LBO

Brother, can you spare a couple mil? It’s been rough days on both the mol desk and on the exoplanet radial velocity desk. So far this year, TC’s stock price is down 20%, hitting molybdenum bugs where it hurts:

If that chart weren’t bad enough, 1,235 Kepler candidates have flooded the market, driving new planet prices to historical lows. In recent trading on the Oklo electronic exchange, uninflated hot Jupiters orbiting V=13-14 stars were changing hands for USD 1,200. Further price deterioration is expected as new production from the Persian Gulf region starts to come on line:

Rather than sit around and grumble, Philip Nutzman and I have been working out the details of a strategy that can take advantage of the depressed TC stock price, while dramatically increasing free cash flow in our core exoplanet businesses. The scheme? A roaring 80′s Barbarians-At-The-Gate inspired leveraged buyout of TC!

The full details, of course, are proprietary, but I can tip our hand a little bit: We’ll be issuing junk bonds paying ~10% to underfunded university pension plans. Despite their junk rating, our bonds will be quite attractive, as they’ll be contingent on the success of the deal. We’ll use the 2.6 billion in capital thus raised to initiate a leveraged buyout of TC at a ~20% premium over the current basement-level stock price. Once we’ve gained control, we’ll sell off the Mt. Milligan copper-gold project to a large-cap copper major for ~1.2 billion. We’ll use the cash thus obtained to start paying down the bonds, and help ourselves (or rather, we’ll help the exoplanet desk) to TC’s 300 million in cash. Continued operations at the Endako and Thompson Creek mines will be used to retire the remaining bonds over the next 5-7 years.

Now before the TC executives come at us with a pitchfork, let me remind everyone that I’m being strictly tongue in cheek. In addition, see also the web log disclaimer!

Disclaimer

Nothing on this site should be construed as a recommendation to buy or sell any specific security nor as a solicitation of an order to buy or sell any specific security. Before making any trade for any reason you should consult your own financial advisor. The author may hold long or short positions in any of the securities discussed either before or after publication of an article mentioning such a security.