Multibagger speculative ideas

[frommi]

NWH.AX and RSSS.

[yadayada]

I'm long this and buying more today.

See monitor report for capital structure:

http://documentcentre.eycan.com/eycm_library/Project%20mike/English/Monitor's%20Reports%20(Sixth%20and%20Eighth%20Report%20are%20located%20in%20their%20own%20sub-folders)/Thirteenth%20Report%20of%20the%20Monitor%20Dated%20June%2023%202015.pdf

 

I get roughly 42% recovery for the Unsecureds...

Seems likely they get much more? 440m$ available. First and second lien is 263m$. Then 155m$ for unsecured and convertible before interest. So it seems they will likely get 20m$ or so?  that would mean almost a double.

 

Any value for that mining company? They are held at 72c.

 

So First and second + interest is about 15m$. Or 40c. This is almost guaranteed. Then let's say 15m$ for unsecured, and you get 80c. So anywhere between 40c and 160c. I supose we will see.

[bizaro86]

I'm long this and buying more today.

See monitor report for capital structure:

http://documentcentre.eycan.com/eycm_library/Project%20mike/English/Monitor's%20Reports%20(Sixth%20and%20Eighth%20Report%20are%20located%20in%20their%20own%20sub-folders)/Thirteenth%20Report%20of%20the%20Monitor%20Dated%20June%2023%202015.pdf

 

I get roughly 42% recovery for the Unsecureds...

Seems likely they get much more? 440m$ available. First and second lien is 263m$. Then 155m$ for unsecured and convertible before interest. So it seems they will likely get 20m$ or so?  that would mean almost a double.

 

Any value for that mining company? They are held at 72c.

 

So First and second + interest is about 15m$. Or 40c. This is almost guaranteed. Then let's say 15m$ for unsecured, and you get 80c. So anywhere between 40c and 160c. I supose we will see.

 

I think the 1st/2nds will get principal and accrued interest, so a total of $308MM for DIP/1st/2nd. That leaves $140MM for the senior unsecured/pari-passou unsecured, of which there is $310MM outstanding including accrued interest. 

 

So after they get their $15MM for the secured, their 15.5% PIK would have a maximum recovery of 45%. However, there will naturally be costs associated with the CCAA/monitor/wind-up which will come from the recovery. Best case scenario is another $20MM, but that seems generous. That gets you a best case scenario of just under $1.00, but I agree that $0.40 is the downside if Rogers is allowed to close. I do think there is still regulatory risk here, Industry Canada refused to let them sell to Telus last year, they may not let them sell to Rogers either. If they make them sell to a "4th carrier" the only option is wind (or MAYBE videotron), and they'd get less from either of them than any of the incumbents.

 

I went through Cline's reports, and they have a bit of cash left but it looks like they're reorganizing, so I think they intend to spend the cash trying to sell the mining assets. Not something I'm likely to stick around for.

 

Big thanks to Sculpin for posting this, I bought this morning and am enjoying the quickest double of my investing career.

[yadayada]

The last part o f 12% convertible comes after the second last and the unsecured. So you can exclude 50M$ right there.

 

So unsecured and pari passu notes are 265m including interest. And the first two are 215 for the first and 54 for second? So that is only 270m$ for the first two including interest?

 

And 265m for second two. But the unsecured weighs much heavier in that 265m$, since they are 165m$ of that 265m$. So they get about 62% of what remains.

 

So if you assume 40m$ in costs, 270m$ for first two, there is about 130m$ left over for the unsecured and the 12% pari passu. Which is 80m$ or 48%. So 48% of 30m$ (including interest here), is 15m$.

[sculpin]

It appears that the Mobilicity deal now has Competition Bureau approval as well as stated in the following Globe article tonight. So the only loser here is Telus and given all of the checkmarks (Court, Regulatory & Competition Bureau) it does not seem very likely the deal can now be rescinded. Congrats to all who bought into this. First time I think I have had a position go up by 212% in one day. Hoping to see Marret clarify the potential NAV impact in a press release tomorrow.

