Author Topic: FELP - Foresight Energy  (Read 298876 times)

Picasso

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Re: FELP - Foresight Energy
« Reply #290 on: May 24, 2016, 04:01:33 PM »
I don't think Murray wants Cline sitting fulcrum on 2nd lien notes past 2017. The PIK's will be redeemed and Cline gets to slightly increase his stake in FELP through the 7.5% warrant kicker while delevering the business. 

We still might see Cline invest directly into Murray which means he may own even more FELP through a potential Murray ownership.


heth247

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Re: FELP - Foresight Energy
« Reply #291 on: May 24, 2016, 04:09:27 PM »
I don't think Murray wants Cline sitting fulcrum on 2nd lien notes past 2017. The PIK's will be redeemed and Cline gets to slightly increase his stake in FELP through the 7.5% warrant kicker while delevering the business. 

We still might see Cline invest directly into Murray which means he may own even more FELP through a potential Murray ownership.

Hopefully you are right. Btw, how did the Murray's bond trade today?

Picasso

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Re: FELP - Foresight Energy
« Reply #292 on: May 24, 2016, 04:14:29 PM »
No change in either FELP or Murray bonds even though both traded. You can still buy FELP notes around $71.

Picasso

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Re: FELP - Foresight Energy
« Reply #293 on: May 24, 2016, 04:23:36 PM »
Interesting comments by Murray

http://bit.ly/1XQE492

heth247

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Re: FELP - Foresight Energy
« Reply #294 on: May 24, 2016, 05:09:35 PM »
Interesting comments by Murray

http://bit.ly/1XQE492

So Murray is looking to capture about 90MM tons of US coal production in the future. How much of that will come from FELP?  ;)

Picasso

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Re: FELP - Foresight Energy
« Reply #295 on: May 24, 2016, 05:32:23 PM »
Their intention was to eventually run it all through FELP.  But I don't think they can do it with a lot of leverage so they'll need a much stronger LP currency.  Which explains the way they've structured this deal. Murray and Cline probably see the value in the IDR's. They're really in it for the long haul.

Picasso

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Re: FELP - Foresight Energy
« Reply #296 on: May 24, 2016, 06:38:55 PM »
I just noticed something I missed the first read through.  heth, you're on to something here.  It looks like Cline is getting some flexibility on the PIK's.

Quote
FELP shall cause notice of any Partnership Redemption to be given to Reserves no less than 15 business days prior to the consummation of such Partnership Redemption stating its proposed terms. Within 10 business days of receipt, Reserves shall notify FELP that it intends to (i) continue to hold all of the Convertible PIK Notes held by Reserves and receive payment upon redemption in connection with such Partnership Redemption, (ii) exchange its pro rata share of the Convertible PIK Notes (not to exceed $180 million (plus accrued and unpaid interest)) for an equal aggregate principal amount of the debt or having a value (based on the economic terms of the Murray Investment), in the case of other securities, on the same terms being issued or borrowed in connection with such Partnership Redemption or (iii) any combination of (i) and (ii) above. If after exchange, Reserves would not be the holder of at least 60% of the total amount of any such new debt or other securities it shall have the option to provide cash that would result in Reserves holding up to 60% of an aggregate principal amount of such new debt or other securities. 

If Murray or FELP directly purchases or redeems, as the case may be, all of the Convertible PIK Notes directly from the holders thereof, Reserves may elect not to have the Convertible PIK Notes it then holds (in an aggregate principal amount not to exceed $180 million plus PIK interest), purchased or redeemed, as the case may be, and, if Murray or FELP does not purchase or redeem such Convertible PIK Notes from Reserves in connection with the purchase or redemption of Convertible PIK Notes from the other holders, then the Convertible PIK Notes held by Reserves shall automatically convert into Common Units in accordance with the terms of the Convertible PIK Notes Indenture (at a conversion price equal to the higher of (x) $0.8483 per unit (calculated assuming the Effective Date of July 15, 2016) and (y) the VWAP Price).  If Reserves’ Convertible PIK Notes convert as described in this paragraph, for all purposes hereunder, the Note Redemption shall nevertheless be deemed to have occurred so long as all of the other Convertible PIK Notes are purchased or redeemed in full as provided herein.

