the best and most attractive assets to generate cash,” Rogerson says. “Now, however, if we can demonstrate that we can create more value by operating the business rather than selling, we can keep it.” Rogerson says forecasts issued to creditors are based on the presumption that Chemtura will keep all of its current businesses. “And we think that’s reasonable given the current market for M&A,” Rogerson says. “It is not a good time to sell assets. We will always consider any offers for the businesses, but right now our five-year plan includes running them all.”
A key part of the compnay’s post-bankruptcy strategy calls for the company to shift its manufacturing footprint east as sales shift to Asia and Eastern Europe, and to source product closer to where it is sold. Management responsibility will also be shifted into those regions and away from Chemtura’s corporate headquarters in Middlebury, CT. “Operations outside the U.S. will have step up,” Rogerson says. “And that means giving them the authority and responsibility to deliver results.”
Chemtura Sees Exit from Bankruptcy in Early 2010
10:05 AM EDT | September 21, 2009 | Robert Westervelt
Chemtura expects to emerge from bankruptcy in early 2010 as progress on its reorganization advances. The company filed for bankruptcy in March as sharp demand declines cut down earnings and drained liquidity, and efforts to sell assets and restructure debt faltered in the frozen credit markets of earlier this year.
“We’re working to exit bankruptcy as fast as we can,” says Chemtura chairman and CEO Craig Rogerson says. “We’re on track right now to come out within a year of going in, by [the end of] first-quarter 2010.” The company issued a revised business plan to creditors last month, which included five-year forecasts for each of the company’s businesses. The document will form the basis for a plan of reorganization, which is expected to be filed by mid-December. Core strategies in the business plan revolves around three themes: growth around greener technologies in key businesses; strengthening the company’s global presence, particularly in emerging markets; and making Chemtura an easier company to do business with, Rogerson says.
“We should be a stronger company with a much improved balance sheet,” he says. “There are things you can do in Chapter 11 around legacy liabilities and rejection of contracts, where appropriate, that allow you to come out as a cleaner company and we expect to take full advantage. And we will have clear direction around what we’re trying to accomplish as a company. That will be the biggest benefit because we didn’t have that prior to going into bankruptcy.”
Stronger market conditions are also starting to provide some support. “We think we’re seeing the first indications of improvement,” Rogerson says. “The industrial businesses are showing some signs of improvement, but we are still a long way from where business was in September 2008. As this continues, I’m a little more confident that it is the start of recovery and not just people putting inventory back on the shelves.”
Results are clearer for the company’s seasonal product lines, crop protection and pool and spa chemicals, with the 2009 selling cycle in key markets in the Northern Hemisphere largely complete. Performance in the pool and spa segment will be stronger in 2009 than last year despite a wet and cool summer in parts of the U.S. market, Rogerson says. Crop protection remains strong but results are not likely to match 2008 results, due in part to the impact of credit restrictions in Eastern Europe and Brazil that caused some customers to defer purchases.
Rogerson would not address speculation around specific assets that the company could sell but adds that Chapter 11 makes the need for divestitures less urgent.
Documents filed as part of the bankruptcy proceedings indicate that the company is exploring the possible sale of some assets, including its polyvinyl chloride (PVC) additives business and polyurethane dispersions business. Chemtura has retained Lazard (New York) as investment banker to advise on restructuring and M&A. Chemtura was in discussions with bidders for its agricultural chemical and fuel additives businesses prior to its bankruptcy filing, but it is not clear whether those assets are still being considered for sale.
“In the middle of credit crunch, you’re faced with having to sell the best and most attractive assets to generate cash,” Rogerson says. “Now, however, if we can demonstrate that we can create more value by operating the business rather than selling, we can keep it.” Rogerson says forecasts issued to creditors are based on the presumption that Chemtura will keep all of its current businesses. “And we think that’s reasonable given the current market for M&A,” Rogerson says. “It is not a good time to sell assets. We will always consider any offers for the businesses, but right now our five-year plan includes running them all.”
A key part of the compnay’s post-bankruptcy strategy calls for the company to shift its manufacturing footprint east as sales shift to Asia and Eastern Europe, and to source product closer to where it is sold. Management responsibility will also be shifted into those regions and away from Chemtura’s corporate headquarters in Middlebury, CT. “Operations outside the U.S. will have step up,” Rogerson says. “And that means giving them the authority and responsibility to deliver results.”
Friday, September 18, 2009
Lehman, WaMu Join Zombie Dance
For those of you wanting to get into a parlay play...here are a couple that I am involved in...Lehman and Wamu...Read this article and do your own due diligence before joining this party.
Lehman, WaMu Join Zombie Dance
NEW YORK (TheStreet) -- Apparently, even bankruptcy isn't enough to kill a zombie stock.
