Author Topic: FELP - Foresight Energy  (Read 299449 times)

valcont

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Re: FELP - Foresight Energy
« Reply #680 on: March 01, 2017, 10:06:15 AM »
So after this refinancing, Murray will still need to pay the MQD to the unit holders to get the subs converted. If I remember correctly there were some arrearages + $2.025 that he needs to pay out after March 31st . That would get the total outstanding units to 130m. They didn't talk about the outstanding warrants but that would dilute the unit holders further. They did $308m EBITDA last year, if you assume $100m interest expense and $50-60m maintenance , you are getting roughly $1 of DCF with 130m units. What do you guys think?


gadfly

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Re: FELP - Foresight Energy
« Reply #681 on: March 01, 2017, 11:32:52 AM »
So after this refinancing, Murray will still need to pay the MQD to the unit holders to get the subs converted. If I remember correctly there were some arrearages + $2.025 that he needs to pay out after March 31st . That would get the total outstanding units to 130m. They didn't talk about the outstanding warrants but that would dilute the unit holders further. They did $308m EBITDA last year, if you assume $100m interest expense and $50-60m maintenance , you are getting roughly $1 of DCF with 130m units. What do you guys think?

Say FELP comes out with $1.35 distribution for the first year. ARLP is currently 13x its distribution. Say FELP is 8x to account for the subs.. then you're looking at $10.8 share price and that will cost something like $105 million for FELP (I think) if you include the warrants and the new commons from the refi.

Also, the beginning of 2016 was the bottom in export prices so $308 Adjusted EBITDA might be low going forward if things stay as they are currently. So if DCF going forward is more like $200 million then the MQD is no sweat.

Currently the commons don't have worry about subs or IDRs and we get all the money. Because we get all the money it creates an incentive for Murray to do something to get his...

Anyone have any idea when or how we'll find out if Reserves Group is taking their 60% of the new securities from the refi? If Cline doesn't take any equity at these prices that'd worry me...

valcont

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Re: FELP - Foresight Energy
« Reply #682 on: March 01, 2017, 11:36:58 AM »
Anyone have any idea when or how we'll find out if Reserves Group is taking their 60% of the new securities from the refi? If Cline doesn't take any equity at these prices that'd worry me...

What do you mean? There is no equity being exchanged here. There are notes and credit facilities for all the outstanding PIKs

gadfly

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Re: FELP - Foresight Energy
« Reply #683 on: March 01, 2017, 11:47:20 AM »
Anyone have any idea when or how we'll find out if Reserves Group is taking their 60% of the new securities from the refi? If Cline doesn't take any equity at these prices that'd worry me...

What do you mean? There is no equity being exchanged here. There are notes and credit facilities for all the outstanding PIKs

From this mornings 8K

"In connection with the foregoing, Murray Energy Corporation (“Murray Energy”) intends to contribute approximately $60.6 million in cash directly or indirectly to FELP in the form of common equity, with such proceeds further contributed to the Issuer (the “Murray Investment”).  On February 24, 2017, the Issuers issued a conditional notice of redemption to redeem $54.5 million aggregate principal amount of the Second Lien Notes on the business day immediately prior to the closing of the offering of the New Notes (as defined below) at a redemption price equal to 110% of the principal thereof, plus accrued and unpaid interest to, but excluding, the redemption date (the “Equity Claw Redemption”).  The Equity Claw Redemption is expected to be funded using the net proceeds from the Murray Investment.

valcont

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Re: FELP - Foresight Energy
« Reply #684 on: March 01, 2017, 12:03:36 PM »
From this mornings 8K

"In connection with the foregoing, Murray Energy Corporation (“Murray Energy”) intends to contribute approximately $60.6 million in cash directly or indirectly to FELP in the form of common equity, with such proceeds further contributed to the Issuer (the “Murray Investment”).  On February 24, 2017, the Issuers issued a conditional notice of redemption to redeem $54.5 million aggregate principal amount of the Second Lien Notes on the business day immediately prior to the closing of the offering of the New Notes (as defined below) at a redemption price equal to 110% of the principal thereof, plus accrued and unpaid interest to, but excluding, the redemption date (the “Equity Claw Redemption”).  The Equity Claw Redemption is expected to be funded using the net proceeds from the Murray Investment.

Right, that is to redeem the 2021s partially. The 2017 PIKs are being refinanced fully and thus reserves can not exercise equity exchange. Am I reading this right. I hate this f.. lawyer speak.

"Furthermore, if Murray Energy elects to exercise its right to effect a Murray Purchase of: (i) all of the Exchangeable PIK Notes; or (ii) a portion of the Exchangeable PIK Notes in combination with an Exchangeable PIK Note Retirement of the remainder of the Exchangeable PIK Notes, in either case prior to October 2, 2017, each member of the Reserves Investor Group may elect to decline to have his or its Exchangeable PIK Notes purchased by Murray Energy and such Exchangeable PIK Notes shall instead exchange into Common Units in accordance with the Exchangeable PIK Notes Indenture."

heth247

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Re: FELP - Foresight Energy
« Reply #685 on: March 01, 2017, 12:05:05 PM »
Anyone have any idea when or how we'll find out if Reserves Group is taking their 60% of the new securities from the refi? If Cline doesn't take any equity at these prices that'd worry me...

