Guest anilpandit Posted January 7, 2016 Share Posted January 7, 2016 Just saw that the CEO gets close to 2 million as a compensation for the job! Link to comment Share on other sites More sharing options...
str8shot Posted January 7, 2016 Share Posted January 7, 2016 It means that we've been abused by management ineptitude for so long that it's starting to feel good. What puzzles me (seriously, not just being sarcastic) is how their current run rate in Nov & Dec 2015 (not counting days of shutdown) is around 106 tpd. At the same time, re Dec 2014: "We were particularly pleased that for extended periods in December the facility operate the near our estimated cash flow breakeven level after cash interest expense [at the prices prevailing then] of 230 tons per day." This does not appear to be anode-limited since they've been adding them through nov-dec without increasing production. So, after a ton of debottlenecking and fixes (bleed treatment, controllers, pumps, mixer tanks, bypass to first clarifier, new cooling fan, acid distribution system, hydrochloric acid recovery system, rebuilding carbon filters, refurbishing anodes, to name a few), as well as hiring Hatch and Greg Belland, the plant is running at (a sustained rate) of about half of the (peak-ish) rate of a year ago. It seems like quite a feat to deliver output this low after so many improvements. Scorpion's ramp wasn't like that... good point about operating at about half of where they were a year ago despite all the investments in fixes over the past year. clearly their sense of progress as of Dec 2014 was misleading and unsustainable, and flaws (not evident to a team in over their heads) were not going to enable them to scale fully. i can only relate, as an exec consultant who was brought in multiple times to take over "troubled" multi-year business transformation programs with multi-hundred million dollar budgets, that in my experience large, complex projects with many interdependent parts often go sideways or backwards in the short term (3-4 months) as the new leadership/consultants get a full grasp of the challenges and how best to resolve the root cause issues rather than bandaging cuts that will otherwise keep bleeding, en route to achieving the end goals as efficiently as possible. recent updates since Belland took over the plant ramp-up have revealed less and promised less. not good for the stock, but not surprising as they re-position and re-plan. come Feb 24 they will have to reveal their cards. and hopefully the Jan update, if they issue one, will begin to demonstrate a turnaround. Link to comment Share on other sites More sharing options...
Guest anilpandit Posted January 7, 2016 Share Posted January 7, 2016 there will no Jan update. We have to wait till next earning call. Link to comment Share on other sites More sharing options...
abitofvalue Posted January 7, 2016 Share Posted January 7, 2016 Just saw that the CEO gets close to 2 million as a compensation for the job! And that was without a bonus since they did not meet targets.. Nice job if you can get it I guess Link to comment Share on other sites More sharing options...
pdoak Posted January 7, 2016 Share Posted January 7, 2016 Clearly things are not going according to plan at Zinc. At some point, the plant will be working properly but it might not be soon enough for equity investors. With that in mind, has anyone looked at the 3.8% 07/01/2017 (http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C589105&symbol=ZINC3893598) as it is now trading at $20? Link to comment Share on other sites More sharing options...
Jurgis Posted January 7, 2016 Share Posted January 7, 2016 With that in mind, has anyone looked at the 3.8% 07/01/2017 (http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C589105&symbol=ZINC3893598) as it is now trading at $20? No inventory on Fido. Not much motivation to do further DD. ;) Clearly this is far superior to the common. Whether bond is attractive by itself, I don't really know (I'd have to read this whole huge thread I'd guess ;) ) Link to comment Share on other sites More sharing options...
rishig Posted January 7, 2016 Share Posted January 7, 2016 With that in mind, has anyone looked at the 3.8% 07/01/2017 (http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C589105&symbol=ZINC3893598) as it is now trading at $20? No inventory on Fido. Not much motivation to do further DD. ;) Clearly this is far superior to the common. Whether bond is attractive by itself, I don't really know (I'd have to read this whole huge thread I'd guess ;) ) How does one buy a bond like this? Link to comment Share on other sites More sharing options...
Picasso Posted January 7, 2016 Share Posted January 7, 2016 Have your broker see where CUSIP 440694AB3 is offered. Link to comment Share on other sites More sharing options...