 

Rogers said Wednesday evening that it has now received all necessary approvals for the transactions, including the green light from the Competition Bureau.

 

June 24, 2015

Mobilicity deal positions Wind to compete with wireless Big Three

By CHRISTINE DOBBY

Small wireless player was pivotal in 'remarkable' $465-million deal for carrier that had been in creditor protection

 

Startup wireless carrier Wind Mobile Corp. has emerged as a key winner in a deal between Rogers Communications Inc. and Mobilicity that awards Wind the cellular airwaves it needs to expand and improve its network at no cost.

 

The Toronto-based carrier was pivotal in the $465-million deal no one in the Canadian wireless industry thought could get done. As part of a series of spectrum licence transfers from both fellow new entrant Mobilicity and Shaw Communications Inc., all of which Industry Canada has now approved, Wind now has more of the resources it needs to compete against the Big Three wireless players.

 

Wind paid a bargain-basement price for a significant chunk of licences in a spectrum auction in March, but it cannot yet deploy service with those airwaves because the necessary ecosystem of mobile devices for that frequency band does not yet exist. The airwaves it will get through the Rogers transactions – which are in the same frequency band Wind bought in 2008 and built its original network with – will allow it to start building an LTE (long-term evolution or fourth-generation) network immediately.

 

"This is a remarkable transaction," Orestes Pasparakis, a lawyer for Mobilicity, told the Ontario Superior Court judge who approved the deal Wednesday morning, apparently still somewhat amazed himself as he recalled the company's frustration with government policy on the path to finally getting the deal done.

 

Others like it had been floated before – Rogers courted Wind Mobile at one point and Telus Corp. repeatedly offered to buy Mobilicity – but as the federal government's fourth-carrier policy for the industry hardened in the summer of 2013, it became clear that Ottawa would not bless a tie-up between one of Canada's dominant three carriers and its struggling new entrant players.

 

The Rogers proposal allowed the government to finally approve a deal for long-floundering Mobilicity, give Wind another spectrum boost and a quick path to LTE and, at the same time, address the sticky issue of what to do with an option agreement Rogers struck in early 2013 to buy unused spectrum from Shaw. Rogers said Wednesday it will pay a further $100-million to Shaw for the licences.

 

The fact that the transactions cleaned up so many outstanding issues and offered more help to Wind is believed to have been central to the federal government's willingness to approve the deal over one with Telus that did not offer as much of a benefit to Wind and left the Shaw spectrum stranded.

 

"Wind played a key role at the table, but Rogers brought the cheque book," said a source close to the negotiations.

 

Talks heated up over the past two weeks, with a flurry of offers and counteroffers, and Rogers had a team of 20 people in Ottawa and Toronto working on the transaction.

 

Sources said Telus offered to pay more, but Mobilicity's stakeholders were more confident they could win government approval of the Rogers deal. After more than two years of attempts to win Mobilicity's spectrum, Telus executives are said to be disappointed with the outcome and weighing a legal challenge of some sort. Telus did not reply to a request for comment Wednesday.

 

Bill Aziz, chief restructuring officer for Mobilicity, which has been under creditor protection since September, 2013, said he would not discuss the bid process publicly, but added, "We went with the deal that was the highest price and the most executable."

 

"Everybody's a winner today except Telus, unfortunately," Alek Krstajic, chief executive officer of Wind, said.

 

"Mobilicity wins, Shaw wins and Rogers wins. But most importantly, the big win is for Canadian consumers due to the government policy."

 

"Our government has one goal: to take deliberate, concrete steps to create more choice, lower prices and better wireless service for Canadians and their families. Today's approval of these licence transfers delivers on this objective," Industry Minister James Moore said in a statement.

 

Rogers will continue to offer service for Mobilicity's 157,000 customers, transitioning them over to its network. Spokesman Aaron Lazarus said Rogers has not yet determined whether it will retain the brand as a discount wireless offering.

