ZINC - Horsehead Holding Corp

[tylerdurden]

For those that still own shares in ZINC and still want to participate but want to protect your principal as well.  I recommend that you sell your shares and buy the $0.50 Jun 2016 calls instead. Those calls have very little premium.  Frankly, the company will likely file or hit a homerun by Jun 2016.  The volume is there.

 

If you don't wish to own a position anymore, then you should sell out entirely.  But if you're unsure, my best advice is to sell shares and buy the calls.  You should probably swap in parts.  Meaning, you should sell shares and buy calls in 5-10% increments.  Don't sell all your shares at once.  If the shares go to $2, you lose out on 5 cents. 

 

No position in this name anymore.  But for anyone looking to "have a position and protect further downside", I highly recommend this strategy.   

 

BG2008, I believe you owned some senior secured on this name? May I ask when and why you sold?

 

Thanks.

[walt373]

Re: Post from Walt about Senior Notes:

 

Be careful assuming the senior notes get everything, they don't. The credit revolver is secured by inventory and receivables. Senior notes are second lien to those assets. Hence, if the company increases its revolver, senior loans are "not as secured" in a Chapter 11. This ultimately brings down the value for the unsecured bonds, which is why they are probably around 7.

 

Good point. I did say "secured creditors" and not "senior notes" specifically. Although I did reference the market price of the notes.

[BG2008]

For those that still own shares in ZINC and still want to participate but want to protect your principal as well.  I recommend that you sell your shares and buy the $0.50 Jun 2016 calls instead. Those calls have very little premium.  Frankly, the company will likely file or hit a homerun by Jun 2016.  The volume is there.

 

If you don't wish to own a position anymore, then you should sell out entirely.  But if you're unsure, my best advice is to sell shares and buy the calls.  You should probably swap in parts.  Meaning, you should sell shares and buy calls in 5-10% increments.  Don't sell all your shares at once.  If the shares go to $2, you lose out on 5 cents. 

 

No position in this name anymore.  But for anyone looking to "have a position and protect further downside", I highly recommend this strategy.   

 

Thanks for the valuable advice! I agree that the upside would be higher with the options and downside is very similar. If this ends up in Ch 11 or something you loose the extra premium on the options and if the stock would still trade at some real zombie value like Arch Coal does now in that scenario, you loose that as well. It shouldn't make a diffeence at this point I guess.

 

To further clarify, I'm suggesting that you sell your X number of shares and buy the same X number of calls.  I'm not advocating for you to sell Y dollars of the shares and then buy Y dollars of the calls.  Assuming the calls are $0.10 each and the shares are $0.55.  The upside is about the same.  But you get to preserve 80+% of your principal. 

[RadMan24]

Re: Post from Walt about Senior Notes:

 

Be careful assuming the senior notes get everything, they don't. The credit revolver is secured by inventory and receivables. Senior notes are second lien to those assets. Hence, if the company increases its revolver, senior loans are "not as secured" in a Chapter 11. This ultimately brings down the value for the unsecured bonds, which is why they are probably around 7.

 

Good point. I did say "secured creditors" and not "senior notes" specifically. Although I did reference the market price of the notes.

 

Ah, yea I should've quoted you, I lost the post and got lazy. Sorry about that. But, yea the next Q will give the best picture of the current environment and if Ch. 11 is literally right around the corner or if they still got some time left to rampup the plant.

[Guest wellmont]

negotiating with secured debt holders who are way underwater or have bought the bonds at a massive discount means only one thing. and it is not good for shareholders. in this situation equity is OWED squat. equity may get a tiny bit of something, but they are owed nothing. so whatever they get depends on the kindness of strangers who have no real reason to be your buddy. negotiation with bondholders implies this is a zero. don't let the .50c price fool you. pay attention only to the bond prices here. bond prices tell ALL.

[BG2008]

For those that still own shares in ZINC and still want to participate but want to protect your principal as well.  I recommend that you sell your shares and buy the $0.50 Jun 2016 calls instead. Those calls have very little premium.  Frankly, the company will likely file or hit a homerun by Jun 2016.  The volume is there.

 

If you don't wish to own a position anymore, then you should sell out entirely.  But if you're unsure, my best advice is to sell shares and buy the calls.  You should probably swap in parts.  Meaning, you should sell shares and buy calls in 5-10% increments.  Don't sell all your shares at once.  If the shares go to $2, you lose out on 5 cents. 

 

No position in this name anymore.  But for anyone looking to "have a position and protect further downside", I highly recommend this strategy.   

