Author Topic: Looking for free options on Met Coal  (Read 9660 times)

sculpin

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Re: Looking for free options on Met Coal
« Reply #20 on: February 18, 2017, 09:59:20 AM »
Should help keep coal pricing elevated...

North Korea is China’s fourth-biggest supplier of coal. Although China announced last April that it would ban North Korean coal imports to comply with United Nations sanctions, it made exceptions for deliveries intended for the “people’s well-being” and not connected to the North’s missile programs.

In practice, that exception was the cover for coal to continue to flow across the border in huge quantities, with imports of non-lignite coal up 14.5 percent last year to 22.5 million metric tons (24.8 U.S. tons).


China suspends North Korean coal imports, striking at regime’s financial lifeline

https://www.washingtonpost.com/world/china-suspends-north-koreas-coal-imports-striking-at-regimes-financial-lifeline/2017/02/18/8390b0e6-f5df-11e6-a9b0-ecee7ce475fc_story.html?utm_term=.bfd37e7f4293

http://www.reuters.com/article/us-column-russell-coal-coking-idUSKBN1582BY

Another factor to consider is Chinese imports of North Korean coal.

This is classified as anthracite by customs, but North Korean supplies are largely used as coking coal in steel-making or as a high-quality fuel in other manufacturing, such as ceramics.
« Last Edit: February 18, 2017, 10:03:49 AM by sculpin »


sculpin

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Re: Looking for free options on Met Coal
« Reply #21 on: March 05, 2017, 08:05:26 AM »
King Coal Begins To Releverage

12:29 PM ET
Thomson Reuters
LPC: Coal companies return to U.S. leveraged loan market
By Jonathan Schwarzberg

NEW YORK, March 3 (Reuters) - Rising coal prices and a more favorable outlook for the industry under President Donald Trump’s administration are allowing U.S. coal companies to sign new leveraged loans after being shut out of the market since mid-2015, despite a declining long-term outlook for the industry.

Massive investor demand for floating rate assets helped St Louis, Missouri-based coal mining and processing company Arch Coal to increase the size of a refinancing loan to US$300m from US$250m on February 23, less than six months after emerging from bankruptcy.

“This is probably the strongest leveraged loan market since before the credit crisis,” a banker said.

Coal has fallen out of favor as a fuel source in the United States in the last few years due to environmental concerns and the sector was hit by multiple bankruptcies amid the commodities and energy slump of 2015 and 2016.

“The coal world has gone through some challenging times,” a syndicator said. “However, met coal prices have been in a rally for a number of months now, which is helping to portray that industry in a more positive light,”

Metallurgical coal prices climbed more than 50% from March to October in 2016 and have held on to these gains as the U.S. gets ready to increase coal production. Coal carload traffic was up 19.2% in February compared to a year earlier, according to the Association of American Railroads.

President Trump has been promising to help strengthen the coal industry since the campaign trail, and a White House official told Reuters Wednesday the president plans to remove a federal coal leasing moratorium as soon as next week.

“The regulatory scrutiny of coal has eased since the new administration has taken over, and that has relaxed some of the negative bias as well,” the syndicator said.

Although coal companies are anticipating regulatory relief and are getting a better reception in the capital markets, production is continuing to decline and the rise in the price of thermal and coking or ‘met’ coal is failing to increase enough to benefit shareholders or stimulate new investment.

MORE DEALS

Coal companies, which until recently were viewed as difficult credits, are taking advantage of seemingly insatiable investor appetite and an issuer-friendly market to complete deals, helped by investors’ preference for floating rate debt as U.S. interest rates start to rise.

Arch Coal’s new US$300m term loan will refinance existing debt. The company emerged from bankruptcy in October 2016 after eliminating about US$4.8bn in debt. In addition to increasing the loan, Arch Coal was also able to cut the pricing to 400bp over Libor from initial guidance of 450bp.

Coal plant owner Homer City Generation was not able to achieve similar pricing for a loan after it filed for bankruptcy on January 11. The company launched a US$150m term loan to collateralize its obligation and fund its debt service reserve account, which priced in line with guidance at 825bp over Libor on February 8.