 

Mr. Krstajic said Wind also negotiated an option that allows it to opt to pay Rogers $25-million in exchange for half of Mobilicity's cell sites and equipment. Finally, it gains new licences for spectrum in Manitoba and Saskatchewan, which he said the company would consider selling to MTS Inc. or SaskTel, respectively.

 

Although Wind walks away happy, it ironically managed to facilitate a deal that saw its one-time rival Mobilicity sell for far more than Wind itself was able to attract last fall, when a consortium of investors bought it for $300-million. Of course, in that case, a sale to one of the Big Three was not seen as an option.

 

Meanwhile, Rogers gains new chunks of contiguous spectrum – which means the frequencies are right next to each other, allowing it to offer more speed and capacity – and will be able to use Mobilicity's losses to reduce its tax bill by $175-million.

 

Scotia Capital Inc. analyst Jeff Fan called the transactions, "Probably the best strategic move Rogers CEO [Guy Laurence] has made since joining the company."

 

Shaw said in a statement Wednesday it made a total of $350-million selling its spectrum licences to Rogers after originally purchasing them for $190-million in 2008. Rogers paid $50-million to Shaw for the option plus a $200-million refundable deposit, which, given the government's policy on transfers to incumbents, many had assumed Shaw would eventually have to return. The fact that the option was successfully exercised after all and Rogers paid the extra $100-million gives Shaw a nice boost to its balance sheet.

 

Rogers said Wednesday evening that it has now received all necessary approvals for the transactions, including the green light from the Competition Bureau.

 

[rukawa]

Congrats to all who bought into this

 

Ya I didn't buy this. Just started looking into it 3 days ago and wanted to do some more research before pulling the trigger. I have decided that I need to rub my nose in this one.

 

How did you discover this, Sculpin?

[sculpin]

Rukawa --- Been following Cdn small caps for 20+ years - get to know what is out there.

 

Disappointed that Marret has not put out a press release as they said they would a few days ago. My guess is that they are under no obligation to until there is more clarity on the amounts the unsecured creditors will receive. At the same time, they could have alerted the market to the potential value but did not so they have had many of their longer term unit holders sell out at bargain prices while those who did the work scooped up these shares. As well, I'm sure that there is a great likelihood that friends and family of certain senior mgmt were given indications of how good a deal the MHY.un shares were in the $0.20's - $0.50's.

 

I refined my valuation and now believe they will get $15.5MM from principle & accrued interest on the secured debt and $13.9 mm from the $21MM of Pik bonds. So this is $0.42 from secured and $0.37 from the PIK bonds for total of $0.79/unit from Mobilicity. Cline debt is free below this number. Remember this is just an estimate as there are moving parts & uncertainties (unknown costs etc) that I am not privy to so my final number could be off (and maybe substantially).

 

GLTA

[yadayada]

What % of cline do they own? I cannot find that anywhere. It seems if they now own part  the equity and debt, that is worth at least another 20-30c or so.

[lessthaniv]

Great call on this one, Sculpin. I sucked my thumb for too long but still managed a reasonable entry as compared to IV.

 

[sculpin]

What % of cline do they own? I cannot find that anywhere. It seems if they now own part  the equity and debt, that is worth at least another 20-30c or so.

 

Yada

 

Below is the amount of Cline they own. I'm sure this doesn't include the accrued interest. This may change as they (Marret) is restructuring Cline to cut costs and simplify the structure. I believe that Marret owns most of the debt on Cline so they drive the bus in terms of restructuring, negotiating any deals etc. Given how depressed the coal market is today (ongoing shuttering of coal power plants, weak met coal demand, over supply of both met & thermal) my only hope is that some entity comes in and pays them 10 - 20% on their debt to take these properties over.

 

Here too, I am very disappointed in the management of Marret in that they have not written down the value of their Cline holdings materially. This seems nonsensical in the current enviroment. If you are interested, there is another play on these busted Marret funds evolving right now. This is the Marret Resource Corp (MAR on the TSX) which is liquidating all of their investments other than $8mm in cash and of course the holding in Cline (they have no Mobilicity).