What do you mean? There is no equity being exchanged here. There are notes and credit facilities for all the outstanding PIKs

From this mornings 8K

"In connection with the foregoing, Murray Energy Corporation (“Murray Energy”) intends to contribute approximately $60.6 million in cash directly or indirectly to FELP in the form of common equity, with such proceeds further contributed to the Issuer (the “Murray Investment”).  On February 24, 2017, the Issuers issued a conditional notice of redemption to redeem $54.5 million aggregate principal amount of the Second Lien Notes on the business day immediately prior to the closing of the offering of the New Notes (as defined below) at a redemption price equal to 110% of the principal thereof, plus accrued and unpaid interest to, but excluding, the redemption date (the “Equity Claw Redemption”).  The Equity Claw Redemption is expected to be funded using the net proceeds from the Murray Investment.

Maybe that is the reason of the less exciting response by Market today? Market doesn't know at what price Murray participate.

valcont

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Re: FELP - Foresight Energy
« Reply #686 on: March 01, 2017, 12:08:53 PM »

Maybe that is the reason of the less exciting response by Market today? Market doesn't know at what price Murray participate.

Ok there are two separate issues that we are talking here.

1. Murray injecting $60m to payoff some 2021 in exchange of common equity.

2. Reserves opting for equity exchange in lieu of refinance.

I am only talking about point (2). That is not happening. That was $180m dilution.

gadfly

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Re: FELP - Foresight Energy
« Reply #687 on: March 01, 2017, 12:17:45 PM »

Maybe that is the reason of the less exciting response by Market today? Market doesn't know at what price Murray participate.

Ok there are two separate issues that we are talking here.

1. Murray injecting $60m to payoff some 2021 in exchange of common equity.

2. Reserves opting for equity exchange in lieu of refinance.

I am only talking about point (2). That is not happening. That was $180m dilution.

My reading is that they are related issues. Reserves group is given the chance to participate in whatever new securities (including equity) that are created as a result of a refi of the 2017 PIK. Are you sure that thr 60.6 of Murray investments is going to the 2021 notes? I'm not. I give up until the 5pm call!

from the restructuring docs:

"If, after exchanging the entire Reserves Investor Group Amount, the Reserves Investor Group would not be the lender or holder of at least
60% of the total amount of the securities, debt or other instruments to be issued in the Exchangeable PIK Note Retirement, the Reserves Investor
Group has the option under the Financing Letter Agreement to fund an additional amount in cash to purchase additional securities or interests on
the same terms as other investors as may be necessary to make the Reserves Investor Group the holders of up to 60% of the total amount of such
securities, debt or instruments, as applicable." 

valcont

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Re: FELP - Foresight Energy
« Reply #688 on: March 01, 2017, 12:26:26 PM »

My reading is that they are related issues. Reserves group is given the chance to participate in whatever new securities (including equity) that are created as a result of a refi of the 2017 PIK. Are you sure that thr 60.6 of Murray investments is going to the 2021 notes? I'm not.

"In connection with the foregoing, Murray Energy Corporation (“Murray Energy”) intends to contribute approximately $60.6 million in cash directly or indirectly to FELP in the form of common equity, with such proceeds further contributed to the Issuer (the “Murray Investment”).  On February 24, 2017, the Issuers issued a conditional notice of redemption to redeem $54.5 million aggregate principal amount of the Second Lien Notes on the business day immediately prior to the closing of the offering of the New Notes (as defined below) at a redemption price equal to 110% of the principal thereof, plus accrued and unpaid interest to, but excluding, the redemption date (the “Equity Claw Redemption”).  The Equity Claw Redemption is expected to be funded using the net proceeds from the Murray Investment."

Patmo

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Re: FELP - Foresight Energy
« Reply #689 on: March 01, 2017, 12:54:10 PM »
OK my previous posts were all messed up, here's what I think we're looking at:

2024 secured senior notes: 238.5mil (backed into, net of 78mil cash)
New term loan: 750 mil
New revolver: 170mil
Commons issued to Murray: 45.6mil (about 6.5mil units issued out)
Option on GP stake: 15mil

Total 1.3bil refi'd, 12.5mil units dilution including warrants, new debt 1.16bil

There is $1.5/unit in arrears before Murray can start getting distributions. Afterwards, if he chooses to convert to common units, will either have to wait for .3375/unit MQD's to have been steadily paid 3 years in a row, or "pay" a $2 fee to common holders. At least that's my understanding of it. Murray probably wants to "pay" out the $2 fee on top of arrears, 3 years straight of MQD's is not a done deal on 140mil total units... Unless he is actually going to take the co private, but he'll still have to true that up to unitholders on top of the going-forward value and the premium for take-out...


Note: This trade had tons of appeal to me at the beginning, but not for the right reasons. It's slowly seeping in my thick skull, bit by bit, how genius it really was.  At a price of $1.6 when the restructuring was virtually complete,  this stock was essentially an unlocked ATM machine out in the open... It's ridiculous...
« Last Edit: March 01, 2017, 01:21:44 PM by Patmo »