Author Topic: FELP - Foresight Energy  (Read 284998 times)

Patmo

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Re: FELP - Foresight Energy
« Reply #780 on: April 10, 2017, 08:00:25 PM »
Even at the disappointingly high rates of interest, the annual expense is going to be about par with 2016 though. So the co will generate a floor of 200mil after int, 50 mil to capex, there is still 150mil to split 75/25 debt/distributions, is that roughly where you are at?


heth247

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Re: FELP - Foresight Energy
« Reply #781 on: April 10, 2017, 09:18:01 PM »
So here is my back of napkin calculation: they have $475+825+170=1470MM secured debt, and for 2016, the bottom year, they did ~$320MM in EBITDA. Let's say they direct all of their excess cash flow into repaying the debt in 2017 and end up with $1300MM debt (or less) at 2017 year end, and achieve $350MM EBITDA (or more) for 2017. So at the end of 2017, the secured leverage ratio would be $1300/$350=3.71 (or less). This should qualify us for 50% "retained percentage" of excess cash flow for 2018. And for 65M+6M+9M=80M common units (excluding the sub units), I think we probably can get about $1 distribution per units. Anybody think this estimation is too aggressive?

Quote
Retained Percentage means, with respect to an Excess Cash Flow Period, 25%; provided that, commencing with the Excess Cash Flow Period for the fiscal year ending December 31, 2018, such percentage shall be (i) 50% if the Secured Leverage Ratio at the end of such Excess Cash Flow Period is less than or equal to 4.00 to 1.00 and greater than 3.00 to 1.00, (ii) 75% if the Secured Leverage Ratio at the end of such Excess Cash Flow Period is less than or equal to 3.00 to 1.00 and greater than 1.75 to 1.00 and (iii) 100% if the Secured Leverage Ratio at the end of such Excess Cash Flow Period is less than or equal to 1.75 to 1.00.

maybe4less

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Re: FELP - Foresight Energy
« Reply #782 on: April 11, 2017, 08:58:46 AM »
Even at the disappointingly high rates of interest, the annual expense is going to be about par with 2016 though. So the co will generate a floor of 200mil after int, 50 mil to capex, there is still 150mil to split 75/25 debt/distributions, is that roughly where you are at?

Here is what I see for 2017 without Hillsboro:

1) Total Secured Debt currently:

Term Loan - $825M
Revolver    - $170M
Second Lien Notes - $425M
Sugarcamp Longwall Financing - $39.22M
Hillsboro Longwall Financing - $41.25M
Capital Leases - $41.5M

Total - $1,542M

2) Cash Flow:

$300M EBITDA by annualizing H2 2016 (after removing $30M of insurance recoveries)

less $55M capex

less $122M in interest

less 4% mandatory annual prepayments to term loan of $33M

less principal payments on capital leases of $16M

plus stock option expense of $5M

= Excess Cash Flow of $79M

3) Debt paydown during 2017 of $49M

Secured Leverage Ratio at year-end of $1,493/ $300 = 4.98x

Required payment to Term Loan = 75% x $79M = $59.25

4) $19.75M available to common units
$66.9M diluted shares

$0.30 distribution per share

at a price of $5.96/share, that is less than 5% yield

5) For 2018, assuming the same EBITDA, I get a year-end secured leverage ratio of 4.54x and distributable cash per share of $0.31 cents

Assumptions are no Hillsboro, no refinancing, and floating rates don't move much.

See attached spreadsheet



valcont

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Re: FELP - Foresight Energy
« Reply #783 on: April 11, 2017, 02:14:44 PM »
Here is what I see for 2017 without Hillsboro:

1) Total Secured Debt currently:

Term Loan - $825M
Revolver    - $170M
Second Lien Notes - $425M
Sugarcamp Longwall Financing - $39.22M
Hillsboro Longwall Financing - $41.25M
Capital Leases - $41.5M

Total - $1,542M

2) Cash Flow:

$300M EBITDA by annualizing H2 2016 (after removing $30M of insurance recoveries)

less $55M capex

less $122M in interest

less 4% mandatory annual prepayments to term loan of $33M

less principal payments on capital leases of $16M

plus stock option expense of $5M

= Excess Cash Flow of $79M

3) Debt paydown during 2017 of $49M

Secured Leverage Ratio at year-end of $1,493/ $300 = 4.98x

Required payment to Term Loan = 75% x $79M = $59.25

4) $19.75M available to common units
$66.9M diluted shares

$0.30 distribution per share

at a price of $5.96/share, that is less than 5% yield

5) For 2018, assuming the same EBITDA, I get a year-end secured leverage ratio of 4.54x and distributable cash per share of $0.31 cents

Assumptions are no Hillsboro, no refinancing, and floating rates don't move much.

See attached spreadsheet

Thanks for sharing your work. How are you thinking about arrearages? The way I look at it, I am buying $3.90 worth of arrearages for the $6.00 price tag. That eliminate my risk against dilution and my share of the distributions increases as FELP pays out debt. That share would've gone to the IDR/Subs had there were no arrears.

