writser

The senior notes (with the ~8% stake in PAEC as collateral) have been sold to an EM private equity group ( http://www.swalaoilandgas.com/documents/Sale-of-25,000,000-Class-1-Senior-Notes-listed-on-the-CSX.pdf ) . I'm not quite sure how to interpret this. These notes were issues in 2018 to finance the PAEC acquisition. Now the original buyer resold them to a PE shop but even though the notes have the stake in PAEC as collateral this transaction ensures Swala's ownership of PAEC? What is the plan here? And can one figure out at what price these notes were sold? Did Orca try to buy these notes, as suggested in the initial press release? Interesting puzzle ..

Not really. Looks like a somewhat above average business at a somewhat below average price, but I have no strong opinion about the company. Just wanted to say that a fellow board member wrote a couple of nice blog posts about this name in case you hadn't seen them yet: https://kodakmoats.wordpress.com/2020/06/03/pke-park-aerospace-corp/ https://kodakmoats.wordpress.com/2021/01/31/update-pke-park-aerospace/

Q1 results out. ~20m shares outstanding for a market cap of ~$92m USD. $68m cash, $27m in Tanesco receivables fully written down despite getting back $20m last year. Swala bought 8% of PAEM at an implied valuation of ~$250m (including the debt on the balance sheet) in 2018. Since then the company has spending quite some capex to be able to increase production and has been returning a lot of capital to shareholders. I know, banana republic, their license expires in 2026, taxes, etc., etc.. Quite a bit of hair. Still, this field is very lucrative and you aren't paying a lot for it. I've been buying a bit more recently. I'd say there is a decent chance they'll launch another tender within a year.

It's an interesting way too look at the situation. The series A prefs are senior to the common, they yield 11% and you are aligned with the big boys (who all signed up for the prefs). Unless Garrett is flipped immediately to another buyer I'd say I 'd rather keep my common and pay up for the pref in your example. But yeah, common traded as low as ~$4.50 the past few days and you could certainly argue that selling your common for $6.25 and buying some back much lower is a valid alternative to holding on to your position just to get the prefs. It's difficult to make sense of the pricing the past few months. Perhaps the correct answer is that you should do both, get the prefs AND buy in the open market ? .

Yeah, it sucks. Unfortunately the stock market is often two-tiered like that. Exercising appraisal rights, reclaiming foreign withholding taxes, private placements, access to management, going activist, joining lawsuits, greenmailing, etc .. You often get a better deal / more options if you have a couple of million to spare and/or operate with large positions. I didn't sell any shares but bought a few more shares when price came down. I hope this doesn't disqualify my ability to tender or participate in the right offering. However, now IB is showing the total number of shares as eligible to participate in offering(at least on the surface). I suspect this will be a nightmare for all the brokers and their systems to figure out which shares have which rights... I think IB is taking the approach: you can only participate with your current position, they will make sure that users do not participate with a larger position than your position on the record date (on account level or perhaps even on company level) and they don't give a shit about what you did inbetween. That should be relatively easy for them. If that is the case, then in hindsight I think it was possible to sell and buy back this week at IB for a nice scalp. Still not 100% sure about that. If the transfer agent requires extra information or whatever things could still go haywire for me but I think that is unlikely at this point. I even think there is a non-zero chance that you can also participate with your newly-bought shares if IB is lazy and their company-wide position on the record date allows it (i.e. others don't forget to exercise their rights). But again I would definitely not recommend doing that, it's probably illegal and it will very likely not work out and cause problems.

I also looked a bit into OCBC but that seems to be an inferior option to me. First of all, it seems that setting up an account requires a bit more documentation ( https://portal.iocbc.com/accounts/basic-securities-trading-account#apply-online-basic-trading ) which could be a hassle. Note that I haven't really tried to do so, so maybe requirement 3: [quote>Bank statement from a Monetary Authority of Singapore (MAS) licensed bank Latest CPF statement Latest Notice of tax assessment from IRAS can be sidestepped, but it might be difficult to produce these documents. On top of that, far more annoying if I am correct, OCBC offers only trading by phone for Korea: https://portal.iocbc.com/platforms/global-market-access.page . I hate placing orders by phone. It's expensive, error-prone and I find it very annoying to talk English over the phone when both speakers are non-native speakers and have their own mangled accent. Phillip Capital / Securities: same thing: expensive, only over-the-phone trading. That seems like the least favorable option. According to this list: https://the-international-investor.com/comparison-tables#findstockbrokers Swissquote would also work, which could be a simple alternative. Haven't tried that one yet - if I remember correctly somebody here said it wasn't actually possible in practice.

