Entro domani devono comunicare la decisione sul pagamento del dividendo; le quotazioni sembrano indicare che ciò non avverrà. Detto questo, come tu anticipavi, non sembrano esserci notizie in merito.
The following report was written byJim Collins of the Portfolio Guru on April 30, 2015
Yes, It's Miller Time
Lest anyone think I'm writing using insider information, Miller Energy filed an 8-K well after the market closed last night, and several hours after my column on their preferred shares.
The 8-K divulged that Miller had received a Wells Notice from the SEC regarding activities from 2009 and also had received a letter from the NYSE indicating that MILL's listing could be in jeopardy due to its sustained run under $1/share.
The Wells Notice is civil, not criminal and is quite dated as it regards events from 2009. I can't even count how many companies I follow that have "broken the buck" and have received NYSE status letters, which call for a plan to address the share price and then allow for further time to implement that plan.
Neither is a big deal, but the last paragraph in the release was, and has certainly gotten the market's attention as MILL and its preferred Series C and D have all fallen 25% in today's trading.
Miller management noted that the company's Board of Directors had not made a decision regarding the next payment of preferred dividends on the Series c and Series D
So, will Miller make its scheduled preferred dividend payment?
The relevant #s:
Payment Amount: $4.369 million.
As of 1/30 Miller had 3.25mm shares of the Series C and 3.331mm shares of Series D outstanding. So, by my calculations, the quarterly interest payment on the two preferred series is about $2.18mm, each and $4.369 million in toto.
Latest Declaration Date: May 5th. I am told by MILL mgmt that they have to notify the NYSE by next Tuesday the 5th whether the June dividend will be declared. Prior dividends have been declared on the last day of the quarter but MILL's Board does have a few extra days to mull over payment.
Record date: May 15th. This is fixed in the prospectuses.
Payment date: June 1st. Also fixed in the prospectuses.
So, Miller needs to come up with $4.4 million by 6/1.
And to squelch three conspiracy theories I've heard several times today
--I read Miller's charter (fun!) earlier today and the company can only choose to pay preferred dividends "in kind" in the event of a change of control. There's no PIK option for quarterly dividends.
--I don't know where people come up with the idea that companies can convince investors to trade their preferred stock for common stock, but if anyone has an example of this being done successfully, please e-mail me at
[email protected]
--There is language in Miller's March 8th 8-K that states that Miller would need to raise $10mm in net proceeds from offerings of preferred shares to be able to make the next dividend payment. Some have noted that the small amount remaining under Miller's current preferred share count authorizations (0 on the C and only 670,000 on the D) would not allow for issuance of enough preferred shares to hit $10 million. My reading of the prospectuses shows that both authorizations could be increased with approval of Miller's Board--shareholder approval is NOT necessary--so that is not a roadblock to a capital raise.
There simply is no choice for Miller management--if they want to sustain the company in its current form--than to pay preferred dividends.
Yes, Miller's preferreds are cumulative, and, per the prospectuses, 4 payments can be skipped on the two preferred series before a penalty rate of coupon + 2% applies. One might say "oh, we can just non-pay for a few quarters and then catch up". Well the market doesn't see it that way.
Yes, Magnum Hunter had to non-declare for 5 months in 2013 (loyal readers of my newsletter know I covered that saga in full detail as it happened) but that was purely due to an issue with its auditors that led to late filing of MHR's 2012 10-K, prohibiting payment of pref dvds.
Not paying because a company doesn't have the cash on hand is a TOTALLY different thing. If the market perceives a liquidity crunch, all bets are off and the common will go down with the preferred.
Want proof??? Look no further than Escalera resources. I made some money flipping Escalera's preferred (ESCRP) into its 4th quarter dividend announcement. I was fortunate enough to be out of ESCRP long before management's foolish decision on March 9th to suspend payment of its preferred dividend.
Escalera as we know it is dead, and I used that decision to non-pay as a cautionary tale in a conversation I had with a VERY senior Milller executive this morning.
I can't predict what will Miller's Board will do, but I was able to send the following Escalera Case Study to my Miller contact (I redacted his name from the version pasted below) earlier today. It is just plain ugly, and shows, in no uncertain terms what the market will do to a company that voluntarily suspends its preferred dividend.
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Great talking to you earlier. As a follow-up to our conversation, this is the Escalera Resources (ESCR) situation.
On March 9th, the company issued a press release stating they would be omitting the dividend on their preferred (ESCRP) ESCRP's dividends are cumulative.
Press Releases: Escalera Resources Suspends Series A Cumulative Preferred Stock Dividend to Preserve Capital
Escalera's full-year results filing (April 15th) included the following paragraph
Given the Company's existing capital structure, specifically the Series A Preferred Stock's liquidation preference, it is likely Escalera will be unable to raise additional capital to support its future cash needs and longer-term acquisition and development strategy. In March 2015, Escalera announced that it was suspending the cash dividend on its Series A Preferred Stock for the quarter ending March 31, 2015 to preserve capital.
Press Releases: Escalera Resources Reports Full-Year 2014 Financial and Operating Results
This is what has happened to common since March 9th:
ESCR - SharpCharts Workbench - StockCharts.com
This is what has happened to the preferred, ESCRP, which is now trading at 13 cents on the dollar:
ESCRP - SharpCharts Workbench - StockCharts.com
Key Takeaway:
If you omit your preferred dividend, the market will punish your common and send your preferred to a level that implies liquidation.
Jim Collins
Portfolio Guru, LLC
1 646 823 4598
www.theportfolioguru.com
Jim Collins - RealMoney Contributor - RealMoney
