awindenberger Posted February 18, 2017 Share Posted February 18, 2017 Reddit not in love with coal today, ayaye... Can't say I am too excited either, I doubt the incremental profits short term are going to be worth all the other costs... Do you have a link to this? Whats going on? Link to comment Share on other sites More sharing options...
Patmo Posted February 18, 2017 Share Posted February 18, 2017 It was top of first page yesterday. I've been growing pretty nervous these past couple weeks about where the markets are headed. This one is a tough stock to sell because the only true downside risk left is if the crap hits the fan, essentially. Stock price should double quickly after stabilizing the capital structure, looking at TECK as a blueprint that is roughly what I expect to happen... Link to comment Share on other sites More sharing options...
awindenberger Posted February 19, 2017 Share Posted February 19, 2017 The market does seem ready to have at least a small correction, but I think it will affect stocks that have raged up recently on a lack of company specific news, but rather due to the rising tide. This doesn't exactly apply to FELP. Link to comment Share on other sites More sharing options...
Patmo Posted February 21, 2017 Share Posted February 21, 2017 I agree, just a bit scared, seeing lots of bad signs about the American economy/stock market valuation that makes me feel very uneasy. I'm fully invested with a relatively big % in FELP (not Picasso level though), and don't want to be that guy caught with my wiener out in the open if all hell breaks loose, you know? Every rational fiber of me says to stay put, so I'm following that, but I'm just not feeling as good about it as 6 months ago. I mean the prelim results confirm the $200mil free cash flow to equity (or distributable cash flow? never figured out the difference) that others hinted at, and 2017 will be closer to $300mil... That's coming off the bottom with a coal-friendly government for possibly the next few years, yet still just trading for a 3x multiple. Even coming off a multibagger price increase it's way too cheap, so long as the capital structure gets stabilized. I think we could see a price jump just as the 10k comes out, if the company simply issues guidance for 2017. Look at CYH today, that's what happened and the situation is in somewhat the same ballpark as FELP's. Link to comment Share on other sites More sharing options...
PullTheTrigger Posted February 24, 2017 Share Posted February 24, 2017 http://investor.foresight.com/file/Index?KeyFile=38209976 Q4 next Wednesday Link to comment Share on other sites More sharing options...
gadfly Posted February 24, 2017 Share Posted February 24, 2017 redeeming 54 million of 2021 notes: http://stocknewsflow.com/1540729_000156459017002421_0001564590-17-002421ppp2 Link to comment Share on other sites More sharing options...
Guest roark33 Posted February 25, 2017 Share Posted February 25, 2017 What's the rational for redeeming a portion of the 2021 notes, don't they have to take them all out to deal with the 2017 PIK notes? Disclaimer...could be a stupid question...mainly here to troll picasso. Link to comment Share on other sites More sharing options...
gadfly Posted February 25, 2017 Share Posted February 25, 2017 Question: Why 54.5 million and not the entire 35% clawback? Can they do multiple equity offerings to keep chipping away until they hit 35%? Who in the heck participates in this equity offering and at what price? Link to comment Share on other sites More sharing options...
Green King Posted February 25, 2017 Share Posted February 25, 2017 What's the rational for redeeming a portion of the 2021 notes, don't they have to take them all out to deal with the 2017 PIK notes? Disclaimer...could be a stupid question...mainly here to troll picasso. +1 Reddit's sentiment on Coal has not been positive either. Sell Sell Sell. Link to comment Share on other sites More sharing options...
PullTheTrigger Posted February 25, 2017 Share Posted February 25, 2017 What's the rationale to sell? Link to comment Share on other sites More sharing options...
heth247 Posted February 25, 2017 Share Posted February 25, 2017 What's the rational for redeeming a portion of the 2021 notes, don't they have to take them all out to deal with the 2017 PIK notes? Disclaimer...could be a stupid question...mainly here to troll picasso. It seems to me that the $54MM part will be funded by equity offer, but they also mentioned that it is conditioned by "the pricing of an offering of senior secured debt securities of the Issuers prior to the Redemption Date". What is this new senior secured debt for and how much will it be? Will it be used to take out the 2017 PIK notes? Link to comment Share on other sites More sharing options...
heth247 Posted February 25, 2017 Share Posted February 25, 2017 Question: Why 54.5 million and not the entire 35% clawback? Can they do multiple equity offerings to keep chipping away until they hit 35%? Who in the heck participates in this equity offering and at what price? Maybe they think the current stock price of $6.5 is still a bit too low for taking out the entire 35%? As a common unit holder, I really want them to issue as less ass possible shares at this price. Link to comment Share on other sites More sharing options...
