valcont Posted March 1, 2017 Share Posted March 1, 2017 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, but the interest rate on the 2020 loans is also pretty good so it might just be to lower the cost of borrowing too... Or two birds with one stone *Note that the revolver had lower effective interest than the 2020 loans so probably intent is to extend maturity dates moreso than lower cost, which makes more sense overall right now So no equity dilution which the market was dreading. And the reaction is pretty muted. Link to comment Share on other sites More sharing options...
sampr01 Posted March 1, 2017 Share Posted March 1, 2017 Murray is contributing $60m directly or indirectly. I think previous agreement requires him to pay $15 mill to obtain additional voting power. So, we expecting common dilution for $45m. 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, but the interest rate on the 2020 loans is also pretty good so it might just be to lower the cost of borrowing too... Or two birds with one stone *Note that the revolver had lower effective interest than the 2020 loans so probably intent is to extend maturity dates moreso than lower cost, which makes more sense overall right now So no equity dilution which the market was dreading. And the reaction is pretty muted. Link to comment Share on other sites More sharing options...
Patmo Posted March 1, 2017 Share Posted March 1, 2017 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, but the interest rate on the 2020 loans is also pretty good so it might just be to lower the cost of borrowing too... Or two birds with one stone *Note that the revolver had lower effective interest than the 2020 loans so probably intent is to extend maturity dates moreso than lower cost, which makes more sense overall right now So no equity dilution which the market was dreading. And the reaction is pretty muted. Yeah, I think the real catalyst (at least in stock price, not so much in stock value) will come the day they start distributing again, stock will shoot up to 12-14 out of nowhere when the yield guys somersault back into the pool. They'll distribute at a floor amount of $1.35/unit per year (what's that, $90mil per year before the subs kick in? With $250mil in FCF coming in 2017, hardly a tough task) Also the refinance is not completed yet, just being announced, but I doubt it matters, with the results FELP produced, debt guys should be pretty at ease with this? Link to comment Share on other sites More sharing options...
Patmo Posted March 1, 2017 Share Posted March 1, 2017 Murray is contributing $60m directly or indirectly. I think previous agreement requires him to pay $25 mill to obtain additional voting power. So, we expecting common dilution for $35m. 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, but the interest rate on the 2020 loans is also pretty good so it might just be to lower the cost of borrowing too... Or two birds with one stone *Note that the revolver had lower effective interest than the 2020 loans so probably intent is to extend maturity dates moreso than lower cost, which makes more sense overall right now So no equity dilution which the market was dreading. And the reaction is pretty muted. I thought the $60mil was meant for the increased GP stake, just not directly mentioned. Would that be too cheap? What is the exercise price on his option? Found it, option is $15mil, so I guess the "directly or indirectly" part means that $15mil will come from the option and $45mil from equity issuance to Murray? Link to comment Share on other sites More sharing options...
sampr01 Posted March 1, 2017 Share Posted March 1, 2017 No idea about strike price, but 8K clearly states directly or indirectly contribute $60m. But based on 2015 purchase agreement, Murray can acquire additional control by paying $15m. Thanks Patmo Murray is contributing $60m directly or indirectly. I think previous agreement requires him to pay $25 mill to obtain additional voting power. So, we expecting common dilution for $35m. 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, but the interest rate on the 2020 loans is also pretty good so it might just be to lower the cost of borrowing too... Or two birds with one stone *Note that the revolver had lower effective interest than the 2020 loans so probably intent is to extend maturity dates moreso than lower cost, which makes more sense overall right now So no equity dilution which the market was dreading. And the reaction is pretty muted. I thought the $60mil was meant for the increased GP stake, just not directly mentioned. Would that be too cheap? What is the exercise price on his option? Link to comment Share on other sites More sharing options...
valcont Posted March 1, 2017 Share Posted March 1, 2017 So after this refinancing, Murray will still need to pay the MQD to the unit holders to get the subs converted. If I remember correctly there were some arrearages + $2.025 that he needs to pay out after March 31st . That would get the total outstanding units to 130m. They didn't talk about the outstanding warrants but that would dilute the unit holders further. They did $308m EBITDA last year, if you assume $100m interest expense and $50-60m maintenance , you are getting roughly $1 of DCF with 130m units. What do you guys think? Link to comment Share on other sites More sharing options...
