ZINC - Horsehead Holding Corp

[walt373]

Well. Can the company receive liquidity to get the plant operational, and not to wipe out all of the equity? It's only $40 million. I think it's still possible. And if they can get operational, the value of the company can be replenished. Sure it is a big if, given the current stake of the markets. But it's not doomed like coal companies, and over leveraged E&P who have assets that are depleted.

 

This is what I don't understand. A few months ago we were talking about liquidity issues not being a problem until 6 to 12 months out, an estimate not including a subsidiary sale and not including the ATM. We were talking about all the options they have, one of them which includes negotiating with the creditors to possibly delay the payment until management can figure out how to properly engineer up this hell-hole of a plant.

 

I haven't crunched the numbers since then, but the big news here is they missed a coupon grace period. Is there any reason for missing a coupon payment other than as a strategy for those negotiations? In the posts quoting management since the missed coupon, they seem pretty coy. I know they've lost complete credibility with investors, but why do we believe they've suddenly run out of liquidity? Is the plant just hopeless?

 

+1 to Parsad's post.

 

As late as June 2015, both secured and unsecured debt were trading over 100. They have crashed to 56 and 7 respectively in a little over six months. This means ZINC has been suddenly and unexpectedly cut off from capital markets and the assumption that they'd be able to roll over their debt proved wrong.

 

Junk bonds in general have been getting killed in the past few months and a lot of that has been due to distressed energy credit. Arguably, ZINC debt would be trading a lot higher in a more benign environment. So ZINC's situation might have been indirectly caused by the crash in oil.

[tylerdurden]

Fair enough walt373.

 

On Pabrai letter, woaw. I totally own my decision to hold this stock but pabrai is definitely not the man he claims to be. How many times are you going to change your rules on position sizing bro? I don't think he is an honest man, sorry.

 

I am very interested in what changes he made to his rules on position sizing.

 

He was 10 x 10 positions pre-financial crisis. Then he moved to 2% (asymmetric), 5%, and 10% (more sure, high conviction).

 

What has he said now about position sizing changes?

 

I think what Pabrai meant in his letter related to percentage ownership of a company...not necessarily position sizing. He essentially said he did not want to own more than 4.9% of a company due to the disclosure requirements...not anything to do with how he will be sizing his position in the future (although if the company is small I guess this would effect his position sizing as well). An example would be Pabrai putting 50% of portfolio assets in BRK. This would be a massive 50% position for his portfolio but he would not own 5% of BRK and would not have any increased disclosure requirements from this position. Thats the way I interpreted it at least.

 

My bad. I first reviewed his letter while I was on a long road trip so after quick review, thought he was commenting on position sizing. Having said that his decision of not owning a more than 4.9% of a company would have an impact on position sizing as well, especially if it is a small company investment.

 

As someone has said, if this "not investing more than 4.9%" was the only lesson he learnt from this journey with ZINC I think that shows some lack of self-critique. He believes if the position was less than 4.9% he could have sold it for tax harvesting and based on developments in new year, he wouldn't have invested back in 2016. That would have been a right move totally by luck not by making a right investment decision so to me this "4.9% discussion" is just an excuse for not selling before. Why not admitting that you should have sold before like David Einhorn admits in his letter for Micron? Anyways, I don't really care about his performance, investing style etc. anymore. All I cared whether he was going to be more involved with his outsized ZINC investment and it seems he will just sit on his ass and watch...

[walt373]

One issue I see with Pabrai's position sizing is that he allows positions to be oversized if they started smaller. I think a lot of investors made this mistake with VRX too. This makes no sense to me. Your stock's cost basis has no effect on risk and future performance other than tax reasons. The question should be, if you were starting with a clean slate today, how would you size your positions?

[original mungerville]

Fair enough walt373.

 

On Pabrai letter, woaw. I totally own my decision to hold this stock but pabrai is definitely not the man he claims to be. How many times are you going to change your rules on position sizing bro? I don't think he is an honest man, sorry.