 

BG2008, I believe you owned some senior secured on this name? May I ask when and why you sold?

 

Thanks.

 

Tyler, nice name btw. I don't own any position in the name at this point.  If you're referring to when I had a position.  It was during 2015.  I never owned the shares outright.  I bought calls on the company and I created synthetic calls where I went long the shares and bought puts to hedge my downside.  If you search previous thread, you will see that I shared these details. 

 

Why? Because the company kept saying that they should be able to ramp up to 75% by the end of 2015.  I had initially thought that the company could ramp by mid 2015.  My thought during mid 2015 was if they can't ramp by end of 2015, then it could be 1) An inherent design problem 2) extremely incompetent management 3) this is way more complex than I thought.  These factors can lead to a the company having to file Ch 11 due to the debt coming due.   

 

Neither of these three situations I want to be involved with.  So, I synthetically created a "heads I win, tails I lose my premium" type of trade.  It's never good to lose money.  But it's slightly better to lose your call premiums rather than the entire principal.       

[oddballstocks]

negotiating with secured debt holders who are way underwater or have bought the bonds at a massive discount means only one thing. and it is not good for shareholders. in this situation equity is OWED squat. equity may get a tiny bit of something, but they are owed nothing. so whatever they get depends on the kindness of strangers who have no real reason to be your buddy. negotiation with bondholders implies this is a zero. don't let the .50c price fool you. pay attention only to the bond prices here. bond prices tell ALL.

 

Walt had a good point earlier, debt market cap is $5-7m, that is the 'true' market cap for this.  Bonds are traded by the guys talking to the company, when a company is like this that's the market price.  I don't think there will be much if any residual left for shareholders.

[walt373]

It's not inherently inconsistent that the debt is trading at very distressed levels but the equity is still worth something. I think the equity can be viewed as far out-of-the-money call options on the bonds. It will be worthless unless the bonds' value can exceed the strike price, whatever that may be.

[tylerdurden]

For those that still own shares in ZINC and still want to participate but want to protect your principal as well.  I recommend that you sell your shares and buy the $0.50 Jun 2016 calls instead. Those calls have very little premium.  Frankly, the company will likely file or hit a homerun by Jun 2016.  The volume is there.

 

If you don't wish to own a position anymore, then you should sell out entirely.  But if you're unsure, my best advice is to sell shares and buy the calls.  You should probably swap in parts.  Meaning, you should sell shares and buy calls in 5-10% increments.  Don't sell all your shares at once.  If the shares go to $2, you lose out on 5 cents. 

 

No position in this name anymore.  But for anyone looking to "have a position and protect further downside", I highly recommend this strategy.   

 

Thanks for the valuable advice! I agree that the upside would be higher with the options and downside is very similar. If this ends up in Ch 11 or something you loose the extra premium on the options and if the stock would still trade at some real zombie value like Arch Coal does now in that scenario, you loose that as well. It shouldn't make a diffeence at this point I guess.

 

To further clarify, I'm suggesting that you sell your X number of shares and buy the same X number of calls.  I'm not advocating for you to sell Y dollars of the shares and then buy Y dollars of the calls.  Assuming the calls are $0.10 each and the shares are $0.55.  The upside is about the same.  But you get to preserve 80+% of your principal.

 

Thanks for the clarification and your valuable input. It makes sense.

[tylerdurden]

For those that still own shares in ZINC and still want to participate but want to protect your principal as well.  I recommend that you sell your shares and buy the $0.50 Jun 2016 calls instead. Those calls have very little premium.  Frankly, the company will likely file or hit a homerun by Jun 2016.  The volume is there.

 

If you don't wish to own a position anymore, then you should sell out entirely.  But if you're unsure, my best advice is to sell shares and buy the calls.  You should probably swap in parts.  Meaning, you should sell shares and buy calls in 5-10% increments.  Don't sell all your shares at once.  If the shares go to $2, you lose out on 5 cents. 

 

No position in this name anymore.  But for anyone looking to "have a position and protect further downside", I highly recommend this strategy.   

 

BG2008, I believe you owned some senior secured on this name? May I ask when and why you sold?

 

Thanks.

 

Tyler, nice name btw. I don't own any position in the name at this point.  If you're referring to when I had a position.  It was during 2015.  I never owned the shares outright.  I bought calls on the company and I created synthetic calls where I went long the shares and bought puts to hedge my downside.  If you search previous thread, you will see that I shared these details. 

