hardincap Posted November 10, 2015 Share Posted November 10, 2015 I don't believe they said the $50-60M capex budgeted for next year excludes the full scale bleed treatment solution. They've already started engineering it. Either way, they need to add liquidity. Hopefully the ATM never gets used at anywhere near these prices. Link to comment Share on other sites More sharing options...
str8shot Posted November 10, 2015 Share Posted November 10, 2015 I don't believe they said the $50-60M capex budgeted for next year excludes the full scale bleed treatment solution. They've already started engineering it. Either way, they need to add liquidity. Hopefully the ATM never gets used at anywhere near these prices. Yes that's a good catch, thank you. I looked at the call transcript and they were actually referring to a prospective expansion of EAF dust recycling capacity in response to an analyst question when they mentioned the exclusion to 2016's capex budget. To your point, they have started engineering the full scale bleed treatment solution and expect to have a better projection of total cost and delivery timing in several weeks. For now they have tentatively estimated the total cost at $15M, which is included in next year's $50-60M capex allocation, most of which is targeted for Mooresboro. Link to comment Share on other sites More sharing options...
kranthi_vic Posted November 11, 2015 Share Posted November 11, 2015 One big problem they have with their capacity expansion plan is the 18% reduction in EAF dust. Which is the feed into the plant. This is a structural problem that cant be resolved very soon..im really worried abt this.. Link to comment Share on other sites More sharing options...
cmlber Posted November 11, 2015 Share Posted November 11, 2015 One big problem they have with their capacity expansion plan is the 18% reduction in EAF dust. Which is the feed into the plant. This is a structural problem that cant be resolved very soon..im really worried abt this.. If the plant is working this isn't an issue. And if the plant isn't working, this doesn't matter. They can purchase scrap feedstock to replace dust, it's lower margin but still very high margin. Link to comment Share on other sites More sharing options...
kranthi_vic Posted November 11, 2015 Share Posted November 11, 2015 Cmlber, Do you have any horsehead presentation reg. Scrap metal and the associated costs, that you can share. They only talked abt EAF dust capacity expansion plans on the call. Link to comment Share on other sites More sharing options...
finetrader Posted November 11, 2015 Share Posted November 11, 2015 July 2017! There facing a wall of debt repayment at that time. If they can't show some good cash flow to lenders till then, equity will probably be worthless in my opinion. Rolling over the debt won't be easy let me tell you that Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted November 11, 2015 Share Posted November 11, 2015 July 2017! There facing a wall of debt repayment at that time. If they can't show some good cash flow to lenders till then, equity will probably be worthless in my opinion. Rolling over the debt won't be easy let me tell you that If you assume management hits their stated 60% utilization in Q1 16, what makes you think breakeven 75% utilization by end of Q2 17 is so unattainable? Link to comment Share on other sites More sharing options...
AzCactus Posted November 11, 2015 Share Posted November 11, 2015 July 2017! There facing a wall of debt repayment at that time. If they can't show some good cash flow to lenders till then, equity will probably be worthless in my opinion. Rolling over the debt won't be easy let me tell you that If you assume management hits their stated 60% utilization in Q1 16, what makes you think breakeven 75% utilization by end of Q2 17 is so unattainable? Hasn't management so far over-promised and under-delivered. I would ask what makes you think that they will achieve their 60% figure? Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted November 11, 2015 Share Posted November 11, 2015 July 2017! There facing a wall of debt repayment at that time. If they can't show some good cash flow to lenders till then, equity will probably be worthless in my opinion. Rolling over the debt won't be easy let me tell you that If you assume management hits their stated 60% utilization in Q1 16, what makes you think breakeven 75% utilization by end of Q2 17 is so unattainable? Hasn't management so far over-promised and under-delivered. I would ask what makes you think that they will achieve their 60% figure? Hence the if statement. There's obviously risk that management will under-deliver again which I recognize, but with that said, they have been increasingly granular and articulate with their status updates and near term remediation plans. The addition of the new executive who left his executive position at the top zinc producer in North America (once again, he could have had shady reasons for doing this, but I put this in the "pros" column), who is a fresh set of eyes and incredibly experienced in the field, stood behind every update that Hensler was making regarding anode replacement and transitioning to the full scale bleed treatment. Additionally, he basically attested to the fact that there's little doubt in his head that they will reach full capacity (there's nothing fundamentally wrong with plant - its a matter of how much capex are required at this point). I'm of the opinion (maybe wrongfully so) that even after assuming full $50mm ATM dilution, there is significant upside at current prices (assuming the dilution is executed at a price > $1). Nobody is saying this is a sure thing/slam dunk without risk... but I once against stand behind the fact that this a heavily outweighted asymmetrical risk/reward bet at ~3 a share. In an ideal world, you'd have a basket of 5-10 of these. Link to comment Share on other sites More sharing options...