valcont Posted February 25, 2017 Share Posted February 25, 2017 It seems to me that the $54MM part will be funded by equity offer, but they also mentioned that it is conditioned by "the pricing of an offering of senior secured debt securities of the Issuers prior to the Redemption Date". What is this new senior secured debt for and how much will it be? Will it be used to take out the 2017 PIK notes? It may refer to the pricing of the equity offering. If they are planning to take out the 2017 PIK , don't they have to give a 30 day notice to the reserve group according to this section? Financing Letter Agreement On the Closing Date, FELP, Reserves, certain investors in Reserves (together with Reserves, the “Reserves Investor Group”) and Murray Energy entered into a letter agreement (“Financing Letter Agreement”) that grants certain rights and imposes certain obligations on the Reserves Investor Group, Murray Energy and the Partnership with respect to the redemption of all of the Exchangeable PIK Notes. Pursuant to the Financing Letter Agreement, if the Partnership proposes to consummate an Exchangeable PIK Note Retirement, the Partnership must deliver to the Reserves Investor Group notice of the proposed Exchangeable PIK Note Retirement, along with the expected material terms thereof, no less than 30 days prior to the consummation of such Exchangeable PIK Note Retirement. No later than 15 business days prior to the consummation of such Exchangeable PIK Note Retirement, the Partnership must deliver a second notice to the Reserves Investor Group that must include all the material terms of the Exchangeable PIK Note Retirement and copies of any agreements to be entered into with respect thereto, which may be delivered in draft form. Within 10 business days of receipt of the second notice described in the preceding sentence, each member of the Reserves Investor Group shall have the right to make an election with respect to the Exchangeable PIK Note Retirement (an “Election”) which shall entitle such person or entity to: (i) continue to hold all of the Exchangeable PIK Notes then held by such person or entity and receive payment in full in connection with the Exchangeable PIK Note Retirement on the same terms as the holders of Exchangeable PIK Notes who are not members of the Reserves Investor Group; (ii) exchange the Exchangeable PIK Notes then held by such person or entity (subject to an aggregate cap on all Exchangeable PIK Notes held by the Reserves Investor Group of $180.0 million in principal plus an amount of additional principal issued in consideration of accrued and unpaid interest (the “Reserves Investor Group Amount”)) for the securities or other instruments to be issued in the Exchangeable PIK Note Retirement in an aggregate principal amount equal to the Exchangeable PIK Notes held by such person or entity (subject to the Reserves Investor Group Amount); or (iii) any combination of (i) and (ii) immediately above. To the extent any member of the Reserves Investor Group elects to exchange any portion of the Exchangeable PIK Notes held by such person or entity under the terms described in the preceding sentence, the Partnership and Murray Energy must promptly enter into, and subsequently perform, such agreements or arrangements, and to cause each of their financing providers to enter to such agreement or arrangements as may be necessary or advisable to effectuate such exchange. Link to comment Share on other sites More sharing options...
heth247 Posted February 25, 2017 Share Posted February 25, 2017 It seems to me that the $54MM part will be funded by equity offer, but they also mentioned that it is conditioned by "the pricing of an offering of senior secured debt securities of the Issuers prior to the Redemption Date". What is this new senior secured debt for and how much will it be? Will it be used to take out the 2017 PIK notes? It may refer to the pricing of the equity offering. If they are planning to take out the 2017 PIK , don't they have to give a 30 day notice to the reserve group according to this section? Financing Letter Agreement On the Closing Date, FELP, Reserves, certain investors in Reserves (together with Reserves, the “Reserves Investor Group”) and Murray Energy entered into a letter agreement (“Financing Letter Agreement”) that grants certain rights and imposes certain obligations on the Reserves Investor Group, Murray Energy and the Partnership with respect to the redemption of all of the Exchangeable PIK Notes. Pursuant to the Financing Letter Agreement, if the Partnership proposes to consummate an Exchangeable PIK Note Retirement, the Partnership must deliver to the Reserves Investor Group notice of the proposed Exchangeable PIK Note Retirement, along with the expected material terms thereof, no less than 30 days prior to the consummation of such Exchangeable PIK Note Retirement. No later than 15 business days prior to the consummation of such Exchangeable PIK Note Retirement, the Partnership must deliver a second notice to the Reserves Investor Group that must include all the material terms of the Exchangeable PIK Note Retirement and copies of any agreements to be entered into with respect thereto, which may be delivered in draft form. Within 10 business days of receipt of the second notice described in the preceding sentence, each member of the Reserves Investor Group shall have the right to make an election with respect to the Exchangeable PIK Note Retirement (an “Election”) which shall entitle such person or entity to: (i) continue to hold all of the Exchangeable PIK Notes then held by such person or entity and receive payment in full in connection with the Exchangeable PIK Note Retirement on the same terms as the holders of Exchangeable PIK Notes who are not members of the Reserves Investor Group; (ii) exchange the Exchangeable PIK Notes then held by such person or entity (subject to an aggregate cap on all Exchangeable PIK Notes held by the Reserves Investor Group of $180.0 million in principal plus an amount of additional principal issued in consideration of accrued and unpaid interest (the “Reserves Investor Group Amount”)) for the securities or other instruments to be issued in the Exchangeable PIK Note Retirement in an aggregate principal amount equal to the Exchangeable PIK Notes held by such person or entity (subject to the Reserves Investor Group Amount); or (iii) any combination of (i) and (ii) immediately above. To the extent any member of the Reserves Investor Group elects to exchange any portion of the Exchangeable PIK Notes held by such person or entity under the terms described in the preceding sentence, the Partnership and Murray Energy must promptly enter into, and subsequently perform, such agreements or arrangements, and to cause each of their financing providers to enter to such agreement or arrangements as may be necessary or advisable to effectuate such exchange. True, but can they just issue the senior debt for now and take out 2017 PIK later? Maybe they saw an opportunity in the debt market and want to take advantage of it. That might be also why they have to issue $54MM more equity for now at ~$6.50. Just some speculations. I am not an expert of these things. Link to comment Share on other sites More sharing options...