So if you think FELP's situation will improve over time as the debt is paid off , then a 5% yielder today is not a bad deal.



heth247

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Re: FELP - Foresight Energy
« Reply #784 on: April 11, 2017, 07:47:57 PM »

Here is what I see for 2017 without Hillsboro:
1) Total Secured Debt currently:

Term Loan - $825M
Revolver    - $170M
Second Lien Notes - $425M
Sugarcamp Longwall Financing - $39.22M
Hillsboro Longwall Financing - $41.25M
Capital Leases - $41.5M

Total - $1,542M

From their recent 10K, as of 12/31/2016, they have long-term debt and lease obligations as:

2021 Second line Notes     $349,100
2017 Exchange PIK notes  $299,859
Revolver                          $352,500
Term loan                        $295,667
Trade AR                             14,200
5.78% longwall financing       39,217
5.55% longwall financing       41.250
Capital lease                        41,457
Sub total =                     1,433,250

So after refinancing, this increases to $1,542M? Where does the extra $100M come from? The only thing I can think of is the $170MM revolver. I think it is unlikely that the $170M revolver will be completely drawn. In addition, they also have $103M cash at hand at 2016 year end. So their actual net leverage ratio is not as high as you calculated.

« Last Edit: April 11, 2017, 08:38:27 PM by heth247 »

Beardog

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Re: FELP - Foresight Energy
« Reply #785 on: April 12, 2017, 08:02:15 AM »

So after refinancing, this increases to $1,542M? Where does the extra $100M come from? The only thing I can think of is the $170MM revolver. I think it is unlikely that the $170M revolver will be completely drawn. In addition, they also have $103M cash at hand at 2016 year end. So their actual net leverage ratio is not as high as you calculated.



Agree -- the company said in its 3/1 8-K that they expect the revolver will be completely undrawn, which makes sense considering the cash on the balance sheet plus the additional $60M from Murray.

https://www.sec.gov/Archives/edgar/data/1540729/000095014217000446/eh1700349_8k.htm

maybe4less

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Re: FELP - Foresight Energy
« Reply #786 on: April 12, 2017, 11:19:49 AM »

So after refinancing, this increases to $1,542M? Where does the extra $100M come from? The only thing I can think of is the $170MM revolver. I think it is unlikely that the $170M revolver will be completely drawn. In addition, they also have $103M cash at hand at 2016 year end. So their actual net leverage ratio is not as high as you calculated.



Agree -- the company said in its 3/1 8-K that they expect the revolver will be completely undrawn, which makes sense considering the cash on the balance sheet plus the additional $60M from Murray.

https://www.sec.gov/Archives/edgar/data/1540729/000095014217000446/eh1700349_8k.htm

You're right, I missed that. I confirmed with IR too this morning that the revolver is undrawn. So, we are still probably looking at a 30 something cent distribution early next year. Then, if coal prices stay where they are and Hillsboro is still out of commission, the company can probably pay enough debt down to get under 3x leverage by the end of 2018. In which, case 2018's distribution would be around 70 cents a share.

maybe4less

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Re: FELP - Foresight Energy
« Reply #787 on: April 12, 2017, 11:23:07 AM »
Here is what I see for 2017 without Hillsboro:

1) Total Secured Debt currently:

Term Loan - $825M
Revolver    - $170M
Second Lien Notes - $425M
Sugarcamp Longwall Financing - $39.22M
Hillsboro Longwall Financing - $41.25M
Capital Leases - $41.5M

Total - $1,542M

2) Cash Flow:

$300M EBITDA by annualizing H2 2016 (after removing $30M of insurance recoveries)

less $55M capex

less $122M in interest

less 4% mandatory annual prepayments to term loan of $33M

less principal payments on capital leases of $16M

plus stock option expense of $5M

= Excess Cash Flow of $79M

3) Debt paydown during 2017 of $49M

Secured Leverage Ratio at year-end of $1,493/ $300 = 4.98x

Required payment to Term Loan = 75% x $79M = $59.25

4) $19.75M available to common units
$66.9M diluted shares

$0.30 distribution per share

at a price of $5.96/share, that is less than 5% yield

5) For 2018, assuming the same EBITDA, I get a year-end secured leverage ratio of 4.54x and distributable cash per share of $0.31 cents

Assumptions are no Hillsboro, no refinancing, and floating rates don't move much.

See attached spreadsheet

Thanks for sharing your work. How are you thinking about arrearages? The way I look at it, I am buying $3.90 worth of arrearages for the $6.00 price tag. That eliminate my risk against dilution and my share of the distributions increases as FELP pays out debt. That share would've gone to the IDR/Subs had there were no arrears.

So if you think FELP's situation will improve over time as the debt is paid off , then a 5% yielder today is not a bad deal.

I agree that the arrearages are valuable, but we are still dependent on the cash flows to get those arrearages. I'm not sure I want to wait around for years in a highly levered commodity company before I can get paid.

bonkers

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Re: FELP - Foresight Energy
« Reply #788 on: April 12, 2017, 01:26:07 PM »
On another topic, I suppose also others than me are watching the coal price:
https://www.quandl.com/data/EIA/COAL-US-Coal-Prices-by-Region

Even if the prices move pretty closely in tandem, they do not move in the same direction all the time. E.g. for some reason when Central Appalachian price is going nicely upwards, for Illinois Basin the price dropped in Feb some -10 %. Moves like this have happened before, so perhaps the prices generally increase still 1-1 yrs more if there is such a thing as a cycle.

- B

Patmo

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Re: FELP - Foresight Energy
« Reply #789 on: April 12, 2017, 06:03:34 PM »
No lies, I'd rather have flipped my stock to yield pigs ASAP. But the company is only barred from issuing sizable distributions because of financial engineering and an incredulous debt market, not because the business went tits up. So to me it doesn't make sense to value the stock based on this year's yield. Until these covenants are handled, delevering the BS and time value are a pretty good price to pay to lock in a bunch of distributions at the LP level. The cash flow held up very strong in a gritty downturn, and so long as this remains true, I can't justify selling at these prices.