finetrader Posted November 11, 2015 Share Posted November 11, 2015 Even if they break even in 2017, they have to repay something like 350M$ july 2017. Who is going to lend them the money to repay those bondholders? I say the value probably lies in the bond. Link to comment Share on other sites More sharing options...
goldfinger Posted November 12, 2015 Share Posted November 12, 2015 Even if they break even in 2017, they have to repay something like 350M$ july 2017. Who is going to lend them the money to repay those bondholders? I say the value probably lies in the bond. Pierre Espesis - Private Investor Okay. Broadly how are the states of the credit markets right now for your space, you've got some debt coming up in 2017, any movement on that in terms of rolling that over, any interest, anything that you want to comment on? Jim Hensler - President & CEO Well we've had discussion around that in the past there is, we think there is some time it's not until we get probably further into '16 that has make sense from a timing standpoint, we believe we'll have the opportunity to have some trailing improved performance from Mooresboro behind us. And I think when you look at secured debt, in particular, we have all this focus on Mooresboro very importantly but we've got an extremely valuable attractive security package when we've got four EAF dust recycling plants out there plus the INMETCO facility in Zochem and in the Mooresboro plant. So there is a tremendous amount of fixed assets out there from a security standpoint as we talk to some of our secured holders, they are very interested and continuing forward, we think there will be a desire -- there would certainly be desire on our part to extend maturities out and move call dates out. But how do that exactly would be speculation, we don't see that as something that occurs until closer to mid-year 2016 probably. Link to comment Share on other sites More sharing options...
finetrader Posted November 12, 2015 Share Posted November 12, 2015 we can run different scenarios, optimistic and pessimistic ones.. But there is nonetheless a WALL of debt repayment coming in 18 months. I think some debtholders might be tempted to wipe existing shareholders and exchange their debt for fresh equity Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted November 12, 2015 Share Posted November 12, 2015 we can run different scenarios, optimistic and pessimistic ones.. But there is nonetheless a WALL of debt repayment coming in 18 months. I think some debtholders might be tempted to wipe existing shareholders and exchange their debt for fresh equity I'm not saying you're wrong, but you seem to be making just as many assumptions as the bull case. There's a decent probability (I think an argument can be made >50%), that breakeven utilization will occur before the debt repayment which would likely yield beneficial to the equity holders. Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted November 12, 2015 Share Posted November 12, 2015 At the end of the day though, would sure be nice to see management buying more at these prices if they are as confident as they claimed on the recent conference call Link to comment Share on other sites More sharing options...
widenthemoat Posted November 12, 2015 Share Posted November 12, 2015 At the end of the day though, would sure be nice to see management buying more at these prices if they are as confident as they claimed on the recent conference call Looks like your wish is Robert's command. http://www.sec.gov/Archives/edgar/data/1216622/000120919115079505/xslF345X03/doc4.xml Link to comment Share on other sites More sharing options...