Reserves = Cline.  Basically Cline can swap into new debt that the 2nd lien holders allow, or he can let it get swapped into new units at the higher of VWAP or 0.85.

Also this:

Quote
Subject to approval by the Synergy and Conflicts Committee, Murray shall be entitled to make an investment in FELP (any such investment, the “Murray Investment”) at any time prior to April 7, 2017.  To the extent the Murray Investment is in the form of debt or preferred equity, it must: (a) be unsecured or secured on a junior lien basis to the Second Lien Notes pursuant to an intercreditor agreement that is reasonably acceptable to Murray, FELP and the holders of a majority in principal amount of the Second Lien Notes, (b) have a maturity date at least 91 days later than the earlier of (i) the maturity date of the Second Lien Notes and (ii) the date on which the Second Lien Notes have been paid in full in cash and are no longer outstanding; (c) have no obligor thereto other than the Issuers and the Guarantors, (d) not include cash payments while the Second Lien Notes are outstanding, and (e) other restrictions set forth in the Description of Notes (defined below).

I'll need to think about what options Murray would have to do a debt/preferred issuance instead of equity.  A lot of that will probably depend on where FELP is trading before the redemption is announced and what's going on at Murray itself and whether Cline steps into that picture.
« Last Edit: May 24, 2016, 06:41:09 PM by Picasso »

Picasso

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Re: FELP - Foresight Energy
« Reply #297 on: May 24, 2016, 06:52:44 PM »
Okay sorry for the spam here...

It would appear that Cline owning $180 million of the PIK's would simply say "no thanks to the redemption, I'll take the VWAP in stock."

Which means FELP only needs to come up with another $120 million plus accrued interest to redeem the rest.  Cline has essentially already injected his capital with whatever price FELP happens to be by April 2017.  Worst case dilution happens at $0.85.

Now we're back into incentives again.  Murray is going to want to have Cline's PIK's convert at the highest price possible.  Then we get a Murray + a rights offering for the remaining $120 million + accrued.  An easier pill to swallow than Murray and the other shareholders coming up $300+ million of capital by April.  But this is super reflexive, they need to get the stock price up.  I'm sure they could repurchase a fair amount of PIK's in the open market as well.

heth247

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Re: FELP - Foresight Energy
« Reply #298 on: May 24, 2016, 08:16:13 PM »
Okay sorry for the spam here...

It would appear that Cline owning $180 million of the PIK's would simply say "no thanks to the redemption, I'll take the VWAP in stock."

Which means FELP only needs to come up with another $120 million plus accrued interest to redeem the rest.  Cline has essentially already injected his capital with whatever price FELP happens to be by April 2017.  Worst case dilution happens at $0.85.

Now we're back into incentives again.  Murray is going to want to have Cline's PIK's convert at the highest price possible.  Then we get a Murray + a rights offering for the remaining $120 million + accrued.  An easier pill to swallow than Murray and the other shareholders coming up $300+ million of capital by April.  But this is super reflexive, they need to get the stock price up.  I'm sure they could repurchase a fair amount of PIK's in the open market as well.

Thanks for digging that out, Picasso. This sounds much better to me. :)  Now, the question is, what can they do from now on to get the stock price up before April 2017?  What catalyst do you see can help the stock price up, since their DCF will be limited for now, and the big picture for coal probably would not turn around in the short term.  Maybe we really should start to hope for a Trump win of the election.  ;D

Picasso

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Re: FELP - Foresight Energy
« Reply #299 on: May 24, 2016, 08:42:06 PM »
A completed tender and swap will be helpful.  Having their notes no longer trading flat and defaulted. Earnings improvement in the back part of the year as they deliver deferred shipments. Utilities feeling okay with contracting 2017 volume now that bankruptcy isn't at play.  A super cold winter. Trump winning might get the market back into coal stocks. Deer Run fire getting extinguished. Maybe selling an asset.

There was basically no press on the 8K from yesterday. Nothing on Seeking Alpha, etc. Maybe we need a good earnings call and some positive PR to get people hyped up again. Right now IR won't even call back investors.  The company has their investors completely in the dark so it's still an uncomfortable situation. Oh god I sound like Bill Ackman.