Southern Pacific Resource Corp STPJF

STP.DB - Caution - Fees Ahead!

[nikehercules]

Order Details
100,000     $33.74     3:37:00 PM EDT     21-Mar-2014

This is what was debited:

21-Mar-2014     26-Mar-2014     SOUTHERN PAC CV 6% 30JN16     BUY     100,000     -     -$9.99     -$35,183.32

Live and learn!

[ShatnersRug]

You should call and ask for an exact breakdown. Do it while they are still open. Before the weekend passes and it becomes "yesterday's transaction".

[nikehercules]

I was warned, see rad10's post.

[Park1]

Wow. I bought a few thousand on Wed (But just of T.STP). You bought 100,00 @ 33.74 of T.STP.DB?.  I wish I had your $$$.  Question:- If STP does better and pays of the debt what happens to the STP.DB, should go down?

[Pandora]

100,000 at $33+ ... a measly $3.3 million and time to post on Stockhouse as well. Who'd a thought we were dealing with such financial powerhouses here.

[rad10]

LMFAO - the great thing about this post - is that you are several orders of magnitude out. It's 100K face value paying 33 cents on the dollar.  Now if you don't have anything nice to say - back in the box pandora.

[ShatnersRug]

@rad10 :)

[Pandora]

I was following up to park1's post on March 21.

[sculpin2]

The extra amount is not fees. It is accrued interest on the debenture which you will get back on the next interest pay date. 

[ShatnersRug]

sculpin2, Using nike's example, wouldn't accrued interest be in the $4000 range up to this point? Pay date is June 30

[nikehercules]

for my $100,000 face value shares, it's $6,000/year. It is March, so the $35,183.32 - $33,740.00 = $1,443.32 is about right. Last payment was Dec, 31st an Eyeinvestor noticed that the bank allowed that payment out of the LOC. It's interesting that STP did not elect to pay the debs with common shares for the last payment. They had announced the strategic initiative at that point. That'

[ShatnersRug]

Although it matures on June 30th, you get paid only 6 months later???

[Awarded]

1 Re:  or my $100,000 face value shares, it's $6,000/year. It is March, so the $35,183.32 - $33,740.00 = $1,443.32 is about right. Last payment was Dec, 31st an Eyeinvestor noticed that the bank allowed that payment out of the LOC. Here is how I view it. “The 2011 Debentures mature on June 30, 2016 at a price of $1,000 per 2011 Debenture and bear interest at an annual rate of 6.00

[nikehercules]

@Awarded: Thank you very much for that post. Very informative. MH

[rad10]

Nike Don't sweat it - the bulk of what you have been charged over and above the price of the debs is accrued interest.  You will get this back in June.  If you sell before then - you will receive the interest plus however many days you have accrued from the buyer.  

[rad10]

Bang on Awarded - the way I see it - 16 bucks a day on a 33k investment.  difficult to get money working much harder than that as a retail investor. Nike will get his 1450 bucks back in June.  They will not be issuing stock in lieu of interest unless there is an incredible stock price appreciation - too dilutive.  Significant risk with this company though. Find ten different

[rad10]

I love it Nike - it is very very addictive - I short the common stock on debentures that are at or near the money whenever possible and then load up on the converts.  I  pick up the interest on the convertible with minimal risk to myself and no significant capital outlay.  Downside risk is covered with the short. Dire straits had a song about it - money for nothing and drinks

[nikehercules]

Thanks sculpin2, Greatly appreciated. This board has been a great deal of help. If you want to take a look at a disfunctional board, look no further than PRY. I wonder if the investors are a reflection on the company, and vice versa? @ Park I actually bought 1,000 at $33.74. The 100,000 is the face value of the instrument. If all is well, the debs will be worth face value and cash returned

[Park1]

Thanks Nikehercules. I understand that part about DB's better now.

[Eyeinvestor]

Bonds trade with accrued interest added to the price you pay, until the are officially declared "distressed" then they trade ex coupon. For STP DBs the seller has received his coupon whether or not the coupon is eventually paid...................this is a risk you face when buying a bond in this gray zone.... the price is distressed , but it is still trading with accrued interest, so

[rad10]

Eyeinvestor - you have nicely outlined the risk - for which there are very handsome rewards.  Debentures are definitely not for everyone. The fact that STP is for sale as a going concern (redemption at parity if a takeover deal is reached), and the recent string of positive results make a 33 cent debenture very attractive IMHO.   If a deal is not reached - the most likely scenario is

[demarko]

Man this whole debenture stuff got me "googling"  on what the term means and this whole STP.DB. Call me "green" on this but what i make of this is: Your basically lending money to STP and getting a return on it at X amount of interest. You can do this on the open market by buying STP.DB. Am I wrong Rad?..thanks people

[rad10]

That's the gist of it.  It is usually a lower tier unsecured debt carrying a higher rate of interest. The beauty is that they are convertible to common stock at a prefixed stock price within a certain time frame.  When they trade out of the money - like stp - a long way from the stock conversion price, they are a fixed rate bond.  When the sp approaches parity, they are at the

[demarko]

Got it.  Pretty much a gamble, if it pays off, it can payoff huge. If it goes the other way, ciao $$. Thanks for the explaination Rad.. D