 

I am very interested in what changes he made to his rules on position sizing.

 

He was 10 x 10 positions pre-financial crisis. Then he moved to 2% (asymmetric), 5%, and 10% (more sure, high conviction).

 

What has he said now about position sizing changes?

 

I think what Pabrai meant in his letter related to percentage ownership of a company...not necessarily position sizing. He essentially said he did not want to own more than 4.9% of a company due to the disclosure requirements...not anything to do with how he will be sizing his position in the future (although if the company is small I guess this would effect his position sizing as well). An example would be Pabrai putting 50% of portfolio assets in BRK. This would be a massive 50% position for his portfolio but he would not own 5% of BRK and would not have any increased disclosure requirements from this position. Thats the way I interpreted it at least.

 

Thks.

[original mungerville]

One should be very careful reading into an investors returns, putting that investor in a pedestal and cloning them blindly.

 

Say a value investor setup his/her firm in 2000 and with smaller AUM (say < 50MM) greatly outperformed major indices in first 2 years. Assume, after 3rd year, for next 12-13 years, they slightly under performed major indices. Any investor blindly putting in QQQ or SPY and reinvesting dividends would have done better after year 3.

 

Now if that value investor computed annualized returns from day 1 (from year 2000), he/she'll show awesome returns. In fact all their brochures, marketing ppt will show returns for $1 invested on day 1. If you shifted it 3 years forward, and compounded $1 from year 4-current, the returns will be much worse.

 

PS

The above mentioned investor is none other than MP. Anyone who invested in his fund starting Jan-2004 would have under performed major indices.

 

My guess is Pabrai's big test will be how he comes out of this current market situation - that will probably largely determine his legacy. If he ignores the macro (like he did with financials in 2008), its going to be tough, but still possible to outperform.

[tylerdurden]

After reviewing Mr. Pabrai's letter here are some reflections I had (tried to be as brief as possible):

 

1) Lack of Options: I invested slightly above $2 in this name and one of the pillars of my thesis was that company had "options" to buy more time until the plant shows improvement. Clearly, I did not take into account management's incompetence (imprudence/negligence/overconfidence?) for not being conservative enough with their outlook. China was a big concern for how many years now? I think Zochem/Inmetco could have been sold to buy more time even if you didn't get the full price before. That would have even opened the ATM program possibilities. Of course, it is impossible for me to know how much they tried and the extent of negotiations but Sep/Oct seems like a calm period that you could have pulled the trigger on asset sales...

 

2) Mr. Pabrai's Involvement: I did not blindly invest because of him but as a value investor, his outsized investment, long history with the name, most recent investment in July/August and recent interactions with management gave me some extra comfort. In my mind, there was a significant possibility that he would become an active investor in order to create much needed "disciplined" atmosphere for the management of the company. I still don't understand his decision of staying passive and to me that's a disservice to his investors. (If you don't believe in activism, why do you even bring the CFO to your annual meeting?) There was also a chance he could have provided funding to the company, especially after seeing him with the amount of conviction to make investment at $7 range on the way down...

 

3) Current Status: It seems this restructuring negotiation could continue until the end of grace period (Jan 31). The outcome for the equity holders could also depend on what's happening with china and markets calming or spiraling down further and zinc prices etc. I wish they had more time at least to see the impact of some zinc production curtailments on prices. Anyways, as Pabrai said in his letter, prospects do not look good but call them traders/average Joe etc. there were some buyers still at 0.5-0.7 price levels with significant volume so I guess this is not zero just yet...

[original mungerville]

One should be very careful reading into an investors returns, putting that investor in a pedestal and cloning them blindly.

 

Say a value investor setup his/her firm in 2000 and with smaller AUM (say < 50MM) greatly outperformed major indices in first 2 years. Assume, after 3rd year, for next 12-13 years, they slightly under performed major indices. Any investor blindly putting in QQQ or SPY and reinvesting dividends would have done better after year 3.