 

$3,421,854    Cline Mining Corp., Convertible, Restricted, 10.000%, 2014/06/15 2,395,298 2,395,298

$35,297,000  Cline Mining Corp., Restricted, 10.000%, 2014/06/15 (USD) 26,926,670 26,926,669

[bskptkl]

Rukawa --- Been following Cdn small caps for 20+ years - get to know what is out there.

 

Disappointed that Marret has not put out a press release as they said they would a few days ago. My guess is that they are under no obligation to until there is more clarity on the amounts the unsecured creditors will receive. At the same time, they could have alerted the market to the potential value but did not so they have had many of their longer term unit holders sell out at bargain prices while those who did the work scooped up these shares. As well, I'm sure that there is a great likelihood that friends and family of certain senior mgmt were given indications of how good a deal the MHY.un shares were in the $0.20's - $0.50's.

 

I refined my valuation and now believe they will get $15.5MM from principle & accrued interest on the secured debt and $13.9 mm from the $21MM of Pik bonds. So this is $0.42 from secured and $0.37 from the PIK bonds for total of $0.79/unit from Mobilicity. Cline debt is free below this number. Remember this is just an estimate as there are moving parts & uncertainties (unknown costs etc) that I am not privy to so my final number could be off (and maybe substantially).

 

GLTA

 

First of all - many thanks for bringing this to my attention last year.

 

I think your numbers make sense as at 5/31 and IF the $7MM "liquidity payment" due to Bridge Note holders is included in the Monitor's $64 million number owing quoted in the 13th Report. But the wording suggest it is not included, see p 10 for wording. Interest until today adds a half penny per share. A share of an additional liquidity payment would add 4 cents - total $17 million. Working the math on interest suggests the payment IS included though.

 

Also 13th report says purchaser is to lend funds to Wireless to pay off secured obligations - so that money could be funded in days if not already.

 

As for the unsecured's I get a 40% recovery of $38.6 million principle plus interest or 42 cents per share. Not sure how long it takes to get a plan approved and funded, possibly months. But interest will be ticking at 15% (roughly $3 million a month) so even if fees go up and it takes more time, the actual recovery percentage may not change that much.

[lessthaniv]

Also sent a note requesting a press release to clarify NAV. Response today;

 

Marret’s goal is to have a press release issued as soon as possible, which will hopefully happen by today or Monday.

 

If you have any further questions or concerns, please do not hesitate to contact me directly via return e mail or at the number below. 

 

Philip Oram| Financial Service Specialist | Marret Asset Management Inc., an affiliate of CI Investments Inc.

416-214-5800 ext. 7138 | Fax: 647-439-6471

 

 

[bizaro86]

Not sure how long it takes to get a plan approved and funded, possibly months. But interest will be ticking at 15% (roughly $3 million a month) so even if fees go up and it takes more time, the actual recovery percentage may not change that much.

 

If fees go up the total amount distributed to unsecureds will go down, since the pot of money is fixed. And all the unsecureds are accruing interest, so if the size of the pot goes down all the unsecureds will get less.

[bskptkl]

Not sure how long it takes to get a plan approved and funded, possibly months. But interest will be ticking at 15% (roughly $3 million a month) so even if fees go up and it takes more time, the actual recovery percentage may not change that much.

 

If fees go up the total amount distributed to unsecureds will go down, since the pot of money is fixed. And all the unsecureds are accruing interest, so if the size of the pot goes down all the unsecureds will get less.

 

Yeah you are correct. Our bonds do earn more than the converts - 15% to 12%, but that won't change much.

