Tuesday, August 19, 2014

"New Evidence Buoys Claims Against Suntech"

Last week:

"Chinese solar company Suntech Power Holdings and its former chief executive must face a class action accusing them of lying to investors, a federal judge ruled.

A 'strong inference' can be made that former Suntech CEO Zhengrong Shi knowingly made false public statements about the company's liabilities before a scandal broke that plummeted Suntech's stock prices, the Tuesday ruling states.

New evidence, including emails and internal Suntech documents, support the ruling, U.S. District Judge Richard Seeborg said."
Here is the ORDER DENYING MOTION TO DISMISS [pdf].

Monday, August 18, 2014

James River Coal "NOTICE OF SELECTION OF STALKING HORSE BIDDER AND SUPPLEMENTAL AUCTION PROCEDURES" $JRCC

This was filed [pdf] on Saturday afternoon. Not a lot of time (0 business days) between it and the auction held today.

Pursuant to the Strategic Transaction Bidding Procedures, the Debtors, in consultation with the DIP Agent and the UCC, have selected JR Acquisition, LLC, a wholly owned subsidiary of Blackhawk Mining LLC, as a Stalking Horse Bidder for the purchase of the Debtors’ mining complexes commonly referred to as the Hampden Complex (including the assets of Debtor Logan & Kanawha Coal Company, LLC), the Hazard Complex (other than the assets of Debtor Laurel Mountain Resources LLC) and the Triad Complex for an aggregate purchase price of $50,000,000 plus the assumption of certain liabilities,
Only $50 million, and the bidder does not assume the black lung benefits or workers' compensation benefits that are something like $100 million plus. Blackhawk seems to be a CAPP coal vulture investor.

More about the purchase price:
Section 2.06. Purchase Price; Allocation of Purchase Price. (a) On the terms and subject to the conditions set forth in this Agreement, Buyer shall, on its own behalf and as agent for the relevant Designated Buyers, as consideration for the Purchased Assets, in addition to the assumption by Buyer of the Assumed Liabilities, (i) pay to the Sellers $20 million cash (the “Closing Cash Payment”), (ii) deliver to Kentucky River the Second Lien Note and (ii) deliver to the sellers a third lien secured promissory note in an amount equal to $25 million (the “Third Lien Note” and together with the Closing Cash Payment and the Second Lien Note, the “Base Purchase Price”). The Base Purchase Price shall be subject to adjustment at and after Closing in accordance with Section 2.08 (as adjusted, the “Purchase Price”). The Purchase Price shall be paid as provided in Section 2.11.
Not even all cash.

"NII Holdings Strikes Deal to Sell Chilean Nextel Subsidiary" $NIHD

WSJ:

NII Holdings Inc. has an agreement to sell its Chilean subsidiary, according to financial disclosures, but negotiations continue with bondholders as the Latin American wireless provider attempts to restructure its debt load.

Grupo Veintitr├ęs, an Argentine media company; Optimum Advisors, a U.S. private-equity firm; and ISM Capital, a London-based investment firm that focuses on emerging markets, have formed a joint venture to acquire the stock of Nextel Chile S.A., NII said Monday in documents filed with the U.S. Securities and Exchange Commission.

NII didn't include a price in the financial disclosure and didn't respond to a request for comment Monday...

According to NII's recent financial statement, Nextel Chile posted $24.5 million in losses on $16.7 million in revenue during the quarter ended June 30. During the same period in 2013, the subsidiary lost $39.9 million on $14.6 million in revenue. NII was unable to precisely value this asset in its most recent financial disclosure.
Wonder what this sold for?

The 10% capco bonds rallied significantly from last week's 15-17 to trade around 25-27 today.

"James River Coal Chooses Blackhawk Mining as Lead Bidder" $JRCC

Finally a bidder, although for a paltry amount:

"Bankrupt James River Coal Co., after repeatedly postponing an asset auction, chose a unit of Blackhawk Mining LLC as the lead bidder, with an opening offer of $50 million.

The Blackhawk unit will be the so-called stalking horse at the auction to be held today in New York, according to papers filed in U.S. Bankruptcy Court in Richmond, Virginia. A sale hearing to consider Blackhawk’s or other possible bids is scheduled for Aug. 20 in Richmond."
Bankruptcy court auctions are set up for the stalking horse bidder to usually win.

Friday, August 15, 2014

"NII HOLDINGS ELECTS NOT TO PAY $118.8M IN INTEREST DUE" $NIHD

"NII Holdings, Inc. announced today that is has elected not to pay approximately $118.8 million in interest due on August 15, 2014 on senior notes issued by its subsidiaries NII Capital Corp. and NII International Telecom, S.C.A. Under the terms of the indentures for the senior notes, there is a 30-day grace period during which the Company may elect to make the interest payments and cure any potential non-payment claims. As previously disclosed, the Company continues to engage in discussions with holders of, and representatives of certain holders of, the senior notes issued by NII Capital Corp. and NII International Telecom regarding the potential terms on which the obligations evidenced by those senior notes could be restructured, including by exchanging all or a portion of the senior notes for equity interests in, or debt securities of, the reorganized Company. Currently the Company has not entered into any agreements relating to a potential restructuring of its obligations, and there can be no assurance that these efforts will result in any such agreement. Additional information regarding the processes for implementing any agreed or other restructuring either on a standalone basis or in conjunction with one or more other potential actions and the potential timing of those processes is included in the Company's Form 10-Q for the quarter ended on June 30, 2014 filed with the Securities and Exchange Commission on August 11, 2014."

"Conrad Announces Second Quarter 2014 Results and Backlog" $CNRD

Press release:

"For the quarter ended June 30, 2014, Conrad had net income of $6.8 million and earnings per diluted share of $1.14 compared to net income of $6.1 million and earnings per diluted share of $1.02 during the second quarter of 2013. The Company had net income of $13.2 million and earnings per diluted share of $2.21 for the six months ended June 30, 2014 compared to net income of $12.0 million and earnings per diluted share of $2.01 for the six months ended June 30, 2013. Conrad’s backlog was $173.0 million at June 30, 2014, $152.9 million at December 31, 2013 and $181.8 million at June 30, 2013."
Net income up 11% quarter over quarter, 10% 1H over 1H. Backlog is down year-over-year.

The Q2 is out [pdf]. At $40, the market cap is $240 million and the enterprise value is maybe $190 million, assuming $50 million in excess cash.

They are now getting 40% of revenue from offshore oil and gas.

No shares repurchased in 2013 or 2014.

Still a great business, but both management and I seem to think that the stock is about fairly priced now.

"We're from google and we are here to help optimize your ad spend." $GOOG

A correspondent writes in about this change to the Google AdWords program,

"Today Google has announced that in late September, AdWords advertisers will no longer have the ability to de-select close variants. All campaigns will now include these variants, something that advertisers could previously opt out of. The way close variants will work is completely the same as it has been since 2012."
He observes,
"They are doing more and more to make it harder to target people. This means your cost per acquisition goes up and they get more of the juice. They want the other half of advertising that's wasted, and they're starting to realize they are giving away the store by letting customers target too precisely. You also cannot exclude tablets now on there - even though someone is much more likely to buy from a desktop or laptop than a tablet, yet Google forces you to target all of them together. The switch to mobile devices scared them, because it was mostly useless inventory from a direct marketing perspective, but it made the remaining desktop inventory more targetable and valuable - if someone is at their actual computer, they are "doing business" and in more of a buying mindset. Google does what it takes to protect 95+% of their revenue."