AzCactus Posted November 12, 2015 Share Posted November 12, 2015 At the end of the day though, would sure be nice to see management buying more at these prices if they are as confident as they claimed on the recent conference call Looks like your wish is Robert's command. http://www.sec.gov/Archives/edgar/data/1216622/000120919115079505/xslF345X03/doc4.xml Is my math wrong or was this a small (about $25,000) transaction? Link to comment Share on other sites More sharing options...
cmlber Posted November 12, 2015 Share Posted November 12, 2015 http://www.businesswire.com/news/home/20151111006444/en/Zochem-Global-Establishes-Distribution-Center-Rotterdam This is a somewhat bizarre press release... Why would they issue a press release about setting up a random distribution center in the Netherlands and talking about the great opportunity Zochem has in this environment? My guess is they are looking to sell it and trying to make it as attractive as possible for a buyer. Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted November 12, 2015 Share Posted November 12, 2015 At the end of the day though, would sure be nice to see management buying more at these prices if they are as confident as they claimed on the recent conference call Looks like your wish is Robert's command. http://www.sec.gov/Archives/edgar/data/1216622/000120919115079505/xslF345X03/doc4.xml Is my math wrong or was this a small (about $25,000) transaction? You're correct. He did the same back back in early September (bought 10k shares) when there was a lot of negative buzz as well. Probably pretty immaterial in the context of how much this dude makes. He's bought $100k cost between Sept and today. Link to comment Share on other sites More sharing options...
cmlber Posted November 12, 2015 Share Posted November 12, 2015 At the end of the day though, would sure be nice to see management buying more at these prices if they are as confident as they claimed on the recent conference call Looks like your wish is Robert's command. http://www.sec.gov/Archives/edgar/data/1216622/000120919115079505/xslF345X03/doc4.xml Is my math wrong or was this a small (about $25,000) transaction? You're correct. He did the same back back in early September (bought 10k shares) when there was a lot of negative buzz as well. Probably pretty immaterial in the context of how much this dude makes. He's bought $100k cost between Sept and today. Base salary is $300k, so it's not immaterial. Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted November 12, 2015 Share Posted November 12, 2015 At the end of the day though, would sure be nice to see management buying more at these prices if they are as confident as they claimed on the recent conference call Looks like your wish is Robert's command. http://www.sec.gov/Archives/edgar/data/1216622/000120919115079505/xslF345X03/doc4.xml Is my math wrong or was this a small (about $25,000) transaction? You're correct. He did the same back back in early September (bought 10k shares) when there was a lot of negative buzz as well. Probably pretty immaterial in the context of how much this dude makes. He's bought $100k cost between Sept and today. Base salary is $300k, so it's not immaterial. I think total comp would be more relevant - I can go looking for it later Link to comment Share on other sites More sharing options...
cmlber Posted November 12, 2015 Share Posted November 12, 2015 At the end of the day though, would sure be nice to see management buying more at these prices if they are as confident as they claimed on the recent conference call Looks like your wish is Robert's command. http://www.sec.gov/Archives/edgar/data/1216622/000120919115079505/xslF345X03/doc4.xml Is my math wrong or was this a small (about $25,000) transaction? You're correct. He did the same back back in early September (bought 10k shares) when there was a lot of negative buzz as well. Probably pretty immaterial in the context of how much this dude makes. He's bought $100k cost between Sept and today. Base salary is $300k, so it's not immaterial. I think total comp would be more relevant - I can go looking for it later Agreed, I would say it's not material and it's not immaterial, it's somewhere in the middle. Total comp this year probably won't be much higher than salary though, how can they get bonuses with what's going on? Link to comment Share on other sites More sharing options...
