Tuesday, December 3, 2013

David King Resigns From Suntech Power Board of Directors $STP $STPFQ

"On November 29, 2013, Mr. David King resigned from the Company’s Board of Directors with immediate effect."
Nice update. Any particular reason? How about a financial statement? How about a update on the Cayman Islands proceedings?


Anonymous said...

The only reason why he'd jump off the ship is because it's sinking.

Anonymous said...

Surprised Nacson and Metzger are still on board...

Any thoughts how this plays out into next week's court date?

Anonymous said...

If/when shareholders unload hundreds of thousands at once, then the equity price will fall below 50 to 30 cents.

94 of the Nacson affidavit in the Cayman provisional liquidation filing pointed out that even if the chapter 7 case were dismissed, the US judgement rulings could be enforced outside of the US unless STPFQ seeks bankruptcy protection in the US.

Additionally, 95 of the same document makes clear that STPFQ would likely seek relief under chapter 15 before there is a ruling in the chapter 7 proceedings.

Chapter 11 would provide more protection to STPFQ than chapter 15, but chapter 15 would buy the company more time in it's attempt to carry out a scheme of arrangements in the Cayman proceedings.

Accordingly, shares will drop when one or more of the following occur:
* Bondholders seek to enforce their US judgement rulings outside of the US
* STPFQ files for bankruptcy under chapter 15 or chapter 11
* A New York judge grants relief to bondholders in the chapter 7 proceedings
* A scheme of arrangement and an implementation plan get announced, as this would almost wipe out shareholders

IMHO, the equity price can be viewed in the following 7 tiers:
1. >60-50 cents: chapter 7 dismissal and STPFQ wins judgement ruling appeals before they get enforced
2. 50-40 cents: bondholders enforce judgement rulings in Italy, Singapore, Japan, etc.
3. 40-30 cents: STPFQ files for bankruptcy under chapter 15
4. 30-20 cents: STPFQ files for bankruptcy under chapter 11
5. 20-10 cents: Bondholders granted relief and trustee gets appointed in the chapter 7 proceedings
6. 10-0 cents: The full details of a scheme of arrangements get announced
7. 0 cents: equity gets cancelled

Opium War said...

The stock is going to zero, regardless.

The real question is, will a Chapter 7 trustee be appointed to help maximize recoveries for bondholders?

If you get about $50 million into the estate from settlements, and Clearwater/Spinnaker are cut out of it, recoveries start to look pretty decent.

Anonymous said...

Suntech could prevent a trustee from being appointed by filing for bankruptcy. We know it will get to 0 but the real question is how long will it take to get there. Maybe someone can ask a lawyer in New York for a realistic timetable for all of the practical next steps that have been listed above?

Anonymous said...

excatly. timing is everything since there is no way now to add to your option position if you have one on.

Anonymous said...

Timing is key when it comes to exercising ITM options and closing OTM options.

It is also important for closing short positions or selling equity hedges.

I think all puts will be ITM after the hearing, but will there be a short squeeze as a result?

Anonymous said...

Timing is irrelevant. The only sensible move if you are short is to stay short. Why would the expected stock price be higher at any given time in the future?

Anonymous said...

The risk to shorts for low volume equities like STPFQ is that the stock gets canceled before it can be bought. Essentially, that means the short position can't be closed and eventually it would get booked as a 100% loss. Of course, the short position could be kept open for the cost to borrow the canceled equity with the hope it resumes trading in the distant future; but that would be a waste of money and time.

Anonymous said...

Sorry, dumbass, but if a bankrupt equity is cancelled then shorts don't have to cover AND put contracts are adjusted to call for delivery of nothing instead of shares.

Anonymous said...

Timing is very relevant when you have to pay 100% interest rate rounded up to the nearest dollar and you need $2.50 margin per share. Also it could spike for no reason and you can't add more if you already have a big position.

Anonymous said...

Actually, the OCC would decide what happens to the outstanding options; usually all call options expire worthless and all puts get cash settled.

Short positions do not get cash settled; they remain open until the borrowed securities can be bought back (, otherwise there is no settlement for the position to be closed).

Good luck buying back cancelled shares in the future; at the very least, it'll provide you with a nice tax write off every year.

Anonymous said...

I like the question above: "will there be a short squeeze after all puts are in the money?"

Anonymous said...