 

Why? Because the company kept saying that they should be able to ramp up to 75% by the end of 2015.  I had initially thought that the company could ramp by mid 2015.  My thought during mid 2015 was if they can't ramp by end of 2015, then it could be 1) An inherent design problem 2) extremely incompetent management 3) this is way more complex than I thought.  These factors can lead to a the company having to file Ch 11 due to the debt coming due.   

 

Neither of these three situations I want to be involved with.  So, I synthetically created a "heads I win, tails I lose my premium" type of trade.  It's never good to lose money.  But it's slightly better to lose your call premiums rather than the entire principal.     

 

Thanks. Actually the convertible notes holders, almost all of them I think that I could see from the 13Fs, had some puts as well. Better than losing all the principal as you said...

[cmlber]

For those that still own shares in ZINC and still want to participate but want to protect your principal as well.  I recommend that you sell your shares and buy the $0.50 Jun 2016 calls instead. Those calls have very little premium.  Frankly, the company will likely file or hit a homerun by Jun 2016.  The volume is there.

 

If you don't wish to own a position anymore, then you should sell out entirely.  But if you're unsure, my best advice is to sell shares and buy the calls.  You should probably swap in parts.  Meaning, you should sell shares and buy calls in 5-10% increments.  Don't sell all your shares at once.  If the shares go to $2, you lose out on 5 cents. 

 

No position in this name anymore.  But for anyone looking to "have a position and protect further downside", I highly recommend this strategy.   

 

Thanks for the valuable advice! I agree that the upside would be higher with the options and downside is very similar. If this ends up in Ch 11 or something you loose the extra premium on the options and if the stock would still trade at some real zombie value like Arch Coal does now in that scenario, you loose that as well. It shouldn't make a diffeence at this point I guess.

 

To further clarify, I'm suggesting that you sell your X number of shares and buy the same X number of calls.  I'm not advocating for you to sell Y dollars of the shares and then buy Y dollars of the calls.  Assuming the calls are $0.10 each and the shares are $0.55.  The upside is about the same.  But you get to preserve 80+% of your principal.

 

Thanks for the clarification and your valuable input. It makes sense.

 

To those comparing calls to equity, I think it's important to consider timing of a restructuring.  If you expect the company to file for bankruptcy, then the equity will likely trade for close to 0 and then once the restructuring is complete, might be worth something.  So with 5 month calls, odds are the restructuring wouldn't be complete and your calls expire worthless.  I think the best way to play this is to own the convertible debt (although I don't have any position in debt or equity).  No reason to own equity or calls when the convertible is priced to be a 15x in the event the equity has any value...

[tylerdurden]

What are the chances ZINC can pull a debt extension rather than a debt to equity swap in a possible workout? I don't know the details but Arch Coal was working on a debt extension although it did not end very well obviously. If they can extend (assuming all sorts of miraculous things happening like ramp up shows significant progress, zinc prices jump etc.) it could be game changer for the equity rather than debt/equity swap.

[walt373]

Not sure if this was posted earlier but I just saw it. It's a week old. http://www.debtwire.com/tools/newsletter.asp?guid=9b1360b61e084b838020b5d5961042eb

[RadMan24]

What are the chances ZINC can pull a debt extension rather than a debt to equity swap in a possible workout? I don't know the details but Arch Coal was working on a debt extension although it did not end very well obviously. If they can extend (assuming all sorts of miraculous things happening like ramp up shows significant progress, zinc prices jump etc.) it could be game changer for the equity rather than debt/equity swap.

 

They need to get the plant up and running to preserve liquidity. If not, options are bleak although they may have a rabbit in the hat, who knows. But if they show progress, a refinancing of the debt should be done without a problem a year from now.

[xtreeq]

What are the chances ZINC can pull a debt extension rather than a debt to equity swap in a possible workout? I don't know the details but Arch Coal was working on a debt extension although it did not end very well obviously. If they can extend (assuming all sorts of miraculous things happening like ramp up shows significant progress, zinc prices jump etc.) it could be game changer for the equity rather than debt/equity swap.

 

They need to get the plant up and running to preserve liquidity. If not, options are bleak although they may have a rabbit in the hat, who knows. But if they show progress, a refinancing of the debt should be done without a problem a year from now.

 

Sorry but there will be no refinancing of the debt, not when it's trading at crazy yields.

 

[ScottHall]

What are the chances ZINC can pull a debt extension rather than a debt to equity swap in a possible workout? I don't know the details but Arch Coal was working on a debt extension although it did not end very well obviously. If they can extend (assuming all sorts of miraculous things happening like ramp up shows significant progress, zinc prices jump etc.) it could be game changer for the equity rather than debt/equity swap.