gadfly Posted March 1, 2017 Share Posted March 1, 2017 So after this refinancing, Murray will still need to pay the MQD to the unit holders to get the subs converted. If I remember correctly there were some arrearages + $2.025 that he needs to pay out after March 31st . That would get the total outstanding units to 130m. They didn't talk about the outstanding warrants but that would dilute the unit holders further. They did $308m EBITDA last year, if you assume $100m interest expense and $50-60m maintenance , you are getting roughly $1 of DCF with 130m units. What do you guys think? Say FELP comes out with $1.35 distribution for the first year. ARLP is currently 13x its distribution. Say FELP is 8x to account for the subs.. then you're looking at $10.8 share price and that will cost something like $105 million for FELP (I think) if you include the warrants and the new commons from the refi. Also, the beginning of 2016 was the bottom in export prices so $308 Adjusted EBITDA might be low going forward if things stay as they are currently. So if DCF going forward is more like $200 million then the MQD is no sweat. Currently the commons don't have worry about subs or IDRs and we get all the money. Because we get all the money it creates an incentive for Murray to do something to get his... Anyone have any idea when or how we'll find out if Reserves Group is taking their 60% of the new securities from the refi? If Cline doesn't take any equity at these prices that'd worry me... Link to comment Share on other sites More sharing options...
valcont Posted March 1, 2017 Share Posted March 1, 2017 Anyone have any idea when or how we'll find out if Reserves Group is taking their 60% of the new securities from the refi? If Cline doesn't take any equity at these prices that'd worry me... What do you mean? There is no equity being exchanged here. There are notes and credit facilities for all the outstanding PIKs Link to comment Share on other sites More sharing options...
gadfly Posted March 1, 2017 Share Posted March 1, 2017 Anyone have any idea when or how we'll find out if Reserves Group is taking their 60% of the new securities from the refi? If Cline doesn't take any equity at these prices that'd worry me... What do you mean? There is no equity being exchanged here. There are notes and credit facilities for all the outstanding PIKs From this mornings 8K "In connection with the foregoing, Murray Energy Corporation (“Murray Energy”) intends to contribute approximately $60.6 million in cash directly or indirectly to FELP in the form of common equity, with such proceeds further contributed to the Issuer (the “Murray Investment”). On February 24, 2017, the Issuers issued a conditional notice of redemption to redeem $54.5 million aggregate principal amount of the Second Lien Notes on the business day immediately prior to the closing of the offering of the New Notes (as defined below) at a redemption price equal to 110% of the principal thereof, plus accrued and unpaid interest to, but excluding, the redemption date (the “Equity Claw Redemption”). The Equity Claw Redemption is expected to be funded using the net proceeds from the Murray Investment. Link to comment Share on other sites More sharing options...
valcont Posted March 1, 2017 Share Posted March 1, 2017 From this mornings 8K "In connection with the foregoing, Murray Energy Corporation (“Murray Energy”) intends to contribute approximately $60.6 million in cash directly or indirectly to FELP in the form of common equity, with such proceeds further contributed to the Issuer (the “Murray Investment”). On February 24, 2017, the Issuers issued a conditional notice of redemption to redeem $54.5 million aggregate principal amount of the Second Lien Notes on the business day immediately prior to the closing of the offering of the New Notes (as defined below) at a redemption price equal to 110% of the principal thereof, plus accrued and unpaid interest to, but excluding, the redemption date (the “Equity Claw Redemption”). The Equity Claw Redemption is expected to be funded using the net proceeds from the Murray Investment. Right, that is to redeem the 2021s partially. The 2017 PIKs are being refinanced fully and thus reserves can not exercise equity exchange. Am I reading this right. I hate this f.. lawyer speak. "Furthermore, if Murray Energy elects to exercise its right to effect a Murray Purchase of: (i) all of the Exchangeable PIK Notes; or (ii) a portion of the Exchangeable PIK Notes in combination with an Exchangeable PIK Note Retirement of the remainder of the Exchangeable PIK Notes, in either case prior to October 2, 2017, each member of the Reserves Investor Group may elect to decline to have his or its Exchangeable PIK Notes purchased by Murray Energy and such Exchangeable PIK Notes shall instead exchange into Common Units in accordance with the Exchangeable PIK Notes Indenture." Link to comment Share on other sites More sharing options...