[persistentone]

For anyone who has put some casino money in the Marrett High Yield Fund (MHY.UN) (there is also another play on this too – MMF.UN) there are some encouraging signs that there may be some recovery from the Data & Audio Visual Enterprises debentures that MHY holds. Hopefully, an acquisition is allowed to take place by the Feds. I am not sure what the potential recovery could be at this stage but the Fund had $31,842,000 in DaVE bonds in its portfolio on Dec 31/2014 with 36.7 million shares outstanding – so the upside could be substantial. GLTA….

 

You had some great ideas here.  I missed MHY by a few days but may still bite at that to grab the last part.

 

Did you have any estimate for recovery on the debentures in MMF?

 

What is the easiest way to get a disclosure of all of the holdings of a Canadian fund like MMF?

[sculpin]

For anyone who has put some casino money in the Marrett High Yield Fund (MHY.UN) (there is also another play on this too – MMF.UN) there are some encouraging signs that there may be some recovery from the Data & Audio Visual Enterprises debentures that MHY holds. Hopefully, an acquisition is allowed to take place by the Feds. I am not sure what the potential recovery could be at this stage but the Fund had $31,842,000 in DaVE bonds in its portfolio on Dec 31/2014 with 36.7 million shares outstanding – so the upside could be substantial. GLTA….

 

You had some great ideas here.  I missed MHY by a few days but may still bite at that to grab the last part.

 

Did you have any estimate for recovery on the debentures in MMF?

 

What is the easiest way to get a disclosure of all of the holdings of a Canadian fund like MMF?

 

This is what I believe to be the holdings by MMF.un...

 

625,000      Data & Audio Visual Enterprises Wireless Inc., Callable, 9.500%, 2018/04/29

427,703      Data & Audio-Visual Enterprises Holdings Inc., 15.500%, 2014/06/30

1,369,038    Data & Audio-Visual Enterprises Holdings Inc., Pay-In-Kind, Callable, 15.000%, 2018/09/25

 

My WAG for this fund is $2.1MM in recoveries from DAVE debentures/notes. Remember I am using incomplete information and am not privy to additional costs etc that may lower this estimate. Per share this is $0.63 of which $0.42 is from the secured debt.

 

http://www.marret.com/

 

[sculpin]

Mobilicity gets approval to disburse funds from Rogers deal to creditors

CHRISTINE DOBBY - TELECOM REPORTER

The Globe and Mail

Published Monday, Jun. 29, 2015 6:08PM EDT

Last updated Monday, Jun. 29, 2015 6:11PM EDT

 

A judge has approved the distribution of funds in Mobilicity’s restructuring proceedings after the small wireless carrier struck a $465-million deal to sell itself to Rogers Communications Inc.

 

The court’s order Monday was necessary for the companies to proceed on closing the deal, which they announced last week and which already has approval from the federal government and faces no opposition from the Competition Bureau.

 

A group of Mobilicity’s creditors – including its bondholders as well as suppliers including customer-support provider Amdocs, network manager Ericsson Canada Inc. and landlords for its cellular sites – consented to a “vesting” order the company put forth to Ontario Superior Court of Justice judge Frank Newbould.

 

The order, which the judge signed Monday afternoon, will allow Rogers to assume Mobilicity’s assets free and clear of any claims against them apart from the small carrier’s trade liabilities, which Rogers has agreed to assume. The purchase price of the deal is $440-million and Rogers has agreed to assume $25-million in net negative working capital, according to a spokesman for Mobilicity.

 

The order will see Rogers transfer a portion of the purchase funds as a loan to repay Mobilicity’s first lien, second lien and debtor-in-possession (or DIP) financing. These creditors will fully recover the principal they advanced as well as accrued interest and penalties.

 

However, Mobilicity’s total debt stands at about $600-million, according to court filings, and the balance of the funds from the purchase will be distributed to the company’s unsecured creditors on a pro rata basis.

 

Toronto-based private equity firm Catalyst Capital Group Inc., one of Mobilicity’s biggest individual bondholders, was often at odds with Mobilicity’s other bondholders throughout the restructuring process. Even before Mobilicity filed for protection under the Companies’ Creditors Arrangement Act in September, 2013, Catalyst had already launched a lawsuit against the company for raising a round of financing without Catalyst’s participation.