 

They need to get the plant up and running to preserve liquidity. If not, options are bleak although they may have a rabbit in the hat, who knows. But if they show progress, a refinancing of the debt should be done without a problem a year from now.

 

Sorry but there will be no refinancing of the debt, not when it's trading at crazy yields.

 

"Deal from strength or get crushed every time." - Sun Tzu

[str8shot]

8K from HH just came out. HH creditors were asking for remedies based on defaults by the borrower and they have entered into forbearance agreements. Link below with text of 8K included below. Note section 7.01 below - they are looking at financing options with existing equity and debt holders. Does this give greater hope that they can pull the rabbit out of the hat, or is a BK filing still looking inevitable?

 

http://archive.fast-edgar.com//20160119/AP22R62GZW2R7ZZ2222H2ZXKM9FCOZ22D282/

 

Item 1.01 Entry into a Material Definitive Agreement.

 

Forbearance and Amendment Agreement with Macquarie Bank Limited

On January 15, 2016, Horsehead Corporation (“Horsehead”), The International Metals Reclamation Company, LLC and Horsehead Metal Products, LLC, each a subsidiary of Horsehead Holding Corp. (the “Company”) (collectively, the “Borrowers”), the Company, as guarantor, and another guarantor party thereto, entered into a Forbearance and Amendment Agreement (the “Macquarie Forbearance”) with respect to the Credit Agreement, dated as of June 30, 2015 (as amended from time to time, the “Horsehead Credit Facility”), with Macquarie Bank Limited, as administrative agent and lender (“Macquarie”). Pursuant to the Macquarie Forbearance, Macquarie agreed to temporarily forbear from exercising rights and remedies related to certain events of default related to, among other things, insufficient availability under the Horsehead Credit Facility. Macquarie initially notified the Borrowers of the existence of the events of default on January 5, 2016, at which time the parties commenced negotiations on the Macquarie Forbearance.

 

Pursuant to the Macquarie Forbearance, cash held in certain of the Borrowers’ third-party bank accounts will be transferred to accounts controlled by Macquarie. Disbursements of funds from the controlled accounts to the Borrowers will be subject to a budget as specified in the Macquarie Forbearance. During the Macquarie Forbearance Period (as defined below), borrowings will be available to the Borrowers in amounts based on the borrowing base under the Horsehead Credit Facility plus overage amounts specified in the Macquarie Forbearance, subject to certain adjustments.

 

Pursuant to the Macquarie Forbearance, the Borrowers agreed, among other things, (i) to pay down outstanding borrowings under the Horsehead Credit Facility so that the aggregate amount outstanding as of the date of effectiveness of the Macquarie Forbearance does not exceed $40 million and (ii) to pay a restructuring fee in an amount ranging from $1 million to $2.5 million in the event the obligations under the Horsehead Credit Facility are not paid in full by February 1, 2016, with the amount of such fee increasing over time from February 1, 2016 through April 30, 2016. Pursuant to the Macquarie Forbearance, the Company will also terminate certain physical base metals contracts with Macquarie and pay a fee for such early termination in the amount of approximately $840,000. The Macquarie Forbearance will not become effective until the Borrowers comply with certain conditions precedent set forth in the Macquarie Forbearance, including the agreements described in this paragraph. The Company and the Borrowers currently expect to satisfy all of the conditions precedent on January 19, 2016 although there can be no assurance that they will be able to do so.

 

Once effective, Macquarie’s forbearance will remain effective until the earliest to occur of (i) 12:01 a.m. on February 1, 2016; (ii) the failure of the Company or any Borrower to comply with any of its covenants and obligations under the Macquarie Forbearance; (iii) any representation or warranty made by the Company or any Borrower proving to be untrue or incorrect in any material respect; (iv) the occurrence of an event of default under the Horsehead Credit Facility other than those that resulted in the entry into the Macquarie Forbearance, including arising from a bankruptcy filing of the Company or any Borrower; (v) the termination of the PNC Forbearance (as defined below); (vi) the exercise of remedies by holders of the Company’s outstanding 3.80% Convertible Senior Notes due 2017 or 9.00% Senior Notes due 2017 or by secured creditors of the Company or any Borrower holding claims in excess of $500,000 (other than Macquarie); and (vii) the taking of an action by the Company or any Borrower to repudiate or assert a defense to any of the obligations under the Horsehead Credit Facility, the Macquarie Forbearance or any other related documents (the “Macquarie Forbearance Period”).