heth247 Posted March 1, 2017 Share Posted March 1, 2017 Anyone have any idea when or how we'll find out if Reserves Group is taking their 60% of the new securities from the refi? If Cline doesn't take any equity at these prices that'd worry me... What do you mean? There is no equity being exchanged here. There are notes and credit facilities for all the outstanding PIKs From this mornings 8K "In connection with the foregoing, Murray Energy Corporation (“Murray Energy”) intends to contribute approximately $60.6 million in cash directly or indirectly to FELP in the form of common equity, with such proceeds further contributed to the Issuer (the “Murray Investment”). On February 24, 2017, the Issuers issued a conditional notice of redemption to redeem $54.5 million aggregate principal amount of the Second Lien Notes on the business day immediately prior to the closing of the offering of the New Notes (as defined below) at a redemption price equal to 110% of the principal thereof, plus accrued and unpaid interest to, but excluding, the redemption date (the “Equity Claw Redemption”). The Equity Claw Redemption is expected to be funded using the net proceeds from the Murray Investment. Maybe that is the reason of the less exciting response by Market today? Market doesn't know at what price Murray participate. Link to comment Share on other sites More sharing options...
valcont Posted March 1, 2017 Share Posted March 1, 2017 Maybe that is the reason of the less exciting response by Market today? Market doesn't know at what price Murray participate. Ok there are two separate issues that we are talking here. 1. Murray injecting $60m to payoff some 2021 in exchange of common equity. 2. Reserves opting for equity exchange in lieu of refinance. I am only talking about point (2). That is not happening. That was $180m dilution. Link to comment Share on other sites More sharing options...
gadfly Posted March 1, 2017 Share Posted March 1, 2017 Maybe that is the reason of the less exciting response by Market today? Market doesn't know at what price Murray participate. Ok there are two separate issues that we are talking here. 1. Murray injecting $60m to payoff some 2021 in exchange of common equity. 2. Reserves opting for equity exchange in lieu of refinance. I am only talking about point (2). That is not happening. That was $180m dilution. My reading is that they are related issues. Reserves group is given the chance to participate in whatever new securities (including equity) that are created as a result of a refi of the 2017 PIK. Are you sure that thr 60.6 of Murray investments is going to the 2021 notes? I'm not. I give up until the 5pm call! from the restructuring docs: "If, after exchanging the entire Reserves Investor Group Amount, the Reserves Investor Group would not be the lender or holder of at least 60% of the total amount of the securities, debt or other instruments to be issued in the Exchangeable PIK Note Retirement, the Reserves Investor Group has the option under the Financing Letter Agreement to fund an additional amount in cash to purchase additional securities or interests on the same terms as other investors as may be necessary to make the Reserves Investor Group the holders of up to 60% of the total amount of such securities, debt or instruments, as applicable." Link to comment Share on other sites More sharing options...
valcont Posted March 1, 2017 Share Posted March 1, 2017 My reading is that they are related issues. Reserves group is given the chance to participate in whatever new securities (including equity) that are created as a result of a refi of the 2017 PIK. Are you sure that thr 60.6 of Murray investments is going to the 2021 notes? I'm not. "In connection with the foregoing, Murray Energy Corporation (“Murray Energy”) intends to contribute approximately $60.6 million in cash directly or indirectly to FELP in the form of common equity, with such proceeds further contributed to the Issuer (the “Murray Investment”). On February 24, 2017, the Issuers issued a conditional notice of redemption to redeem $54.5 million aggregate principal amount of the Second Lien Notes on the business day immediately prior to the closing of the offering of the New Notes (as defined below) at a redemption price equal to 110% of the principal thereof, plus accrued and unpaid interest to, but excluding, the redemption date (the “Equity Claw Redemption”). The Equity Claw Redemption is expected to be funded using the net proceeds from the Murray Investment." Link to comment Share on other sites More sharing options...
