The exchange offer went through.

music selection:  “Find Your Way Back” — Jefferson Starship

My bond in FET has been underwater as the company has been negotiating an exchange offer in a difficult to refinance environment.  The company announced today that 96.1% of bondholders agreed to exchange their 6.250 coupon bond due 1OCT2021 for 9% convertible bonds due in 2025.  This is a huge win as the new bond is “better” and moves from being unsecured to secured.

I picked up 21 dollars in unpaid interest and will share in 3.5 million in bonus incentive for tendering my bonds (about another 11 bucks).  The old bonds have been removed from my brokerage and there is a cryptic “corporate action” item in its place until the new bonds are issued.  I’m content to hold this bond until maturity or conversion now as it is secured and pays an attractive coupon.  This is a nice win that removes some of the sting of holding JC Penny’s bond into bankruptcy, which I will likely recover nothing on.

Devour your prey raptors!

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Update CUSIP 34984VAB6 (Forum Energy bond)

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4 thoughts on “Update CUSIP 34984VAB6 (Forum Energy bond)

  • August 5, 2020 at 7:00 pm
    Permalink

    Here are some of my trades today. Criticism requested!

    1) Rolled two of my MSFT short puts at the 187.5 strike from 8/14 to 9/4, collecting $+240.

    2) Bought 10 bear put spreads on DDS at the 32.5 and 35 strikes (current price is 26.39) and 8/21 expiry for $-2250.

    3) Sold 10 bear call spreads on FL at the 30 and 35 strikes (current price is 27.56) and 9/4 expiry for $+960.

    This is essentially a bet against mall traffic and a small bet on the MSFT gated ecosystem expanding as offices close or stay closed. I’m experiencing great reliability from their products in the field and hearing reports about Dynamics growing faster than Salesforce due to economies of scope.

    Reply
    • August 5, 2020 at 10:15 pm
      Permalink

      I like all of those trades. I am evaluating DDS and M for bear put spreads to be opened this Monday.

      Reply
  • August 5, 2020 at 9:28 pm
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    (1) the MSFT play seems solid. MSFT can kind of have it both ways… bad news on the virus means more focus on tech, although less money to go around… good news on the virus means a little less focus on tech, but more money to go around in the economy… either way, MSFT does decently well and shouldn’t fall below 187.5 by Sept 18th (I mean, there are no sure things, but it seems low probability). I guess $240 is the new premium, minus $80 to buy back the old puts? Looks good.

    (2) DDS, this one also looks good. The one worry is that they have spiked well above that since March (the spike was in early June) but they fell back down within 9 days and it doesn’t look like it’s threatening to go back up. 9% premium for 16 days of risk on something that is probably >95% chance to work out, seems good. (btw, it was funny when I looked up the pricing to find that the entire volume today was 10 and the “last”/only trade happened at 2:30pm with a 2.25 debit… it practically had your name written on it)

    (3) I am a little wary of this one since it was up above 30 very recently and I don’t really know what made it go down, which means I don’t know what might make it go up again. But maybe you know, and the trade seems defensible… at almost 20% premium over a month, you’re definitely getting paid for the risk.

    So, these seem like good trades, I guess the only question would be: compared to what? I don’t claim to know what the best trades are but, just to have something to compare to:

    I already have plenty of bullish silver exposure but today entered a sizeable-for-me number of Sept. 18 SLV bull put spreads at 22/20 for 44 cent credits. I know there is no sure thing but I personally feel very good about them, we’ll see. If you have thoughts on that, would be happy to hear them.

    Reply
    • August 6, 2020 at 9:03 pm
      Permalink

      Thanks skeptic and FV!

      My premise is that there will not be another major lockdown in red states in the next month or two. The March-July experience (and foreign experience) indicate that infections grow unless there is a severe lockdown or unless you do things like some other countries did which are not culturally possible in the US (tracking apps, mass compliance).

      An increased infections scenario means suffering for mall based retail.

      Reply

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