 

Forbearance Agreement with PNC Bank, National Association

On January 14, 2016, Zochem, Inc. (“Zochem”), a wholly owned subsidiary of the Company, and the Company entered into a Forbearance Agreement (the “PNC Forbearance”) with respect to the Revolving Credit and Security Agreement, dated as of April 29, 2014 (as amended from time to time, the “Zochem Credit Facility”), with PNC Bank, National Association, as agent and lender (“PNC”). Pursuant to the PNC Forbearance, PNC agreed to temporarily forbear from exercising rights and remedies related to certain events of default related to the failure to comply with the required fixed charge coverage ratio under the Zochem Credit Facility following a transfer of funds to Horsehead. PNC initially notified Zochem and the Company of the existence of the events of default on January 6, 2016, and on January 13, 2016, based on the same events of default, demanded immediate payment of all outstanding obligations under the Zochem Credit Facility. For additional information concerning the notice of acceleration, see Item 2.04 of this Current Report on Form 8-K.

Pursuant to the PNC Forbearance, all funds in any deposit account of Zochem with PNC were transferred to an account controlled by PNC. Disbursements of funds from the controlled account to Zochem are subject to a cash flow forecast as specified in the PNC Forbearance.

 

2

PNC’s forbearance became effective upon signing and will remain effective until the earlier of (i) the occurrence of an event of default under the Zochem Credit Facility other than those that resulted in the entry into the PNC Forbearance; (ii) any breach of a representation or breach or default by a party under the PNC Forbearance with respect to any covenant, undertaking or other agreement of such party under the PNC Forbearance; (iii) February 1, 2016; (iv) the termination of the Macquarie Forbearance; and (v) the commencement by or against Horsehead, of a bankruptcy case or proceeding under federal or state statute or the appointment of a receiver, trustee or other custodian for Horsehead or its assets (the “PNC Forbearance Period”).

In consideration for the forbearance, Zochem agreed, among other things, to pay a forbearance fee to PNC of $1,000,000 due and payable at the termination of the PNC Forbearance Period and provide a mortgage on Zochem’s currently unencumbered property in Ontario, Canada by January 19, 2016.

 

Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement.

As described in Item 1.01 of this Current Report on Form 8-K, on January 13, 2016, Zochem and the Company received a notice from PNC pursuant to which it demanded immediate payment of all obligations under the Zochem Credit Facility, including the outstanding aggregate principal amount of $14,922,440 plus accrued interest as of January 12, 2016, an outstanding letter of credit in the amount of $305,205 plus interest as of January 12, 2016, plus costs of PNC and the lenders thereunder. The acceleration of the obligations under the Zochem Credit Facility was the result of certain events of default related to the failure to comply with the required fixed charge coverage ratio following a transfer of funds to Horsehead. Upon entry into the PNC Forbearance, the acceleration ceased to be effective, and PNC and the lenders agreed to forbear from taking any enforcement action or exercising any related rights or remedies with respect to the existing events of default under the Zochem Credit Facility during the PNC Forbearance Period.

 

Item 7.01. Regulation FD Disclosure.

The Company announced that it has retained Lazard Middle Market LLC (“Lazard”) as a financial advisor and, through Lazard and the Company’s existing legal counsel, Kirkland & Ellis LLP, is in discussions with a number of potential financing sources and certain of the Company’s existing stakeholders to explore short and longer term solutions to address the Company’s liquidity, capital and financing needs. The Company is unable to predict the outcome of these or any future discussions and its review of its various alternatives. While the current discussions continue, the Company is exercising a 30-day grace period with respect to a $1.9 million interest payment that was due and payable on January 4, 2016 with respect to its 3.80% Convertible Senior Notes due 2017. That grace period will expire on February 3, 2016.

The information included in this Current Report on Form 8-K under Item 7.01 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities of that Section, unless the Company specifically states that the information is to be considered “filed” under the Exchange Act or incorporates it by reference into a filing under the Exchange Act or the Securities Act of 1933, as amended.

