tag:blogger.com,1999:blog-1527840491496268397.post220980205502426292..comments2024-03-08T11:20:30.095-07:00Comments on Credit Bubble Stocks: Estimate of Genco Shipping Warrant Valuation $GNKUnknownnoreply@blogger.comBlogger11125tag:blogger.com,1999:blog-1527840491496268397.post-76034550596110432572014-04-05T13:46:56.454-07:002014-04-05T13:46:56.454-07:00Comment on SeekingAlpha.com Genco Equity Sharehold...Comment on SeekingAlpha.com <a href="http://seekingalpha.com/article/2125893-genco-equity-shareholders-to-be-virtually-wiped-out" rel="nofollow">Genco Equity Shareholders To Be Virtually Wiped Out</a><br /><br />"I have finally gotten around to reading how the deal has been reported in the press. Many outlets simply have it wrong. Existing shareholders will get a warrant struck at $1.295 billion for 6% of the company. Several news reports are suggesting existing shareholders will get an outright 6% of the company. <br /><br />An outright 6 percent of the company at a $1.295 billion valuation equates to $1.76 a share, which is not to far off from todays close. Unfortunately for long GNK holders, this is not the deal.<br /><br />The deal is they get a warrant, which requires a vastly different calculation. In order for today's closing price to make sense, the post restructured equity must be worth $2.717 billion [(1.94*44)/.06 + 1.295]. This ignores the time value of money. I doubt many analysts would think that valuation is credible. <br /><br />The likely generous valuation would be 8x peak ebitda, or around 1.6 billion. The equivalent warrant value would be 6 percent of $1.6 -1.3 billion (.06 * 300) or $18 million. That equates to a current share price of around 40 cents."Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-84833498868660167552014-04-04T21:16:00.291-07:002014-04-04T21:16:00.291-07:001.295 billion is the strike price, not the equity ...<b>1.295 billion is the strike price, not the equity value.<br /><br />The market assigns the equity value, not an agreement.<br /><br />If the warrants were worth $86.2 million (as priced by GNK's market cap as of close today), then the new equity value would need to be over 2.75 billion.</b>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-18106814547278056232014-04-04T19:15:58.956-07:002014-04-04T19:15:58.956-07:00Otherwise 9x 2015 ebitda ($180M), a figure expecte...Otherwise 9x 2015 ebitda ($180M), a figure expected to fall precipitously the following years. Need to look at the compsjHurthttps://www.blogger.com/profile/04137029150343569722noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-80127771155994094582014-04-04T19:04:07.275-07:002014-04-04T19:04:07.275-07:00My read is the $1,295 is the equity value, this is...My read is the $1,295 is the equity value, this is not same as enterprise value. To that I think you have to add another $350M:<br /><br /><br />· replacing the $253 Million Facility and $100 Million Facility with new senior secured credit facilities or amending the facilities to provide for extended maturity dates through August 2019 and certain other covenant modifications;jHurthttps://www.blogger.com/profile/04137029150343569722noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-3039880557424781682014-04-04T14:14:50.668-07:002014-04-04T14:14:50.668-07:00I wonder how much longer GNK will remain listed.I wonder how much longer GNK will remain listed.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-26791827038106852682014-04-04T12:21:48.772-07:002014-04-04T12:21:48.772-07:00"As of the Plan Effective Date, Reorganized G... <br />"As of the Plan Effective Date, Reorganized Genco will be a reporting company under the Securities Exchange Act and the parties intend that Reorganized Genco will remain a reporting company under the Securities Exchange Act. In the event that, during the one-year period immediately following the Plan Effective Date, Reorganized Genco meets the applicable listing standards, then Reorganized Genco will use commercially reasonable efforts to cause the New Genco Equity to be listed on the New York Stock Exchange or the NASDAQ Stock Market within a reasonable time after the Plan Effective Date."Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-46493470722911095982014-04-04T11:45:56.874-07:002014-04-04T11:45:56.874-07:00"If the existing Genco shares get canceled in..."If the existing Genco shares get canceled in bankruptcy court, then all puts will get cashed settled and all calls will expire automatically.<br /><br />The option contracts pertain to the existing Genco equity, not the New Genco Equity being issued."<br /><br />This is not true. See OCC Infomemo #27646 for a case study on how this will work... if the warrants are publicly traded, existing options will be adjusted so that the new underlying is the warrants. With a stock as widely held as this piece of crap the warrants most likely will be publicly traded.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-46686487162400736622014-04-04T09:01:38.626-07:002014-04-04T09:01:38.626-07:00Shorts closed large positions around 10-10:30am. A...Shorts closed large positions around 10-10:30am. Also, someone loading up on thousands OTM puts around the same time. There were good returns for the principal and liquidity, and timing risks, but things are coming back to normal now.<br /><br />Also, a lot of dumb money thinks they will be receiving 6% equity in the 1.295 valuation. See the <a href="http://finance.yahoo.com/mb/GNK/" rel="nofollow">yahoo message board for GNK</a>. The reality is that shareholders are getting wiped out and are being granted warrants to re-purchase Genco's new shares at a 10% premium to the valuation which the creditors have agreed upon.<br /><br />The premium will add downward pressure on the volatility. Also, the multiple dilutions from the three, cashless MIP Warrants (each of which effectively is equity issuance by the company), willadd further downward pressure on the volatility. <a href="http://www.streetinsider.com/Downgrades/Maxim+Group+Downgrades+Genco+Shipping+(GNK)+to+Sell/9353726.html" rel="nofollow">Maxim Group cut GNK from hold to sell and slashed it's price target to .25 cents today</a>.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-37646857879253340442014-04-03T23:04:27.502-07:002014-04-03T23:04:27.502-07:00If the existing Genco shares get canceled in bankr...If the existing Genco shares get canceled in bankruptcy court, then all puts will get cashed settled and all calls will expire automatically.<br /><br />The option contracts pertain to the existing Genco equity, not the New Genco Equity being issued.<br /><br />The price of the New Genco Warrant only matters to shorts.<br /><br />If you are short, you will need to buy New Genco Warrants OTC to close your short position.<br /><br />It may also be that New Genco Warrant conditions get modified throughout the restructuring process.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-33308067719253044682014-04-03T18:27:50.068-07:002014-04-03T18:27:50.068-07:00Math behind it:
http://en.wikipedia.org/wiki/Blac...Math behind it:<br /><br />http://en.wikipedia.org/wiki/Black%E2%80%93Scholes_model<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-80473559964854400772014-04-03T18:20:31.057-07:002014-04-03T18:20:31.057-07:00any chance you could post the model (or more detai...any chance you could post the model (or more detail on the math behind it)?Anonymousnoreply@blogger.com