 

Now if that value investor computed annualized returns from day 1 (from year 2000), he/she'll show awesome returns. In fact all their brochures, marketing ppt will show returns for $1 invested on day 1. If you shifted it 3 years forward, and compounded $1 from year 4-current, the returns will be much worse.

 

PS

The above mentioned investor is none other than MP.

 

That's not quite fair.  Though a lot of the outperformance did come from the first years, and the last 3-5 have not been great, PIF3 is outperforming by 3% annually and it started later.  He's also comparing to the best index of three rather than just the S&P500.

[/quote

 

Is that 3% after all fees or before?

[original mungerville]

You didn't read my post carefully. PIF3's out performance is due to first two years. Compute anything starting Jan-2004. Even PIF2&3's new investors starting Jan-04 would have under performed indices. AUM starting Jan-04 is ~$50MM. So the under performance is for last 12 years with AUM > $50MM.

 

And you are making the same mistake that I cautioned against. Looking into alpha for compounding from day 1 can be misleading.

 

One should be very careful reading into an investors returns, putting that investor in a pedestal and cloning them blindly.

 

Say a value investor setup his/her firm in 2000 and with smaller AUM (say < 50MM) greatly outperformed major indices in first 2 years. Assume, after 3rd year, for next 12-13 years, they slightly under performed major indices. Any investor blindly putting in QQQ or SPY and reinvesting dividends would have done better after year 3.

 

Now if that value investor computed annualized returns from day 1 (from year 2000), he/she'll show awesome returns. In fact all their brochures, marketing ppt will show returns for $1 invested on day 1. If you shifted it 3 years forward, and compounded $1 from year 4-current, the returns will be much worse.

 

PS

The above mentioned investor is none other than MP.

 

That's not quite fair.  Though a lot of the outperformance did come from the first years, and the last 3-5 have not been great, PIF3 is outperforming by 3% annually and it started later.  He's also comparing to the best index of three rather than just the S&P500.

 

Is that underperformance before fees (or does it already incorporate the negative effect of fees?)?

[walt373]

My guess is Pabrai's big test will be how he comes out of this current market situation - that will probably largely determine his legacy. If he ignores the macro (like he did with financials in 2008), its going to be tough, but still possible to outperform.

 

He's unlikely to outperform if he ignores the macro and invests in leveraged companies that live and die by macro drivers...

[tylerdurden]

You didn't read my post carefully. PIF3's out performance is due to first two years. Compute anything starting Jan-2004. Even PIF2&3's new investors starting Jan-04 would have under performed indices. AUM starting Jan-04 is ~$50MM. So the under performance is for last 12 years with AUM > $50MM.

 

And you are making the same mistake that I cautioned against. Looking into alpha for compounding from day 1 can be misleading.

 

One should be very careful reading into an investors returns, putting that investor in a pedestal and cloning them blindly.

 

Say a value investor setup his/her firm in 2000 and with smaller AUM (say < 50MM) greatly outperformed major indices in first 2 years. Assume, after 3rd year, for next 12-13 years, they slightly under performed major indices. Any investor blindly putting in QQQ or SPY and reinvesting dividends would have done better after year 3.

 

Now if that value investor computed annualized returns from day 1 (from year 2000), he/she'll show awesome returns. In fact all their brochures, marketing ppt will show returns for $1 invested on day 1. If you shifted it 3 years forward, and compounded $1 from year 4-current, the returns will be much worse.

 

PS

The above mentioned investor is none other than MP.

 

That's not quite fair.  Though a lot of the outperformance did come from the first years, and the last 3-5 have not been great, PIF3 is outperforming by 3% annually and it started later.  He's also comparing to the best index of three rather than just the S&P500.

 

Is that underperformance before fees (or does it already incorporate the negative effect of fees?)?

 

Can you guys carry discussions regarding Mr. Pabrai's performance to another page?