- More on C
- Stocks Mixed on Expiration Day
- The Little Guy: Collateral Damage
- Federal Reserve, Arbiter of Wall Street Pay
- 3 Stocks I Saw on TV
- POLL: Which Troubled Stock Is a Buy?
- Citigroup, Palm: Friday Headlines
- The Death of the Death of Finance
- Citi Could Spin Off Oil Trading Unit Phibro
- Wharton, MIT Return to MBA Blackboard
- Insurance Portfolio Soars 50% in Five Weeks
- Market Activity
Dear reader, tread carefully with these stocks. Celebrity trader Jon Najarian, co-founder of Optionmonster.com, told the New York Post the buying is "more than just the dash for trash," but the reasons are highly speculative.
In an interview with TheStreet.com, Najarian argued that if the bankruptcy judge decided to keep Lehman running to allow it to have a better chance of making paying off creditors, he might pay just 80 cents on the dollar to creditors. From the $6 billion Lehman has collected so far, that would leave it with a market cap of $1.2 billion, or about $2 per share, Najarian reasons.
But who is to say the judge would do such a thing? Just because Najarian is trading in this stuff doesn't mean most individual investors should be. He has access to sophisticated trading technology and a wide range of sources of information not accessible to most of us. He will jump in and out of a stock for reasons retail investors may not hear about for weeks.
"This is a 15-cent stock, so this is not for me to dangle something out there for people to go rush in and buy it," Najarian says.
Chemtura Announces Price Increase: Adiprene(R) and Vibrathane(R)
News: Chemtura Announces Price Increase: Adiprene(R) and Vibrathane(R)Last update: 9/18/2009 11:17:00 AMMIDDLEBURY, Conn., Sep 18, 2009 (BUSINESS WIRE) -- Chemtura Corporation (Pink Sheets: CEMJQ) announces that prices for Adiprene(R) and Vibrathane(R) products will increase in the Americas and Asia by up to 10 percent effective Oct. 15, 2009, or as contracts allow. Price increases will vary by region and product chemistry. This price increase is necessary to offset escalation of raw material, packaging and energy costs and to remain competitive on a long-term basis. Please visit . SOURCE: Chemtura Corporation Chemtura Corporation Urethanes Vimal Sharma, +1 203-573-2322Copyright Business Wire 2009
Wednesday, September 16, 2009
Another Reason To be Buying CEMJQ
This is a post extracted from InvestorsHub, and this was originally posted on the Yahoo CEMJQ Board earlier this year.
Agreed, with the new product line they are still important.
Here's another reason from a past post...........
Worth reading- excerpt from a recent post on Yahoo. My thanks to the original poster.
.....................
Hello, I am a CEMJQ stockholder, in at $0.04 and very happy to have the stake I have, always adding when I can afford, and advise friends and relatives to buy this, as it has treated me very well and it aint done nuthin' yet. WHY?
I work in the oil industry, one of a number if engineers completing the wells that produce a large proportion of our domestic Oil & Gas from the Deepwater Gulf of Mexico. I've been at this for only about 30 years, and a few people think I know a little about it and am good at it. So, when we started getting our oil and gas out there, it was relatively easy from shallower normally geopressured sands that required a lot of great engineering, but not terribly difficult or expensive, or at least not much more than your typical moonshot at NASA. This has been great for our employers, the economy, our family...etc..but guess what?
The easy stuff has been developed, and will decline quicker than we all would like, and there is more, much more, but the catch is-it's in deep high pressure formations that are more difficult and expensive to drill and complete. In order to do it in a manner that produces a really great well that produces the 20000 or 50000 barrels per day that it takes to pay for all of this fun, some very dense, clear brines have to be used in very large quantities. These fluids are Bromide Brines. In the next few years, you will hear stories about huge deep fields that are 30,000'+ deep (Chevron's Jack field is an example has made the news, but there are more like it that will become public knowledge in the future)
As of now, there are only TWO remaining suppliers in the United States of what is really a strategic commodity that hasn't really been recognized as such-but will in due time, especially if oil prices start to really climb again. They are CHEMTURA and ALBERMARLE. Deepwater GOM is not the only oilfield application where these will be needed, many of the prospects in the onshore basins that are being developed and that will be developed in a high-demand market will require them too.
Agreed, with the new product line they are still important.
Here's another reason from a past post...........
Worth reading- excerpt from a recent post on Yahoo. My thanks to the original poster.
.....................
Hello, I am a CEMJQ stockholder, in at $0.04 and very happy to have the stake I have, always adding when I can afford, and advise friends and relatives to buy this, as it has treated me very well and it aint done nuthin' yet. WHY?