valcont Posted February 25, 2017 Share Posted February 25, 2017 True, but can they just issue the senior debt for now and take out 2017 PIK later? Maybe they saw an opportunity in the debt market and want to take advantage of it. That might be also why they have to issue $54MM more equity for now at ~$6.50. Just some speculations. I am not an expert of these things. They can't. There are indentures in place to not assume more debt unless its a payment/refinance of an existing one. Link to comment Share on other sites More sharing options...
gadfly Posted February 25, 2017 Share Posted February 25, 2017 True, but can they just issue the senior debt for now and take out 2017 PIK later? Maybe they saw an opportunity in the debt market and want to take advantage of it. That might be also why they have to issue $54MM more equity for now at ~$6.50. Just some speculations. I am not an expert of these things. If you assume the repriced YTM on the 2021 notes should be something like 6%, it looks like they are only saving about 5 million dollars doing this. That seems strange to do if Murray isn't participating in the equity offering. Why offer more common units to save 5 million dollars and screw Murray if it's done at current prices? So hopefully this meanings something bigger is happening... They can commence the "Murray Purchase" without refinancing the 2021 notes right? Link to comment Share on other sites More sharing options...
Picasso Posted February 25, 2017 Author Share Posted February 25, 2017 It's tricky to figure out what exactly is being refinanced here. Here's what I do know.... The 2021 debt doesn't allow for cash coupons or any maturities before 2021 when addressing the 2017 refinance. They could refinance all $300+ million of the 2021 debt but it's pretty steep ($115 with accrued interest). They did add previously missed coupon payments in new 2021 debt, so total leverage has gone up a bit as well as higher accruals from the bump in coupon payments. If I were running Foresight I guess what I could attempt to do (or in this case what Goldman might be recommending), is use some combination of equity and cash on the balance sheet to reduce total leverage. With $50 million of equity issuance and $100 million on the balance sheet you could do a few things... 1) pay down the PIK by $100 million and work on refinancing the remaining $200 million + accrued, 2) pay down $50 million of the 2021 at $110 by clawing it back in. Anyone who owns that 2021 will now have to worry about losing an 11% note. So maybe it would make them amenable to some waiver on the cash coupon/maturity. Instead of getting called in this year or next year, maybe they'll take some $6 consent fee. I'd probably take another $6 if it meant holding onto that 2L at 11% with some nice call premium in 2018 and 2019. And total leverage has been taken down by $150 million or so which improves the credit of it anyway, 3) now you can issue $200 million or so in new secured 2022 secured notes with some cash coupon (actually a market for that right now) and total dilution would be somewhere around $50 million which only adds 9 million units. That's a decent outcome for Murray. Otherwise without that consent you're looking at new convertible PIK debt with 2022 debt or something where only Murray and Cline participate (who else would buy that kind of paper?). You don't need Goldman to market that security, I'll tell you right now that no one would buy it. Plus they mention in the 8-K some new senior secured bond as part of the 2021 clawback. Or they just issue a bunch of equity for $200 million, but why do it now and not closer to maturity if they'll generate another $100 million by October? Equity issuance at $6 sucks for Murray. And some new convertible PIK note might keep a lid on price appreciation which prevents Murray from selling anything down into Foresight for a long time. Cline will take 60% of it and then Cline will get $2.90 of accrued distributions on it. Hypothetically that would be another 20 million units going to Cline, or another $58 million of cash that would need to be generated for those units on top of the already exiting common units before Murray could convert his subs. Would seem like an unusual decision for Murray to let that happen. Plus they wouldn't even need to do any of this 2021 clawback if they were going to suck it up and issue that much equity. We won't know for a month and it's probably not worth the time to speculate until we get more details... By the way, this is probably my last post on FELP on this board. It's been a blast but I'd like to post on other ideas :) Link to comment Share on other sites More sharing options...