 

I think the ZINC message board is more for people who'd like to discuss the stock rather his performance etc.

 

Thanks.

[Guest wellmont]

lets see. if you invest in very few companies, very volatile companies, have concentrated positions in very few, very volatile companies, wouldn't you expect and demand lots and lots of out-performance? I mean isn't that the price of admission for tolerating that level of volatility and risk?

 

I think there is enough evidence over a long period of time that the "out performance" simply isn't there from an investment in a fund that is so volatile, so risky, and so concentrated.

 

although it does not appear so based on presentation that this is a "slick" and promotional management vehicle, it has been able to capture and hold assets, despite not outperforming over long periods, and despite offering a product that has offered investors lots of risk and lots of volatility for not a lot of excess rewards.

 

the 2000 time frame was a glorious time to be a value investor and a very good time to start a fund. just ask the guys at fairholme.

[tylerdurden]

i have responded to everyone who sent me a PM, if not let me know and due to the number of requests I will be sending them out later so I can send one email!

 

On a related note, i think one thing is clear, leveraged companies are always a bet on timing, and every seven years or so we have some crisis (2000 tech, 2007 financial, 2014 commodity). A company with little or no debt and generating CFO, I can see with a larger position sizing. Even Carl Icahn has taken some lumps, and no one knows the outcome of FCX, CHK etc. the difference I believe lies in his ability with say CHK, to do a debt swap, as well as join the board, etc. He as an activist investor can make things happen even when they look bleak. or take Longleaf and Mason hawkins on the passive side (they prefer to NOT get involved unless they are forced to), he once noted that in 20 out of 24 times he was able to extract value by getting involved, etc. the one large success, LVLT, and the failure (they lost some) was DELL with a take under. I think the one rule that Pabrai should change is his not getting involved. I believe that as a successful business person like Pabrai who sold his company for a nice sum could add value and perhaps salvage a portion if not all of his investment.

 

I would love to hear others thoughts on this, as i understand many may not agree.

 

I agree 100%. I think it was and still is a no brainer for him to be an active investor at ZINC which demonstrated how poor the management was at some certain tasks since the new plant was opened in 2014. Now, with the management deciding probably on how the current shareholders will be treated in restructuring, why wouldn't you want to have a seat in these discussions??? To me a total disservice again to his investors. Why wouldn't someone go active in this circumstance? Because he doesn't like conflict, doesn't believe in activism? Hellloooo, didn't your "Princeton" educated CEO and his management demonstrate enough incompetence by totally destructing this company and shareholders? I don't get it. 

[AzCactus]

i have responded to everyone who sent me a PM, if not let me know and due to the number of requests I will be sending them out later so I can send one email!

 

On a related note, i think one thing is clear, leveraged companies are always a bet on timing, and every seven years or so we have some crisis (2000 tech, 2007 financial, 2014 commodity). A company with little or no debt and generating CFO, I can see with a larger position sizing. Even Carl Icahn has taken some lumps, and no one knows the outcome of FCX, CHK etc. the difference I believe lies in his ability with say CHK, to do a debt swap, as well as join the board, etc. He as an activist investor can make things happen even when they look bleak. or take Longleaf and Mason hawkins on the passive side (they prefer to NOT get involved unless they are forced to), he once noted that in 20 out of 24 times he was able to extract value by getting involved, etc. the one large success, LVLT, and the failure (they lost some) was DELL with a take under. I think the one rule that Pabrai should change is his not getting involved. I believe that as a successful business person like Pabrai who sold his company for a nice sum could add value and perhaps salvage a portion if not all of his investment.

 

I would love to hear others thoughts on this, as i understand many may not agree.