Patmo Posted March 1, 2017 Share Posted March 1, 2017 OK my previous posts were all messed up, here's what I think we're looking at: 2024 secured senior notes: 238.5mil (backed into, net of 78mil cash) New term loan: 750 mil New revolver: 170mil Commons issued to Murray: 45.6mil (about 6.5mil units issued out) Option on GP stake: 15mil Total 1.3bil refi'd, 12.5mil units dilution including warrants, new debt 1.16bil There is $1.5/unit in arrears before Murray can start getting distributions. Afterwards, if he chooses to convert to common units, will either have to wait for .3375/unit MQD's to have been steadily paid 3 years in a row, or "pay" a $2 fee to common holders. At least that's my understanding of it. Murray probably wants to "pay" out the $2 fee on top of arrears, 3 years straight of MQD's is not a done deal on 140mil total units... Unless he is actually going to take the co private, but he'll still have to true that up to unitholders on top of the going-forward value and the premium for take-out... Note: This trade had tons of appeal to me at the beginning, but not for the right reasons. It's slowly seeping in my thick skull, bit by bit, how genius it really was. At a price of $1.6 when the restructuring was virtually complete, this stock was essentially an unlocked ATM machine out in the open... It's ridiculous... Link to comment Share on other sites More sharing options...
awindenberger Posted March 1, 2017 Share Posted March 1, 2017 Note: This trade had tons of appeal to me at the beginning, but not for the right reasons. It's slowly seeping in my thick skull, bit by bit, how genius it really was. At a price of $1.6 when the restructuring was virtually complete, this stock was essentially an unlocked ATM machine out in the open... It's ridiculous... Yeah I think most of us, except for Picasso, didn't truly believe how cheap it was. Assuming things play out as you've laid out, it seems like another double from here is very much on the table. The only question is time-frame. Link to comment Share on other sites More sharing options...
PullTheTrigger Posted March 1, 2017 Share Posted March 1, 2017 No Freaking questions taken on call! Grrrr. Link to comment Share on other sites More sharing options...
awindenberger Posted March 1, 2017 Share Posted March 1, 2017 No Freaking questions taken on call! Grrrr. Why even have the call then. They could put their remarks in a press release. Link to comment Share on other sites More sharing options...
PullTheTrigger Posted March 1, 2017 Share Posted March 1, 2017 It seemed like they more or less just read the press release. Waste of time. Link to comment Share on other sites More sharing options...
gadfly Posted March 1, 2017 Share Posted March 1, 2017 My reading is that they are related issues. Reserves group is given the chance to participate in whatever new securities (including equity) that are created as a result of a refi of the 2017 PIK. Are you sure that thr 60.6 of Murray investments is going to the 2021 notes? I'm not. "In connection with the foregoing, Murray Energy Corporation (“Murray Energy”) intends to contribute approximately $60.6 million in cash directly or indirectly to FELP in the form of common equity, with such proceeds further contributed to the Issuer (the “Murray Investment”). On February 24, 2017, the Issuers issued a conditional notice of redemption to redeem $54.5 million aggregate principal amount of the Second Lien Notes on the business day immediately prior to the closing of the offering of the New Notes (as defined below) at a redemption price equal to 110% of the principal thereof, plus accrued and unpaid interest to, but excluding, the redemption date (the “Equity Claw Redemption”). The Equity Claw Redemption is expected to be funded using the net proceeds from the Murray Investment." Gotcha thanks, so what is the rationale for Murray taking any equity? Is it required for the refi? If they are refinancing 1.4 billion in debt (750 Term, 170 revolver and 500 2024 Notes) it seems like the credit demand is there so why bother with $60.6 million from Murray, especially if 15 mill of that is the Murray Option. Could Foresight have refinanced without this $60.6 from Murray, was it required? And yes that call was useless, I thought at the end Moore was going to say that magic word, "distributions", but no; I'll take, "extremely beneficial for our unit-holders"... for now. Link to comment Share on other sites More sharing options...
heth247 Posted March 2, 2017 Share Posted March 2, 2017 Note: This trade had tons of appeal to me at the beginning, but not for the right reasons. It's slowly seeping in my thick skull, bit by bit, how genius it really was. At a price of $1.6 when the restructuring was virtually complete, this stock was essentially an unlocked ATM machine out in the open... It's ridiculous... Yeah I think most of us, except for Picasso, didn't truly believe how cheap it was. Assuming things play out as you've laid out, it seems like another double from here is very much on the table. The only question is time-frame. If I recollection is correct, in one of his post, Picasso did say something like "this is like free money laying on the ground, but nobody is taking it".... ;) Link to comment Share on other sites More sharing options...
