RE:RE:RE:RE:RE:RE:John David’s questionThe "pin" is put in on all cash liability stock units at a Board meeting late Jan/early Feb accoring to what the co has told me. Yes, it would be great if this stock can stay depressed till then.
I know there are many at S that do not want to see the departed execs who were granted these mammoth units to work through the restructuring, reap any further comp than they did over all those years.
Which is just part of the reason S has and still is intentionally keeping cash off the b/s...partially to keep the stock price depressed so 1) new execs can get some units and 2) so they don't have to pay Pathe more than he took out of this co and importantly - so they do not meet the test of min liquidity on the excess cash flow sweep on the 2nd Lien notes. They need to keep cash off the b/s so they don't have to buy back bonds at or above Par and cna hopefully buy them back at 85 and 55. They want investors to believe they don;t have the liquidity, but...
Look at Page 67 in 3Q22 Supplemental Info: Working Capital is building up substantially. It end YE21 at about $421mm and as of the 3Q22 is was $599mm...almost 50%higher in 9mos. That almost $600mm/2 = $300mm for S on top of 400mm shares = ~$0.75/share! To be fair, they do need some working capital in Moa but this is getting insane. I have written about this before for all you wondering "where the cash is?" It is at the opco (Moa) for very intentional reasons...1) so they can buy as much debt back as possible below Par and 2) keep the stock suppressed so the settlement of units is lower adn new mgmt can accumulate at this lower price.
And why do they need to buy back bonds asap? Because the covenants are onerous...mainly the restricted payments which limit their ability to buy back stock. I bet they do a bond tender every Q for the next year.
If they need $200mm of working capital at Moa, that would release $400mm/2= $200mm for S...that alone would buy back about 2/3rds of the 2nd Liens, which have the more restrictive covenants.