 

I agree 100%. I think it was and still is a no brainer for him to be an active investor at ZINC which demonstrated how poor the management was at some certain tasks since the new plant was opened in 2014. Now, with the management deciding probably on how the current shareholders will be treated in restructuring, why wouldn't you want to have a seat in these discussions??? To me a total disservice again to his investors. Why wouldn't someone go active in this circumstance? Because he doesn't like conflict, doesn't believe in activism? Hellloooo, didn't your "Princeton" educated CEO and his management demonstrate enough incompetence by totally destructing this company and shareholders? I don't get it.

 

I agree with Tyler here.  Admiring buffett is great and Buffett typically is hands off.  However, whenever an investment is this large you need to be aware and get involved if needed.  My thought is that when he added at 7-8 he should have seriously considered changing management.  I would almost imagine that Buffett would have divested some assets and had a firm plan when investing at 7-8.  Worst of all, Pabrai speaking so glowingly in my opinion of the CEO was beyond strange.

[Guest wellmont]

I think the outcome of the equity will be largely driven by how shareholder friendly the management really is and how the plant retrofit is really progressing.

the price of the Secured debt is apparently 50c

the price of the unsecured debt is apparently 7c.

history suggests that with this situation the equity is far otm.

it could of course be different this time.

[tylerdurden]

I think the outcome of the equity will be largely driven by how shareholder friendly the management really is and how the plant retrofit is really progressing.

the price of the Secured debt is apparently 50c

the price of the unsecured debt is apparently 7c.

history suggests that with this situation the equity is far otm.

it could of course be different this time.

 

I am assuming Management has a tactical plan here by delaying the payment in terms of negotiations. Perhaps, they'll disclose some promising result in terms of ramp up, although the next update is scheduled for q4 earnings release. Hard to know whether these guys are fighting for shareholders still or their compensation packages etc. at this point...

[walt373]

The entire market cap of the unsecured debt is $5-7m depending on the last trade. The equity trading at $38m means it's grossly overvalued, at least relative to the debt.

[bennycx]

If my memory serves me well, I recall somewhere that Munger was praising Pabrai and acknowledging that he was quite knowledgeable about the metals market. I assume this could relate to his ZINC investment since Pabrai hasn't really been making any other metals bet, other than POSCO which Munger already knew about. I might be wrong but if anyone could recall this about Munger as well ......?

[Poor Charlie]

I have no position in Horsehead or PIF but couldn't help notice the verbal beating Pabrai is taking in this thread.  Wow!  What makes Pabrai so much worse than his New York hedge fund masters-of-the-universe cohorts, having performed just as bad or worse, to be singled out like this?  At least he has the decency to not hose his LPs with fees while he's underperforming, which is more than 99% of the investment community can say.  If you guys are going to pull out the pitch forks, I think you have them pointed in the wrong direction.

 

Unrelated to his performance, I will say I wish he would tone down the cloning thing.  Going around to all these colleges and telling MBAs it's as easy as mindlessly copying the positions of the so-called 'gurus' while sitting on the beach is wrong (he should know).  And even if it were true it's a cringeworthy message to be planting in the minds of tomorrow's fiduciaries. 

 

[tylerdurden]

For ZINC owners,

 

Are you still holding your shares or selling at the current market price and why?

 

I assume after Pabrai released his letter Friday the stock tanked to $0.42 in the morning and then ended the session at $0.55

 

Thanks.

[Vish_ram]

 

Is that underperformance before fees (or does it already incorporate the negative effect of fees?)?

 

Under performance is after considering fees. To be fair, we've to consider S&P 500 fees (which is really low though). A decade back I followed Pabrai into HNR and got hammered. I exited at 20-25% loss and then saw the stock lose another 95%.

 

There are lots of biases that someone new to investing can get. some examples are

Thinking highly of a person who can quote Buffett verbatim or having some association with Buffett/Munger, having high AUM, espousing virtues of compounding, .....

 

I still admire Pabrai for recovering from catastrophic losses in DFC, CRYP, HNR & many others.

[hobbit]

For ZINC owners,

 

Are you still holding your shares or selling at the current market price and why?