I work in the oil industry, one of a number if engineers completing the wells that produce a large proportion of our domestic Oil & Gas from the Deepwater Gulf of Mexico. I've been at this for only about 30 years, and a few people think I know a little about it and am good at it. So, when we started getting our oil and gas out there, it was relatively easy from shallower normally geopressured sands that required a lot of great engineering, but not terribly difficult or expensive, or at least not much more than your typical moonshot at NASA. This has been great for our employers, the economy, our family...etc..but guess what?
The easy stuff has been developed, and will decline quicker than we all would like, and there is more, much more, but the catch is-it's in deep high pressure formations that are more difficult and expensive to drill and complete. In order to do it in a manner that produces a really great well that produces the 20000 or 50000 barrels per day that it takes to pay for all of this fun, some very dense, clear brines have to be used in very large quantities. These fluids are Bromide Brines. In the next few years, you will hear stories about huge deep fields that are 30,000'+ deep (Chevron's Jack field is an example has made the news, but there are more like it that will become public knowledge in the future)
As of now, there are only TWO remaining suppliers in the United States of what is really a strategic commodity that hasn't really been recognized as such-but will in due time, especially if oil prices start to really climb again. They are CHEMTURA and ALBERMARLE. Deepwater GOM is not the only oilfield application where these will be needed, many of the prospects in the onshore basins that are being developed and that will be developed in a high-demand market will require them too.
One Reason You Should Be Buying CEMJQ
Investors hungry for a big board company trading at Pink Sheet Pricing should look no further than CEMJQ. For those of you who don't understand this lingo, basically what I am trying to share with you is that you can buy some Armani Taylor Made Suits at Men's Warehouse Prices.
Chemtura Corporation is in Chapter 11 Bankruptcy reorganization, and looks to come out leaner, cleaner, and greener. The following article was extracted from TD Ameritrade's Newswire on Chemtura. Savvy investors should read the following article and do further due diligence to decide if they should add Chemtura to their Portfolio:
Chemtura Corporation is in Chapter 11 Bankruptcy reorganization, and looks to come out leaner, cleaner, and greener. The following article was extracted from TD Ameritrade's Newswire on Chemtura. Savvy investors should read the following article and do further due diligence to decide if they should add Chemtura to their Portfolio:
GeoBrom(TM) Bromine and Brominated Derivatives Remove Mercury from Coal Fired Power Plant Emissions
Last update: 9/14/2009 5:41:00 PM
MIDDLEBURY, Conn., Sep 14, 2009 (BUSINESS WIRE) -- Chemtura Corporation (NYSE:CEM), is excited to launch its GeoBrom(TM) family of bromine and brominated derivative products for companies employing bromine technologies in the removal of toxic mercury emitted during the combustion of coal in power plants and other coal-fired boilers. GeoBrom(TM) products are yet another example of Chemtura's commitment to the company's "Greener is Better" program which is focused on adding value to companies in the power industry, while contributing to energy sustainability, environmental stewardship, and a clean, reliable, and cost effective source of power for the consumer.
The GeoBrom(TM) line of brominated, inorganic, derivative products has been designed for incorporation into new technologies for the efficient removal of toxic mercury emissions from coal-fired boilers in order to achieve compliance with State and Federal mandates. The product line includes GeoBrom(TM) HG400, GeoBrom(TM) HG40S, GeoBrom(TM) HG520 and GeoBrom(TM) HG52S.
United States' clean air regulations are driving research and subsequent commercial development into cost effective, efficient and easily-implemented technologies to remove mercury from coal-fired energy sources and prevent mercury emissions into the environment. Bromine chemistries have demonstrated a strong performance advantage in many of the technologies employed for this purpose such as the addition of brominated derivative products to boilers or flues and the incorporation of bromine with sorbents that are injected into the flue.
With many decades of experience in bromine chemistry, Chemtura, the 2005 merger between Great Lakes Chemical Corporation and Crompton Corporation, has been extracting bromine from their site in Arkansas since the 1960's and is a demonstrated leader in bromine technology.
"Such experience and expertise positions Chemtura as a long-term, reliable supplier of bromine solutions to the power industry. Chemtura's focus is to provide bromine and brominated derivatives into all mercury removal applications where our products add value to customers," explains Dr. Janet Chetland, General Manager of Brominated Performance Products.
For more information on Chemtura's products for mercury removal, please visit or call Jon Lehmkuhler at +1 765-497-6011.
About Chemtura
Chemtura Corporation, with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection and pool, spa and home care products. Additional information concerning Chemtura is available at .
Photos/Multimedia Gallery Available:
SOURCE: Chemtura Corporation
Chemtura Corporation Jon Lehmkuhler, +1-765-497-6011 jon.lehmkuhler@chemtura.com
Copyright Business Wire 2009
Why You Must Steward Your Own Investments
After the economic meltdown of last year, when we saw the Dow Jones Industrial Average plummet to under 7000, many people lost most of their life savings. Folks from California to Europe to Japan lost tons of money, literally. Years and years of hard work went down the drain in the blink of an eye. Lives were destroyed overnight, and these sorts of losses investors and hard working folks just can't get back in the "blink of an eye."