Sounds like Clearwater and Spinnaker want to fight this out in court..

"Investment firms Clearwater Capital Partners LLC and a Spinnaker Capital Group affiliate told a bankruptcy judge on Monday that allowing the Chapter 7 bankruptcy for Suntech to move forward would result in a smaller recovery than under the restructuring plan that's in the works for the company.."

Anonymous said...

Clearwater and Spinnaker are not parties to the Chapter 7 case and their opinions do not matter in the proceedings.

All 3 arguments Suntech is making will be shot down immediately:

1. 1 or more bondholders could join the petitioners (in accordance with 3001(b)) and Suntech's first (3001(a)) argument would not longer be a dispute. However, in the event 1 or more bondholders did not join the petitions, the Drugaws had assigned their judgement ruling to a LLC which they own and had bought the bonds with the intent of getting a return of principal + interest, not a fraction of the principal from a judgement ruling assignment and whatever relief the chapter 7 bankruptcy proceedings will offer them. Accordingly, at least 3 bondholders are qualifying petitioners. Thus, the minimum requirements for the chapter 7 case to proceed are satisfied. Let there be no doubt: the chapter 7 proceedings will proceed.

2. There is no dispute between Suntech and bondholders as to the judicial venue; both agreed they would submit to the jurisdiction of NY court when the securities were issued, so this 2nd argument that Suntech has no business presence in NY (and, consequetly, cannot enter bankruptcy proceedings in any NY court, when it does, in fact, have a NY Foreign Agent to which the court of NY had sent a summons, and is appearing in NY court) is merely Suntech disputing itself.

3. It does not matter if the chapter 7 petition is contrary to the interests of "most bondholders," which is Suntech's 3rd argument. A chapter 7 liquidation is not contrary to the interest of the petitioning bondholders. And each petitioning bondholder is entitled to relief given that Suntech has not yet chosen to voluntary file for bankruptcy in the US. No judge has ever used 305(a)(1) to dismiss a chapter 7 case on the grounds which Suntech's alleges, which essentially is that majority bondholders have greater rights than minority bondholders. The bondholders hold the same securities and, therefore, have equal rights. If Suntech is truly seeking a 305 abstention, then it would need to file for Chapter 15 and seek it under 305(2)(b) rather than 305(1)(a). Suntech would still have a difficult time getting this case dismissed under 305(2)(b) and it is very likely that the chapter 7 case would proceed in that case as well.

I wonder if the petitioners with judgement rulings will seek to enforce them elsewhere, including in the BVI, now that Liquidators have been appointed over PSS (which holds all of Suntech's holding and operating subsidiaries).

Anonymous said...

On December 9, 2013, Mr. Philip Fan resigned from the Company’s Board of Directors with immediate effect.

New 6K

Anonymous said...

News from a person who was present at the hearing this morning:

1. The petitioners will respond to the STPFQ motion to dismiss by or on 12/20.

2. A hearing on the STPFQ motion to dismiss was scheduled for 10am on 1/6.

The judge was skeptical about STPFQ's 3001(a) argument that Longball Holdings LLC does not qualify as a petitioner; his exact words were: "if the judgement ruling was held by the Dugaws instead of an entity which they own, would you still make the same argument? What difference does it make?"

The next hearing will focus on the STPFQ 305(a)(1) argument.

Clearwater + Spinnaker expressed concern that the NY chapter 7 proceedings would ultimately realize less value than the Caymen proceedings.

The petitioners expressed concern about the failure of restructuring efforts to yield a return and the ongoing dissipation of STPFQ assets.

Accordingly, the petitioners would like the chapter 7 proceedings to move forward or for STPFQ to voluntarily enter bankruptcy in NY asap.

On the other hand, Clearwater + Spinnaker would like to avoid the costs and filing requirements of converting the chapter 7 proceedings to chapter 15 in NY via 305(2)(b)(2).

Petitioners and Clearwater + Spinnaker are negotiating how to proceed now.

Anonymous said...

looks like dec puts at the 50c level will expire worthless...how annoying

Anonymous said...

All of the .50 puts are just a few cents away from being in the money.

Anonymous said...

the 50c puts for dec trade at 6c. stock needs to fall to 44 just to break even next week. anything short of a 5cent stock price would be a disappointment.

Anonymous said...

STP 3/15 bonds are down to $10.45 now.