 

I assume after Pabrai released his letter Friday the stock tanked to $0.42 in the morning and then ended the session at $0.55

 

Thanks.

 

 

Well I have a significant position around 4 dollars( averaged down from 6) and I have not sold a single share .

 

I am in minority but even with ZINC being in dumps , I do not "hate" the management and I will try to explain why.

 

The management has faced two kinds of criticism viz for not having a handle on the timeline of ramp up and an utter lack of financial prudence.

 

Let us deal with the ramp up first. In the hindsight you can always do things differently, have better engineering designs etc but realistically some of the challenges they have faced e.g the pumps with a life of 20 years failing in the first 16 months coupled with its back up doing the same within 24 hours, those are things that are hard to foresee. If you go over the ramp up of KRP by zincox, they had some issues as basic as weldings not done properly etc which delayed the ramp up quite a bit. You can fret over these challenges all you want but with a plant of this scale and nature, they are unavoidable. The bleed treatment plant is a slightly different story . Even though engineering wise its not a huge challenge to increase the treatment capacity ,they should have been able to get a better grip on it while designing the plant. They have brought in external help in the form of hatch and greg to boost their resources. They have provided monthly updates on the ramp up.

 

I have enuf experience to understand the difference between theory and practical so going into this trade I always added 1.5-2 years from the time management speculated on the ramp up coz there can be unforeseen challenges in a plant of this nature ( and have maintained that the challenges that they have put out can be easily addressed from an engineering prospective) but what I was expecting was that they will have enuf liquidity over that period which is what brings to the financial prudence part.

 

Here I am afraid that greed and overconfidence has clouded management view. I liked the fact that they raised equity capital at $12 when everyone was asking them why. As warren says that you should always do this when people ask why instead of when. But they took a huge fucking risk by not selling off INMETCO/ZOCHEM or doing more equity capital raise when issues starting hitting the ramp up as early as Q1 2015. With a huge debt load coming due in a couple of years they should have adopted a less risky approach coz the future of entire company depends one Mooresboro. What is beyond understanding is that they have maintained throughout ( as late as nov 2015 CC) that they have many options without selling off their cash generating assets. CFO claimed this in september and CEO made the same statement in November. Are they stupid or dishonest or both , I do not know. What are they seeing that everyone else seems to be missing?

 

I mostly agree with what Pabrai wrote about Jim Hensler. INMENTCO/ZOCHEM were some pretty sweet deals that he made. They are still generating positive EBITDA in the worse commodity environment . The zinc hedges he had in place was another prudent move . At the same time he also comes across as a bit of risk taker unfortunately at the behest of shareholders. The situation horsehead finds itself in was easily avoidable with some less risky approach.

 

Also i was not expecting such a horrible commodity market. lesson learnt . Do not try to predict/assume something you do not understand and have no experience doing i.e trading commodities.

 

I am holding onto my ZINC shares but at this point it is

60% that the management is not dishonest and full of crap

and 40 % hope

 

[RadMan24]

For ZINC owners,

 

Are you still holding your shares or selling at the current market price and why?

 

I assume after Pabrai released his letter Friday the stock tanked to $0.42 in the morning and then ended the session at $0.55

 

Thanks.

 

 

Well I have a significant position around 4 dollars( averaged down from 6) and I have not sold a single share .

 

I am in minority but even with ZINC being in dumps , I do not "hate" the management and I will try to explain why.

 

The management has faced two kinds of criticism viz for not having a handle on the timeline of ramp up and an utter lack of financial prudence.

 

Let us deal with the ramp up first. In the hindsight you can always do things differently, have better engineering designs etc but realistically some of the challenges they have faced e.g the pumps with a life of 20 years failing in the first 16 months coupled with its back up doing the same within 24 hours, those are things that are hard to foresee. If you go over the ramp up of KRP by zincox, they had some issues as basic as weldings not done properly etc which delayed the ramp up quite a bit. You can fret over these challenges all you want but with a plant of this scale and nature, they are unavoidable. The bleed treatment plant is a slightly different story . Even though engineering wise its not a huge challenge to increase the treatment capacity ,they should have been able to get a better grip on it while designing the plant. They have brought in external help in the form of hatch and greg to boost their resources. They have provided monthly updates on the ramp up.