Don't let this happen to you. Don't be a victim of reassurances from your bleeping broker that everything is alright, that everything will get better, that you haven't lost everything. These same brokers are telling hard working folks like you and me that the recovery is right around the corner. Yeah right. Tell that to the folks in their golden years who have been working hard their entire lives for 40+ years, making someone else rich, while just trying to plan for a nice retirement. Well, I say SCREW THAT NONSENSE. Wanna know why? Because they have a crystal ball and can predict the future just as much as I can pull a rabbit out of my ass.
What we learned in the economic lessons of 2008 was that none of us are immune to financial catastrophe. Financial ruination can strike anyone of us at any time. Of the many misfortunes that occurred during the global economic meltdown, the biggest one was our trust of public and private institutions. For example, when you are roaring down the highway at 90 mph, at some point you might get stopped by a cop and given a speeding ticket. We can't have everyone driving around recklessly in our society, now can we? The same holds true for our markets, our means of earning a living, and our means of building a retirement or investment portfolio.
Where were all of the "financial cops" doing prior to the economic meltdown? Asleep? Getting donuts and coffee? Just plain lazy? Probably all three. This is why you must learn to manage your own investments. You cannot let your broker be in complete control. The time you invest learning about making the right moves in the market will help you from financial disaster.
Have you ever heard the saying, "Don't screw around with people's money?" It is true. The more you know, the better off you are from losing your money to those who don't have your best interests at heart.
Don't let this happen to you. Don't be a victim of reassurances from your bleeping broker that everything is alright, that everything will get better, that you haven't lost everything. These same brokers are telling hard working folks like you and me that the recovery is right around the corner. Yeah right. Tell that to the folks in their golden years who have been working hard their entire lives for 40+ years, making someone else rich, while just trying to plan for a nice retirement. Well, I say SCREW THAT NONSENSE. Wanna know why? Because they have a crystal ball and can predict the future just as much as I can pull a rabbit out of my ass.
What we learned in the economic lessons of 2008 was that none of us are immune to financial catastrophe. Financial ruination can strike anyone of us at any time. Of the many misfortunes that occurred during the global economic meltdown, the biggest one was our trust of public and private institutions. For example, when you are roaring down the highway at 90 mph, at some point you might get stopped by a cop and given a speeding ticket. We can't have everyone driving around recklessly in our society, now can we? The same holds true for our markets, our means of earning a living, and our means of building a retirement or investment portfolio.
Where were all of the "financial cops" doing prior to the economic meltdown? Asleep? Getting donuts and coffee? Just plain lazy? Probably all three. This is why you must learn to manage your own investments. You cannot let your broker be in complete control. The time you invest learning about making the right moves in the market will help you from financial disaster.
Have you ever heard the saying, "Don't screw around with people's money?" It is true. The more you know, the better off you are from losing your money to those who don't have your best interests at heart.
Tuesday, September 15, 2009
Ever Wanted to Trade Stocks but Too Scared To?
Stocks. Stocks. And more stocks. Do you want to make money buying and selling stocks? Do you want to make more money than your measley 4% returns year after year with that loser broker of yours over at Schwab? Do you hate your day job? Do you hate your boss? Do you hate the daily grind of making someone else more money, while you slave away for an hourly wage?
If your answer is yes to these questions, then continue to follow this blog. Follow me, and I will take you on a journey to a land where the pastures are much greener, the skies clearer, the food better, and the wine to die for.
I can't guarantee you will make anything because I can't sit there and babysit your every move in the market. But I can guarantee you will watch me make money, and as I make money in the stock market, you will hopefully learn something along the way. You will hopefully take these tools and make some money yourself in the market.
I wish to educate you as I've been educated because I don't want to make money alone. I want to share the wealth with others like me, who once had nothing, but took a ballsy risk and turned pennies into dollars and dollars into gold.
Please join me so that you can WATCH AND LEARN.
I look forward to the education I'm about to bestow upon you.
Enjoy!
If your answer is yes to these questions, then continue to follow this blog. Follow me, and I will take you on a journey to a land where the pastures are much greener, the skies clearer, the food better, and the wine to die for.
I can't guarantee you will make anything because I can't sit there and babysit your every move in the market. But I can guarantee you will watch me make money, and as I make money in the stock market, you will hopefully learn something along the way. You will hopefully take these tools and make some money yourself in the market.
I wish to educate you as I've been educated because I don't want to make money alone. I want to share the wealth with others like me, who once had nothing, but took a ballsy risk and turned pennies into dollars and dollars into gold.
Please join me so that you can WATCH AND LEARN.
I look forward to the education I'm about to bestow upon you.
Enjoy!
Subscribe to:
Posts (Atom)