 

The firm struck a separate, confidential agreement with Rogers as part of the overall transaction.

 

There was some delay Monday morning as lawyers for various creditors negotiated last-minute changes to the vesting order. One change to the final order, for example, will give landlords at Mobilicity’s cellular sites – which are often found on building rooftops – 30 days to object to the transfer of their lease agreements to Rogers.

 

Otherwise, the events of the past week have brought the company’s restructuring to a rapid conclusion after a drawn-out process that at times saw stakeholders frustrated with what they saw as a change in government policy, as Ottawa blocked multiple attempts to sell to Telus Corp.

 

Although investors in the wireless industry initially believed they would be able to sell spectrum reserved for new entrants in a 2008 auction to one of the Big Three carriers after five years, Ottawa introduced a new spectrum transfer framework in 2013 and indicated it would not permit deals that increased the concentration of the airwaves used to build wireless networks in the hands of the incumbents.

 

The federal government ultimately approved last week’s deal with Rogers – along with a separate agreement Rogers made in early 2013 to purchase unused spectrum licences from Shaw Communications Inc. for a total of $350-million – in part because the transactions also include the transfer of spectrum licences to Wind Mobile Corp., the last remaining new entrant offering service in Ontario, British Columbia and Alberta.

 

 

[Palantir]

SUNE is one multibagger idea.

[sculpin]

SUNE is one multibagger idea.

Why? Already doubled in last 12 months. $8 billion cap now?

[Palantir]

I don't follow, doc companies stop growing after 8B?

[sculpin]

SUNE is one multibagger idea.

 

Z:SUNE - SUNEDISON INC

 

Why is a $8B utility a multibagger spec idea? Elaborate if you can. Thx

[whistlerbumps]

DCI LN- 3rd Point just bought more stock in the offer at 21.  Tough to value precisely but potential for upside to 60-80...

 

[ATLValue]

PGN - offshore oil driller that recently spun out of Noble. The company spun out above $10 last year and now is trading at around $1.10.

 

In my opinion several things are causing the stocks decline, 1) fall in oil price, 2) offshore rig sector has been weak based on speculation that the market will be oversupplied for the next 2-3 years as chinese rigs come onto the market, 3) selling as a result of the spin off, 4) recent debt for equity swap by similar competitor HERO and 5) fears about bankruptcy

 

Market cap: $95M (first quarter operating cash flow was $210M!!!)

 

Debt covenants are 4.0x EBITDA and 3.0x Minimum Interest Coverage Ratio and only apply to the revolver. As of March 31, 2015, the covenants under the Revolving Credit Facility were a net leverage ratio of 2.39 and an interest coverage ratio of 7.90

[Palantir]

SUNE is one multibagger idea.

 

Z:SUNE - SUNEDISON INC

 

Why is a $8B utility a multibagger spec idea? Elaborate if you can. Thx

 

Because it will rise in price multiple times?

[T-bone1]

PGN - offshore oil driller that recently spun out of Noble. The company spun out above $10 last year and now is trading at around $1.10.

 

In my opinion several things are causing the stocks decline, 1) fall in oil price, 2) offshore rig sector has been weak based on speculation that the market will be oversupplied for the next 2-3 years as chinese rigs come onto the market, 3) selling as a result of the spin off, 4) recent debt for equity swap by similar competitor HERO and 5) fears about bankruptcy

 

Market cap: $95M (first quarter operating cash flow was $210M!!!)

 

Debt covenants are 4.0x EBITDA and 3.0x Minimum Interest Coverage Ratio and only apply to the revolver. As of March 31, 2015, the covenants under the Revolving Credit Facility were a net leverage ratio of 2.39 and an interest coverage ratio of 7.90

 

You might want to take a look at what PGN looks like in 2016 and 2017... they have some very high priced contracts rolling off and their rigs are more likely to be scrapped than re-contracted over the investment horizon before this company goes BK