Jurgis Posted January 7, 2016 Share Posted January 7, 2016 I think you can call Fido fixed income and they might try to find inventory (seller). Not sure if this would cost you extra. If Fido has no inventory for e-trades, I don't bother. But if you think it's a great deal, a call to human might get you some. :) Good luck Link to comment Share on other sites More sharing options...
RadMan24 Posted January 8, 2016 Share Posted January 8, 2016 They do have the other bond, 440694AC1 Link to comment Share on other sites More sharing options...
Guest anilpandit Posted January 12, 2016 Share Posted January 12, 2016 Cloner's original idea with 95 questions of checklist-passed investment seems like headed for bankruptcy!. Link to comment Share on other sites More sharing options...
coc Posted January 12, 2016 Share Posted January 12, 2016 Cloner's original idea with 95 questions of checklist-passed investment seems like headed for bankruptcy!. I'm puzzled what kind of checklist allowed ZINC and CHK through, among others. It's a very interesting learning lesson. And I think Mohnish is extremely smart, which makes it all the more interesting. Link to comment Share on other sites More sharing options...
merkhet Posted January 12, 2016 Share Posted January 12, 2016 Cloner's original idea with 95 questions of checklist-passed investment seems like headed for bankruptcy!. I'm puzzled what kind of checklist allowed ZINC and CHK through, among others. It's a very interesting learning lesson. And I think Mohnish is extremely smart, which makes it all the more interesting. Remember, though, not every company (if any) passes the entire checklist. It's really just a way to crystallize the risks you are taking -- not a fool proof method. Link to comment Share on other sites More sharing options...
cmlber Posted January 12, 2016 Share Posted January 12, 2016 Unfortunately, I think Pabrai underestimated the incompetence of this management team (I certainly did). I just exited my position at a big loss. This management team took a great business and brought it to the edge of bankruptcy. Even with the ramp going this slowly, they didn't need to be this close to bankruptcy. They should have raised more equity at $12/share, sold Zochem a year ago, hedged zinc prices through 2016, and/or refinanced the debt and pushed out maturities a year ago when they were at 50% utilization and zinc prices were $1. They didn't do any of that either because they were incompetent or greedy (probably a mix of both). Now with zinc prices at 66 cents, the dollar strengthening, and commodities collapsing, I don't think it's likely that ZINC survives the next 18 months. I think there will be opportunities to buy much cheaper and even if there is some good news at some point, there will be time to get back in with still significant upside and less risk. With zinc prices so low and no signs of them figuring out how to work the plant, and no ability to issue equity and no ability to issue debt, there aren't many options to bridge the liquidity shortfall that's coming soon. And the fact that they haven't sold Zochem by now signals to me either that they can't sell it, or can't get a reasonable price, or are too dumb to realize they need to sell it. The convertible debt trades at 20 cents, so I just see no reason to own the equity when you can own the debt at 20 cents. So either I'll be right (which I hope I'm not for those still in the stock) or a long time ZINC bull turning bearish will be the sign of the bottom. Link to comment Share on other sites More sharing options...
bennycx Posted January 12, 2016 Share Posted January 12, 2016 It is probably better to think of the worst of management teams than to think positively about them - just to be on the safe side. How else did they get there in the first place? Through selfish means and aggressive methods climbing up the corporate ladder. Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted January 12, 2016 Share Posted January 12, 2016 I still hold a significant position. This has been fun. Link to comment Share on other sites More sharing options...
Sebastien Posted January 13, 2016 Share Posted January 13, 2016 rought time for the energy and material sectors Alot of pessimist since mid 2014 Energy -50% Material -30% USD +25% Link to comment Share on other sites More sharing options...