Blackhawk Mining had to increase pricing on a US$66m term loan that refinanced existing debt to 950bp over Libor from guidance in the 800bp-850bp range in early February, but completed the deal.

Other coal companies were encouraged by these syndications and headed to the market, including U.S. coal supplier Contura Energy and Alabama coal miner Warrior Met Coal, which both set deadlines of March 9.

Contura is arranging a US$400m term loan to refinance debt with proposed pricing of 500bp over Libor and Warrior Met, which is made up of assets from bankrupt Walter Energy, is also lining up a US$350m term loan with guidance of 550bp-575bp to back a dividend payment.

Coal companies have not tapped the market since mid-2015. The metals and mining sector ended 2016 with a default rate of 23.6%, according to Fitch Ratings, led by the coal sector. However, a recovery in secondary loan prices and strong investor demand has created the current wave of coal loans.

Investors’ hunt for paper and yield as billions of dollars of cash flows into the U.S. leveraged loan market has led them to reconsider deals that would previously have been off limits, despite the coal industry’s negative long-term outlook.

“The leveraged loan market has been overrun by such massive inflows of capital that you could probably get a loan to buy a fleet of zeppelins at this point in time,” said Jim Tisch, president and CEO of Loews Corp during his February earnings call.

(Additional reporting by Lynn Adler.) (Reporting by Jonathan Schwarzberg; Editing By Tessa Walsh)

http://www.economiccalendar.com/2017/03/02/teck-resources-noble-group-optimistic-about-coal-prices/

« Last Edit: March 05, 2017, 12:43:05 PM by sculpin »

bskptkl

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Re: Looking for free options on Met Coal
« Reply #22 on: February 14, 2018, 09:07:22 AM »
I've bought MAR back around $0.39 and trimmed MHY.UN at $0.17 just for something to do.
MAR has 45 cents of non Cline NAV and 45 cents of Cline NAV.
MHY has 72 cents of Cline NAV.
MAR has traded up to 50-55 twice in last months, so hoping it can do it again.

In re-reading this thread, I noticed a lot of good picks; CVEO and MHY tripled, BHP, TECK, ARCH all had nice gains.
All with coal prices ending lower (with a lot of volatility though): TECK averaged $207 per tonne for coking coal in 4th Q 2016 vs. $170 for 4th Q 2017.


bskptkl

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Re: Looking for free options on Met Coal
« Reply #23 on: April 23, 2018, 08:14:06 AM »
https://web.tmxmoney.com/article.php?newsid=6874281951184801&qm_symbol=MAR

Marret to distribute Cline to shareholders and to allow shareholders to elect $0.53 in cash (8 cents or $1.4 million more than hard NAV) - vote to occur in June.
Those are great terms negotiated by management. Consider me impressed.

I bet news leakage explains the sharp sell off in MHY.UN last week - went from $0.15 to $0.085.

Cardboard

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Re: Looking for free options on Met Coal
« Reply #24 on: April 24, 2018, 04:03:32 AM »
I am not sure that I understand the drop in MHY.UN related to this announcement.

Marret Resources owns 15.1% of Cline while it is just over 50% for MHY.UN. Marret Resouces plans to sell its 15.1% stake in Cline and to distribute proceeds to its shareholders.

If they sell it for nothing then yes, it would look really bad for MHY.UN. However, there is no indication of what will be realized.

So what has changed really regarding how much this met coal mine in Colorado and iron ore mine in Madagascar are worth?

Cardboard

bskptkl

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Re: Looking for free options on Met Coal
« Reply #25 on: April 24, 2018, 07:38:57 AM »
I am not sure that I understand the drop in MHY.UN related to this announcement.

Marret Resources owns 15.1% of Cline while it is just over 50% for MHY.UN. Marret Resouces plans to sell its 15.1% stake in Cline and to distribute proceeds to its shareholders.

If they sell it for nothing then yes, it would look really bad for MHY.UN. However, there is no indication of what will be realized.