 

[str8shot]

My read, in short, is that the forbearance agreements will expire on the earlier of:

1) Feb 1, 2016, or

2) a BK filing by HH, or

3) the exercise of remedies by holders of the Company’s outstanding 3.80% Convertible Senior Notes due 2017 or 9.00% Senior Notes due 2017 or by secured creditors of the Company or any Borrower holding claims in excess of $500,000 (other than Macquarie), or

4) other specific terms of the Macquarie and PNC forbearances

 

Related to item 3, "while the current discussions continue, the Company is exercising a 30-day grace period with respect to a $1.9 million interest payment that was due and payable on January 4, 2016 with respect to its 3.80% Convertible Senior Notes due 2017. That grace period will expire on February 3, 2016".

 

So it looks like they have bought time until Feb 1 to negotiate with potential financing sources and select current stakeholders to come up with an alternative financing solution to bridge the ramp-up.

 

I don't know that a solution is likely to happen, but my hope has been that they could secure a new investor to loan them $100M plus convertible to common, similar to the deal that Liberty Media did when it saved Sirius.

 

Look forward to hearing people's thoughts on this latest development..

[swissguy]

After asking myself the question "If I didn't own this position, would I buy today?" and answering with no, I have just closed my position to preserve the little bit of principal that is still left. The only thing I regret is position sizing: I've let myself average down into a 10+% position. Next time I max out at 3.5-5.0%.

 

Good luck to everyone who is still holding on!

[kranthi_vic]

I sold out my equity position few minutes back. I dont know if its 100% right or wrong decision, i just wanted to cut the cord.

If you believe the bridge financing is going to happen, then the call option is available.

 

Good luck.

[RadMan24]

Of course. That's the point of significant progress needed to be made in order to eliminate fears of default.

 

The 8-k today pretty much shows the current situation of liquidity and its bleak.

[500pages]

Of course. That's the point of significant progress needed to be made in order to eliminate fears of default.

 

The 8-k today pretty much shows the current situation of liquidity and its bleak.

To beat a (mostly) dead horse (and learn as much as possible from this), from looking at covenants on the credit facility, what did they breach? If it's falling below 10m in net current assets, even taking into account the december coupon payment, how did they manage that trick? The repairs in December could have been costly, but did not cost them tens of millions. And I think the gains on hedges were positive current assets.

[Swami X]

Of course. That's the point of significant progress needed to be made in order to eliminate fears of default.

 

The 8-k today pretty much shows the current situation of liquidity and its bleak.

To beat a (mostly) dead horse (and learn as much as possible from this), from looking at covenants on the credit facility, what did they breach? If it's falling below 10m in net current assets, even taking into account the december coupon payment, how did they manage that trick? The repairs in December could have been costly, but did not cost them tens of millions. And I think the gains on hedges were positive current assets.

 

For Zochem Credit Facility:

 

"The acceleration of the obligations under the Zochem Credit Facility was the result of certain events of default related to the failure to comply with the required fixed charge coverage ratio following a transfer of funds to Horsehead."

 

I couldn't find a rationale for the default event for the Macquarie Credit Facility.

 

 

[str8shot]

Of course. That's the point of significant progress needed to be made in order to eliminate fears of default.

 

The 8-k today pretty much shows the current situation of liquidity and its bleak.

To beat a (mostly) dead horse (and learn as much as possible from this), from looking at covenants on the credit facility, what did they breach? If it's falling below 10m in net current assets, even taking into account the december coupon payment, how did they manage that trick? The repairs in December could have been costly, but did not cost them tens of millions. And I think the gains on hedges were positive current assets.

 

For Zochem Credit Facility:

 

"The acceleration of the obligations under the Zochem Credit Facility was the result of certain events of default related to the failure to comply with the required fixed charge coverage ratio following a transfer of funds to Horsehead."

 

I couldn't find a rationale for the default event for the Macquarie Credit Facility.

 

For the Macquarie Credit Facility:

Macquarie agreed to temporarily forbear from exercising rights and remedies related to certain events of default related to, among other things, insufficient availability under the Horsehead Credit Facility.

[walt373]

New 8-K out today. Here's an excerpt:

 

As previously disclosed, the Company is exercising a 30-day grace period, which expires on February 3, 2016, with respect to a $1.9 million interest payment that was due and payable on January 4, 2016 on its 3.80% Convertible Senior Notes due 2017. The Company has not made a decision at this time as to whether or not such interest payment will be made before the expiration of the grace period.

 

They said they intended to pay before. I guess they are changing their mind.

 

Also, S&P downgraded them to SD. Statement from them:

 

"Given our view of the company's debt level as unsustainable, and ongoing restructuring discussions, we do not expect a payment to be made within the grace period. In accordance with our criteria, we are lowering the corporate credit rating to 'SD'," said Standard & Poor's credit analyst Ryan Gilmore.