Patmo Posted March 2, 2017 Share Posted March 2, 2017 My reading is that they are related issues. Reserves group is given the chance to participate in whatever new securities (including equity) that are created as a result of a refi of the 2017 PIK. Are you sure that thr 60.6 of Murray investments is going to the 2021 notes? I'm not. "In connection with the foregoing, Murray Energy Corporation (“Murray Energy”) intends to contribute approximately $60.6 million in cash directly or indirectly to FELP in the form of common equity, with such proceeds further contributed to the Issuer (the “Murray Investment”). On February 24, 2017, the Issuers issued a conditional notice of redemption to redeem $54.5 million aggregate principal amount of the Second Lien Notes on the business day immediately prior to the closing of the offering of the New Notes (as defined below) at a redemption price equal to 110% of the principal thereof, plus accrued and unpaid interest to, but excluding, the redemption date (the “Equity Claw Redemption”). The Equity Claw Redemption is expected to be funded using the net proceeds from the Murray Investment." Gotcha thanks, so what is the rationale for Murray taking any equity? Is it required for the refi? If they are refinancing 1.4 billion in debt (750 Term, 170 revolver and 500 2024 Notes) it seems like the credit demand is there so why bother with $60.6 million from Murray, especially if 15 mill of that is the Murray Option. Could Foresight have refinanced without this $60.6 from Murray, was it required? And yes that call was useless, I thought at the end Moore was going to say that magic word, "distributions", but no; I'll take, "extremely beneficial for our unit-holders"... for now. Where'd you get the 2024 notes amount? Link to comment Share on other sites More sharing options...
gadfly Posted March 2, 2017 Share Posted March 2, 2017 My reading is that they are related issues. Reserves group is given the chance to participate in whatever new securities (including equity) that are created as a result of a refi of the 2017 PIK. Are you sure that thr 60.6 of Murray investments is going to the 2021 notes? I'm not. "In connection with the foregoing, Murray Energy Corporation (“Murray Energy”) intends to contribute approximately $60.6 million in cash directly or indirectly to FELP in the form of common equity, with such proceeds further contributed to the Issuer (the “Murray Investment”). On February 24, 2017, the Issuers issued a conditional notice of redemption to redeem $54.5 million aggregate principal amount of the Second Lien Notes on the business day immediately prior to the closing of the offering of the New Notes (as defined below) at a redemption price equal to 110% of the principal thereof, plus accrued and unpaid interest to, but excluding, the redemption date (the “Equity Claw Redemption”). The Equity Claw Redemption is expected to be funded using the net proceeds from the Murray Investment." Gotcha thanks, so what is the rationale for Murray taking any equity? Is it required for the refi? If they are refinancing 1.4 billion in debt (750 Term, 170 revolver and 500 2024 Notes) it seems like the credit demand is there so why bother with $60.6 million from Murray, especially if 15 mill of that is the Murray Option. Could Foresight have refinanced without this $60.6 from Murray, was it required? And yes that call was useless, I thought at the end Moore was going to say that magic word, "distributions", but no; I'll take, "extremely beneficial for our unit-holders"... for now. Where'd you get the 2024 notes amount? It was from an S&P leveraged loan reporter via twitter: Maybe she spoke with someone at the bondholder meeting today, not sure where she got it from.. Link to comment Share on other sites More sharing options...
Patmo Posted March 2, 2017 Share Posted March 2, 2017 Note: This trade had tons of appeal to me at the beginning, but not for the right reasons. It's slowly seeping in my thick skull, bit by bit, how genius it really was. At a price of $1.6 when the restructuring was virtually complete, this stock was essentially an unlocked ATM machine out in the open... It's ridiculous... Yeah I think most of us, except for Picasso, didn't truly believe how cheap it was. Assuming things play out as you've laid out, it seems like another double from here is very much on the table. The only question is time-frame. If I recollection is correct, in one of his post, Picasso did say something like "this is like free money laying on the ground, but nobody is taking it".... ;) Keep in mind Murray will now have 80% of the GP vote so he will control the board (as well as over 50% of LP units but no voting power at this layer) Link to comment Share on other sites More sharing options...
Green King Posted March 2, 2017 Share Posted March 2, 2017 It was from an S&P leveraged loan reporter via twitter: Maybe she spoke with someone at the bondholder meeting today, not sure where she got it from.. https://fred.stlouisfed.org/series/BAMLH0A3HYC/ Man has these moved. Link to comment Share on other sites More sharing options...
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