Picasso Posted August 13, 2016 Share Posted August 13, 2016 This is a short pitch and only suitable for those that can buy 144A/REGS debt. I'll start with an early 2015 quote from the colorful founder and CEO: "I have a decision tree. First by god, then by family. Number three on my list is not my employees, it's not my customers. It's my lenders. Then the customers, the employees, the public in general. It's the safest debt that you'll ever see, not just in our industry but any industry." Did I mention it's a coal company? Trades in the mid $20's, has an 11.25% coupon, matures in 2021. For various reasons I think these guys make it through and service the debt for at least another year. Which means you'll get close to half the investment back if I'm right about that, unless they skip the next interest payment and you end up overpaying on accrued. It's a private company; if you want to look at the financials you'll need to contact them and sign an NDA. So not a ton of discussion can take place on this board but there's a decent chance this turns into a 5x. You also probably need to buy at least $500k face, something to keep in mind before diving in too deep. These are D rated bonds, but who are you going to trust? S&P/Moody's (I've heard bad things about those two?) or the founder who has you up on his priority list with God? I know who I'm siding with. Again, this is a "somewhat" speculative bet so don't go too crazy. Link to comment Share on other sites More sharing options...
PullTheTrigger Posted August 13, 2016 Share Posted August 13, 2016 Murray has been in the press non stop recently telling his story of how Obama and the EPA are killing coal and how he is very close to bankruptcy and shedding all his workers. Is this just his typical m.o.? I mean there have been several comments recently at the coal conference that the lenders really don't want to own coal mines. Is this just typical Murray talk to possibly soften the lenders? Would certainly make sense. I can't participate much here but if it's Murray related, it's FELP related so I keep tabs on him. Link to comment Share on other sites More sharing options...
Picasso Posted August 13, 2016 Author Share Posted August 13, 2016 I think a combination of working with the lenders and union. Link to comment Share on other sites More sharing options...
sampr01 Posted August 13, 2016 Share Posted August 13, 2016 Hi Picasso, I am expecting this idea from you when I looked at their financial information (from last month). I think this will be home run and like them much better than WACky bonds. Is there a way to buy them in retirement acct or anyway circumvent 144A issue. ;D. Thanks I think a combination of working with the lenders and union. And it looks like they came to an agreement with the union last night. Link to comment Share on other sites More sharing options...
heth247 Posted August 25, 2016 Share Posted August 25, 2016 Thanks for this idea, Picasso, although I am not eligible to purchase... One question, if MEC defaults (just only a if) on its own debt, what is the implication for FELP? What I can think of is maximum dilution, since Murry will be unable to come up with funds to redeem the PIKs. Anything else? Link to comment Share on other sites More sharing options...
Picasso Posted August 25, 2016 Author Share Posted August 25, 2016 The notes traded up to 45 today, so might be too late to buy anyway. If not redeemed other ways the PIK's will convert at the VWAP, so to be safe I think we should factor in dilution based on a normalized stock price ahead of the refi. Half the share count at FELP is subordinated so the addition of more common units won't be nearly as bad. Obviously not great, but shouldn't be too terrible unless FELP is trading at $1. Link to comment Share on other sites More sharing options...
sampr01 Posted August 26, 2016 Share Posted August 26, 2016 Wow, $45 already from $15 with very attractive coupon. I was unable to buy bcz of my broker. Are planning on keeping these notes? The notes traded up to 45 today, so might be too late to buy anyway. If not redeemed other ways the PIK's will convert at the VWAP, so to be safe I think we should factor in dilution based on a normalized stock price ahead of the refi. Half the share count at FELP is subordinated so the addition of more common units won't be nearly as bad. Obviously not great, but shouldn't be too terrible unless FELP is trading at $1. Link to comment Share on other sites More sharing options...
heth247 Posted September 16, 2016 Share Posted September 16, 2016 Picasso, is there a CUSIP # that I can use to monitor MEC's note price change? thanks. Link to comment Share on other sites More sharing options...
Picasso Posted September 16, 2016 Author Share Posted September 16, 2016 Picasso, is there a CUSIP # that I can use to monitor MEC's note price change? thanks. Sure, CUSIP is 62704PAF0 Link to comment Share on other sites More sharing options...
Picasso Posted October 1, 2016 Author Share Posted October 1, 2016 Not sure if anyone else is in these notes, but they traded up to 60 today. Over a 100% return so far... Link to comment Share on other sites More sharing options...
sampr01 Posted October 1, 2016 Share Posted October 1, 2016 Not sure if anyone else is in these notes, but they traded up to 60 today. Over a 100% return so far... :) Damn you picasso, your calculator will not work when calculate your yearend returns at this pace. Link to comment Share on other sites More sharing options...
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