Agrippa07 Posted November 12, 2015 Share Posted November 12, 2015 At the end of the day though, would sure be nice to see management buying more at these prices if they are as confident as they claimed on the recent conference call Looks like your wish is Robert's command. http://www.sec.gov/Archives/edgar/data/1216622/000120919115079505/xslF345X03/doc4.xml Is my math wrong or was this a small (about $25,000) transaction? You're correct. He did the same back back in early September (bought 10k shares) when there was a lot of negative buzz as well. Probably pretty immaterial in the context of how much this dude makes. He's bought $100k cost between Sept and today. Base salary is $300k, so it's not immaterial. I think total comp would be more relevant - I can go looking for it later Agreed, I would say it's not material and it's not immaterial, it's somewhere in the middle. Total comp this year probably won't be much higher than salary though, how can they get bonuses with what's going on? According to morningstar http://insiders.morningstar.com/trading/executive-compensation.action?t=ZINC®ion=USA&culture=en_US this was their total compesation: Name/Title 2010 2011 2012 2013 2014 Key Executive Compensation 2,143,383 2,648,407 3,092,946 3,582,761 3,460,340 James M. Hensler/President and Chief Executive Officer 1,500,603 1,862,367 1,932,391 2,106,380 2,011,390 Robert D. Scherich/Vice President and Chief Financial Officer 642,780 751,761 765,595 817,904 776,676 Gary R. Whitaker/Vice President, General Counsel and Secretary - 34,279 394,960 658,477 672,274 Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted November 12, 2015 Share Posted November 12, 2015 At the end of the day though, would sure be nice to see management buying more at these prices if they are as confident as they claimed on the recent conference call Looks like your wish is Robert's command. http://www.sec.gov/Archives/edgar/data/1216622/000120919115079505/xslF345X03/doc4.xml Is my math wrong or was this a small (about $25,000) transaction? You're correct. He did the same back back in early September (bought 10k shares) when there was a lot of negative buzz as well. Probably pretty immaterial in the context of how much this dude makes. He's bought $100k cost between Sept and today. Base salary is $300k, so it's not immaterial. I think total comp would be more relevant - I can go looking for it later Agreed, I would say it's not material and it's not immaterial, it's somewhere in the middle. Total comp this year probably won't be much higher than salary though, how can they get bonuses with what's going on? According to morningstar http://insiders.morningstar.com/trading/executive-compensation.action?t=ZINC®ion=USA&culture=en_US this was their total compesation: Name/Title 2010 2011 2012 2013 2014 Key Executive Compensation 2,143,383 2,648,407 3,092,946 3,582,761 3,460,340 James M. Hensler/President and Chief Executive Officer 1,500,603 1,862,367 1,932,391 2,106,380 2,011,390 Robert D. Scherich/Vice President and Chief Financial Officer 642,780 751,761 765,595 817,904 776,676 Gary R. Whitaker/Vice President, General Counsel and Secretary - 34,279 394,960 658,477 672,274 So if you take 30% off of his aggregate comp for the last 5 years for taxes, the $100k in recent purchases is about 4% of his take home pay of the last 5 years. If you take 30% off of his FY14 compensation, the $100k in recent purchases is 18% of his take home pay of the last year. Not sure about you guys, but I'd consider that sizable if I scale it to my annual compensation. Link to comment Share on other sites More sharing options...
hardincap Posted November 12, 2015 Share Posted November 12, 2015 http://www.businesswire.com/news/home/20151111006444/en/Zochem-Global-Establishes-Distribution-Center-Rotterdam This is a somewhat bizarre press release... Why would they issue a press release about setting up a random distribution center in the Netherlands and talking about the great opportunity Zochem has in this environment? My guess is they are looking to sell it and trying to make it as attractive as possible for a buyer. I thought this was strange as well. If they can get a reasonable price for it, it seems to be a no brainer to sell it at this point. $68m in liquidity currently vs $60m in capex needs alone for the next 12mo, which, given management's track record is an optimistic number. Link to comment Share on other sites More sharing options...
cmlber Posted November 12, 2015 Share Posted November 12, 2015 http://www.businesswire.com/news/home/20151111006444/en/Zochem-Global-Establishes-Distribution-Center-Rotterdam This is a somewhat bizarre press release... Why would they issue a press release about setting up a random distribution center in the Netherlands and talking about the great opportunity Zochem has in this environment? My guess is they are looking to sell it and trying to make it as attractive as possible for a buyer. I thought this was strange as well. If they can get a reasonable price for it, it seems to be a no brainer to sell it at this point. $68m in liquidity currently vs $60m in capex needs alone for the next 12mo, which, given management's track record is an optimistic number. Even an unreasonable price is a no brainer over issuing equity here. They'll probably need to do both, but if they can raise $100m+ through a combination of selling Zochem and equity issuance there would be a lot more breathing room. Link to comment Share on other sites More sharing options...
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