Regarding Boom, I enquired there a few weeks ago about opening an account as a foreigner. This is what they told me: [quote> Our individual account opening procedures is simple.  You need to fill in an application form (cash / margin) and submit the below documents to us: https://www.boom.com/en/open_account/ 1)  Passport copy (certified true copy) 2)  Home address proof (ie. credit card / electricity bills within 3 months that shows the client's name and address) (copy) You need to mail in the application and arrange a witness to certify your passport copy as well as the signature on your account application form. The witness can be Justice of Peace, or professional (Bank Manager, Certified Accountant, Solicitor or Notary Public).    Please note that U.S. citizens / residents will not be eligible for trading in the U.S. market.    Please mail the originally signed application and other documents to our office by post: Customer Services Dept. Monex Boom Securities (H.K.) Limited Room 2501, 25/F., AIA Tower 183 Electric Road North Point Hong Kong After your BOOM account is set up, you can transfer funds directly from your bank account in your personal name in overseas via telegraphic funds transfer to one of our bank accounts in Hong Kong (HSBC / Hang Seng Bank / Standard Chartered Bank / Bank of China (HK) Limited): https://www.boom.com/en/customer_service/funds_management/ That seems very doable. I live in Europe - not sure if the same applies to US residents who want to open an account.

Whoops, playing with fire here! I bought my common back. I'm reasonably sure I can still exercise my rights but I could be wrong. And this is me trying to undo an error, in hindsight I would definitely not recommend trying what I did. Clearly I'm the patsy at the table, listen to Bill instead. Or even better, DYODD.

Yeah. The way I understand it, if you are buying today at $6.25, you should have DEFINITELY been buying yesterday at $6.50 because no matter how you slice or dice it, that was a much better bet. I wouldn't be surprised if some people regret their purchase today once they figure out the facts. On the flip side, these bankruptcies are not cookie cutter situations. The judge could still throw a spanner in the works, I could be missing some key stuff from the court room that is not in the docket yet (or that I glanced over), there is nothing on the FINRA daily list, etc. You operate with some uncertainty. And what happens if I reject the plan and vote for the cash-out is absolutely unclear to me. Seems like that would be almost impossible to reconcile with shares still trading and the record date being next Monday. It's a total mess, that's for sure.

The price action today absolutely makes no sense to me. I sold my entire position around the opening, which was around unchanged from the close yesterday. Please tell me why that would be stupid. I might be missing something, this is absolutely no advice.

Just to be sure: the record date is not equal to the ex-date. Stocks in the US settle on a T+2 basis. You buy on Monday, you are a holder of record on Wednesday. So March, 11 was the last day you could buy and still be eligible to participate in the rights offering. If things stay the way they are (no amendments, judge doesn’t change his mind) the common is now trading post-reorg. I.e. buy today and you can neither cash out nor buy prefs.

Many Dutchies here .. Lekker bezig!

There is some confusion about the record date. If you look at, for example, document 995, page 126 - 128. Holders on the Voting Record Date (March, 9) already have to choose whether to cash out or not. So, what happens if you are buying / selling shares today? Can you still opt-in to the voluntary release? What if you do and quote? Who will get the rights? Is this why the common isn't trading higher? Ughhh, these questions, not again ..

I can't make sense of the market price either. But yeah, by far the weakest link in my story is the valuation of the operating business. The good thing is, at $6.30 you can always change your mind for free! New financial projections were filed today: http://www.kccllc.net/garrettmotion/document/2012212210310000000000003 On top of that guidance for Q1 is now $165m in adjusted EBITDA. What multiple to slap on this? Is this guidance conservative or not? These are difficult questions for me. I'm probably a decent stock analyst but not really a sharp business analyst. But if this forecast is ballpark correct and we slap the historical GTX multiple on this (which is quite a bit below where BWA is currently trading, which is up significantly this year, mind you), I don't know, that doesn't seem overly crazy to me.

I think you are still making a tiny mistake: in the final plan the series A raises $50m more than the original plan. Now, in your calculations you convert the series A into equity, i.e. you convert the liability into extra shares. Upsized pref offering results in more shares outstanding, fully diluted. However, if you raise more cash, that cash ends up on the balance sheet. So if you had $120m in cash remaining in the old plan and your liabilities stay the same (because you convert the prefs), the cash on the balance sheet in the new plan should be $170m. That adds a tiny bit extra value. Of course it's not that significant in the big picture, lots of moving parts. The massive question is of course what the EV of the operating business should be. Is a 6.5x multiple on 2017-2019 numbers fair? Where is BWA trading? Is that a better business or not? What EBITDA numbers can we expect in the near future? The numbers we are now using have been given to us by the consortium themselves (document #273 in the docket). You could argue that they have some reasons to lowball enterprise value: that makes their offer look fair and makes the cash-out option look attractive. I'm not very comfortable making any predictions about the enterprise value, I'm not a super good business analyst and I know next to nothing about the turbocharger business. But it seems pretty clear to me that if you play around with some numbers that the cash-out option is inferior. It protects your downside though. So the fact that you could pick up shares for ~$6.30 today seems really strange to me. Not a single consortium member cashes out. They are backstopping the rights agreement. They have been fighting with the equity committee to keep all the prefs for themselves. They still get to buy a shitload of prefs on top of their backstop and their allocation for the common shares they are holding. Some basic calculations show that this optionality could be worth $10 - $20 per _current_ share. Yet the market values this optionality at $0.05? I don't get that. Maybe I am completely wrong, of course. Maybe there is a significant risk that the deal collapses, maybe Garrett is a shit business, etc. Finally, hat tip to Wabuffo for being the grand master of sifting through situations like these.