 

I have enuf experience to understand the difference between theory and practical so going into this trade I always added 1.5-2 years from the time management speculated on the ramp up coz there can be unforeseen challenges in a plant of this nature ( and have maintained that the challenges that they have put out can be easily addressed from an engineering prospective) but what I was expecting was that they will have enuf liquidity over that period which is what brings to the financial prudence part.

 

Here I am afraid that greed and overconfidence has clouded management view. I liked the fact that they raised equity capital at $12 when everyone was asking them why. As warren says that you should always do this when people ask why instead of when. But they took a huge fucking risk by not selling off INMETCO/ZOCHEM or doing more equity capital raise when issues starting hitting the ramp up as early as Q1 2015. With a huge debt load coming due in a couple of years they should have adopted a less risky approach coz the future of entire company depends one Mooresboro. What is beyond understanding is that they have maintained throughout ( as late as nov 2015 CC) that they have many options without selling off their cash generating assets. CFO claimed this in september and CEO made the same statement in November. Are they stupid or dishonest or both , I do not know. What are they seeing that everyone else seems to be missing?

 

I mostly agree with what Pabrai wrote about Jim Hensler. INMENTCO/ZOCHEM were some pretty sweet deals that he made. They are still generating positive EBITDA in the worse commodity environment . The zinc hedges he had in place was another prudent move . At the same time he also comes across as a bit of risk taker unfortunately at the behest of shareholders. The situation horsehead finds itself in was easily avoidable with some less risky approach.

 

Also i was not expecting such a horrible commodity market. lesson learnt . Do not try to predict/assume something you do not understand and have no experience doing i.e trading commodities.

 

I am holding onto my ZINC shares but at this point it is

60% that the management is not dishonest and full of crap

and 40 % hope

 

I'm with hobbit. Sure could be wrong, but bashing Pabrai or management isn't going to be constructive at all. People think its easy running a public company, its not. Could they have managed the liquidity better, of course. Does that mean its the end of the world, no.

 

The posts on the bonds, secured at 57, unsecured a 7, and equity with a $40 million valuation, is about the extreme end of the spectrum. Any positive news, any restructuring that results in more liquidity and less than 10x dilution will be a positive from these levels. But at these levels, keeping a strong eye on the secured notes for various reasons to purchase possibly.

 

 

 

[RadMan24]

Can anyone outline any possible scenarios if ZINC files for bankruptcy ?

 

Will the company shut down and quit existing or just their debt will be discharged with asset sell but the company with continue to function, employee and administration will stick around..

 

Will continue to trade as ticker symbol ZINC exchanges....

 

can anyone provide some color on it?

 

Look at HERO, which went through bankruptcy. $1.2B debt was wiped out and debtors put some new money too. After bankruptcy, it started trading at 14.x and has promptly fallen to 1.x.

 

No position. fascinating story of total destruction.

 

HERO had no chance to begin with. That should have been obvious looking at their asset quality, or lack there of. If you are going to survive bankruptcy and refinancing, those assets have to have an advantage or moat of some kind.

[hobbit]

Also all the people bashing pabrai , do u hold guy spier in the same light ?

[tylerdurden]

Just an interesting observation from 13Fs on ZINC: Largest amount of sale in Q315 Lazard Asset Management (sold $8.345M principal amount of 7/1/17 notes)

 

Restructuring advisor for ZINC: Lazard

 

I guess they saw this coming based on experience with the company. Doesn't seem like a  coincidence to me.

 

Another concentrated investor with sizable bet on the common:

GREYWOLF CAPITAL MANAGEMENT LP HTTP://WWW.GREYWOLFCAPITAL.COM