So what has changed really regarding how much this met coal mine in Colorado and iron ore mine in Madagascar are worth?

Cardboard
An efficient way for MAR to distribute interest in Cline (presuming they cannot just sell it - if they could why not do that already?) would be to do a deal with MHY.UN accepting MHY shares in exchange for Cline interest and then distributing the MHY shares to MAR shareholders. If this transpires, MAR shareholders who already own MHY might want to front run the trade and bash MHY.

Ok, ok, not bloody likely I admit. Why go to all the trouble/illegality for peanuts...It's just that there was heavy selling out of the blue a couple days before the announcement.

Whatever the case may be, once again we are provided a "free option" on met coal in the form of buying MAR stock prior to the deal for 53 cents or below.

sbalsam

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Re: Looking for free options on Met Coal
« Reply #26 on: April 25, 2018, 07:08:14 AM »
Cardboard,
I don't think anything has changed regarding Cline Mining (at least not for the worse).
What has probably changed in certain investors' minds is the concept of buying Cline for free through Marret Resources (setting aside deal closure risks) versus at a discount with MHY (and MMF). At least that is how I was thinking about it yesterday. I happen to own small amounts of both MHY and MMF, but yesterday I was buying Marret Resources.   
Steve

sculpin

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Re: Looking for free options on Met Coal
« Reply #27 on: April 25, 2018, 07:14:46 AM »
Latest Cline update from Q4 MDA put out end March...

Cline Mining Update

Met coal prices have climbed back above $200/tonne, as shipping bottlenecks in Australia and mine closures in
China have been supportive. Chinese factors look to remain positive over at least the next 2-3 quarters. The
overall environment for Cline continued to gradually improve in 2017 and into 2018. Prices remain strong, the
U.S. dollar has weakened somewhat, and at least two restructured coal companies have gone public. This
indicates there is a renewed desire to provide capital to the industry.

Cline continues to be engaged with multiple parties in exploring fresh capital and perhaps new ownership for
Cline. The visions for Cline are extremely varied, as are these parties’ perception of value. These negotiations
are complicated and have proven to be protracted in the past. Overall, the prospects for a liquidity event are
improving, yet far from certain.

rukawa

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Re: Looking for free options on Met Coal
« Reply #28 on: April 25, 2018, 09:34:22 PM »
https://web.tmxmoney.com/article.php?newsid=6874281951184801&qm_symbol=MAR

Marret to distribute Cline to shareholders and to allow shareholders to elect $0.53 in cash (8 cents or $1.4 million more than hard NAV) - vote to occur in June.
Those are great terms negotiated by management. Consider me impressed.

I bet news leakage explains the sharp sell off in MHY.UN last week - went from $0.15 to $0.085.

How do you calculate hard NAV? Is this non-cline NAV?

I don't really get where they are getting the $0.53 in cash from. Is this coming from the private placement. If it is what do the private placement investors get out of it? Did they sell all the non-Cline assets to someone? I feel like I'm missing something.


bskptkl

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Re: Looking for free options on Met Coal
« Reply #29 on: April 26, 2018, 06:30:51 AM »
https://web.tmxmoney.com/article.php?newsid=6874281951184801&qm_symbol=MAR

Marret to distribute Cline to shareholders and to allow shareholders to elect $0.53 in cash (8 cents or $1.4 million more than hard NAV) - vote to occur in June.
Those are great terms negotiated by management. Consider me impressed.

I bet news leakage explains the sharp sell off in MHY.UN last week - went from $0.15 to $0.085.

How do you calculate hard NAV? Is this non-cline NAV?

I don't really get where they are getting the $0.53 in cash from. Is this coming from the private placement. If it is what do the private placement investors get out of it? Did they sell all the non-Cline assets to someone? I feel like I'm missing something.
They update NAV on their website - here's what it says today: NAVPU (April 19, 2018): $0.893
In their last MDA they attribute $0.449 to Cline value.
I presume the buyers will finance the 53 cent cash out. No telling how many elect to cash out.