Patmo Posted February 25, 2017 Share Posted February 25, 2017 By the way, this is probably my last post on FELP on this board. It's been a blast but I'd like to post on other ideas :) At first I was like... But then I was like... Can't wait to see what you have up your sleeve, your ideas are super flavorful and it's a treat to even just follow the stories as they develop Link to comment Share on other sites More sharing options...
heth247 Posted February 25, 2017 Share Posted February 25, 2017 By the way, this is probably my last post on FELP on this board. It's been a blast but I'd like to post on other ideas :) At first I was like... But then I was like... Can't wait to see what you have up your sleeve, your ideas are super flavorful and it's a treat to even just follow the stories as they develop Picasso, Hope it is just "probably", not "definitely", your last post here. We will miss you, but look forward to your new ideas. thanks. Link to comment Share on other sites More sharing options...
awindenberger Posted February 26, 2017 Share Posted February 26, 2017 By the way, this is probably my last post on FELP on this board. It's been a blast but I'd like to post on other ideas :) At first I was like... But then I was like... Can't wait to see what you have up your sleeve, your ideas are super flavorful and it's a treat to even just follow the stories as they develop Picasso, Hope it is just "probably", not "definitely", your last post here. We will miss you, but look forward to your new ideas. thanks. I'm definitely looking forward to these new ideas Picasso, but it seems to me that the FELP story is nowhere near finished. Link to comment Share on other sites More sharing options...
Picasso Posted February 26, 2017 Author Share Posted February 26, 2017 Agreed, still a ways to go but I'll probably have to file my ownership in FELP in the future and for other compliance/OPM issues it's probably better to keep quiet on this position. Link to comment Share on other sites More sharing options...
Guest roark33 Posted March 1, 2017 Share Posted March 1, 2017 https://www.sec.gov/Archives/edgar/data/1540729/000095014217000446/eh1700349_8k.htm In the event the foregoing transactions are consummated, Murray Energy is also expected to exercise its option (“FEGP Option”) to acquire an additional 46% voting interest in Foresight Energy GP LLC, a Delaware limited liability company and the general partner of the Company (“FEGP”), from Foresight Reserves LP (“Reserves”) and Michael J. Beyer (“Beyer”) pursuant to the terms of that certain option agreement, dated April 16, 2015, among Murray Energy, Reserves and Beyer, as amended, thereby increasing Murray Energy’s voting interest in FEGP to 80%. Link to comment Share on other sites More sharing options...
awindenberger Posted March 1, 2017 Share Posted March 1, 2017 It looks like FELP is working to refinance all their long term debt, but I'm a bit confused by one aspect. If we add up the total of their current debt outstanding, its $1,350M. Yet the new debt totals only $1,000M. Does this mean the convertible PIK is going to be converted into new shares? I was hoping it would simply be fully refinanced. Link to comment Share on other sites More sharing options...
valcont Posted March 1, 2017 Share Posted March 1, 2017 It looks like FELP is working to refinance all their long term debt, but I'm a bit confused by one aspect. If we add up the total of their current debt outstanding, its $1,350M. Yet the new debt totals only $1,000M. Does this mean the convertible PIK is going to be converted into new shares? I was hoping it would simply be fully refinanced. No it clearly says the PIKs are going to be refinanced (except the $50m part) the Issuers’ approximately $300 million in aggregate principal amount of Second Lien Senior Secured Exchangeable PIK Notes due 2017 (the “Exchangeable PIK Notes”), including accrued and unpaid interest thereon; and Link to comment Share on other sites More sharing options...
Patmo Posted March 1, 2017 Share Posted March 1, 2017 It looks like FELP is working to refinance all their long term debt, but I'm a bit confused by one aspect. If we add up the total of their current debt outstanding, its $1,350M. Yet the new debt totals only $1,000M. Does this mean the convertible PIK is going to be converted into new shares? I was hoping it would simply be fully refinanced. They are only refinancing the PIK's and revolver. There's 300mil in term loans due 2020 and 135mil total in AR financing, longwall financing, and capital leases that are not being refinanced. Seems structured so they can start dishing out distributions again since they're not refinancing the 2020 loans and I don't think these loans restricted that, plus the interest rate and maturity date on the 2020 loans are also pretty manageable so it might not be worth refinancing if there is no distribution restriction God I'm tired this morning I can't collect my thoughts... 5 edits on this post And another edit, the term loans are being refinanced too... Just adding this comment won't bother to update the rest of the post... This means there is a shortfall in financing of at least 380mil? Link to comment Share on other sites More sharing options...
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