str8shot Posted January 13, 2016 Share Posted January 13, 2016 Unfortunately, I think Pabrai underestimated the incompetence of this management team (I certainly did). I just exited my position at a big loss. This management team took a great business and brought it to the edge of bankruptcy. Even with the ramp going this slowly, they didn't need to be this close to bankruptcy. They should have raised more equity at $12/share, sold Zochem a year ago, hedged zinc prices through 2016, and/or refinanced the debt and pushed out maturities a year ago when they were at 50% utilization and zinc prices were $1. They didn't do any of that either because they were incompetent or greedy (probably a mix of both). Now with zinc prices at 66 cents, the dollar strengthening, and commodities collapsing, I don't think it's likely that ZINC survives the next 18 months. I think there will be opportunities to buy much cheaper and even if there is some good news at some point, there will be time to get back in with still significant upside and less risk. With zinc prices so low and no signs of them figuring out how to work the plant, and no ability to issue equity and no ability to issue debt, there aren't many options to bridge the liquidity shortfall that's coming soon. And the fact that they haven't sold Zochem by now signals to me either that they can't sell it, or can't get a reasonable price, or are too dumb to realize they need to sell it. The convertible debt trades at 20 cents, so I just see no reason to own the equity when you can own the debt at 20 cents. So either I'll be right (which I hope I'm not for those still in the stock) or a long time ZINC bull turning bearish will be the sign of the bottom. I feel your pain and share your concerns, but I'm still holding. Hindsight tells me I would have liked to have sold when it popped up the $5-6 range a couple months back after the Glencore announcement, with the ability to jump back in once they'd clearly gotten over the hump. While management has earned harsh criticism for grossly mismanaging this ramp-up, the market is effectively writing the patient off as dead. And yes there's plenty of evidence for the bear case. But there are still options. First, we don't know if they are putting Zochem on the block or not. But that still looks to be an option. Two, and more likely in my view, is that they find an investor to bridge their cash needs with a significant loan while they ramp to full scale, with the ability to convert the loan to a significant equity stake, which would obviously dilute the common but pave the way for the equity to recover in the future. This would 1) preclude bankruptcy, which nobody wants particularly the existing debt holders, and 2) enable a business which is a low cost producer and leading recycler with a strong competitive position in the US market to emerge as a stronger player in an otherwise collapsing zinc commodity market where global supply is contracting. On another note, some of the major equity holders haven't sold out to the best of my knowledge: 1) Pabrai, owning over 14% of equity (news would surface within days via a Form 4 filing) 2) per a recent news report: Mohican Financial Management held its position in shares of Horsehead Holding Corp. (NASDAQ:ZINC) during the fourth quarter, according to its most recent disclosure with the Securities and Exchange Commission. The hedge fund owned 5,226,000 shares of the company’s stock at the end of the fourth quarter. Mohican Financial Management’s holdings in Horsehead Holding Corp. were worth $1,339,000 at the end of the most recent quarter. 3) Guy Spier's Aquamarine Fund The late Feb conference call is going to be most interesting.. Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted January 13, 2016 Share Posted January 13, 2016 I'm holding on tight - is there anything specific causing the crash today? Link to comment Share on other sites More sharing options...
morningstar Posted January 13, 2016 Share Posted January 13, 2016 I'm holding on tight - is there anything specific causing the crash today? They missed the coupon on their converts and entered the grace period. Link to comment Share on other sites More sharing options...
pantheman Posted January 13, 2016 Share Posted January 13, 2016 Report from debtwire that they missed the Jan coupon payment but still in grace period Link to comment Share on other sites More sharing options...
luck Posted January 13, 2016 Share Posted January 13, 2016 wow. -45% today. i believe pabrai brought one of the top zinc execs to his last fund meeting. wondering what he said? haven't heard anything out of spier or pabrai recently about $zinc. Link to comment Share on other sites More sharing options...
str8shot Posted January 13, 2016 Share Posted January 13, 2016 Report from debtwire that they missed the Jan coupon payment but still in grace period thanks. can you share a link? i can't find anything on the web. Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted January 13, 2016 Share Posted January 13, 2016 Report from debtwire that they missed the Jan coupon payment but still in grace period thanks. can you share a link? i can't find anything on the web. Seems like a classic case of the average investor being totally out of the loop in terms of insider/real-time information. Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted January 13, 2016 Share Posted January 13, 2016 It does seem pretty early for them to start defaulting on coupons? They currently have enough money to pay? Link to comment Share on other sites More sharing options...
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