PARKER DRILLING CO PKD
September 13, 2019 - 2:27pm EST by
bdad
2019 2020
Price: 21.00 EPS .76 1.11
Shares Out. (in M): 15 P/E 27 18.90
Market Cap (in $M): 315 P/FCF 0 0
Net Debt (in $M): 74 EBIT 0 0
TEV ($): 389 TEV/EBIT 0 0

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  • way to lower the odds of this going thru
  • Odd-Lot Tender
  • BLBD Round II

Description

This idea isn't going to make anybody rich but it's exceptionally straightforward and provides a good way to make 40% in ~2 months but since it's limited to 99 shares (~$2K), this is particularly well suited for PAs or folks who run multiple accounts.

Parker Drilling is a drilling services and tool rental company. The Company entered a pre-pack bankruptcy in Decemer '18 and emerged in March with pre-petition creditors led by Varde and Brigade controlling the equity (Varde and Brigade own a combined ~62%).

With a float of ~$125MM and ~$25MM in LTM OCF, the ~$800K in public company operating expenses is an expense the Company doesn't want to bear so earlier this week they voted to delist. They are going to delist by reducing the number of shareholders of record to <300 by implementing a 1-100 reverse stock split. As part of the stock split, odd lot positions of 99 shares or less will be cashed out at $30.

https://investors.parkerdrilling.com/press-releases/detail/254/parker-drillings-board-of-directors-approves-plan-to

The Company will hold a special shareholder meeting to implement the proposal but they already have the support of Varde and Brigade (so ~62% of holders) so the vote should just be a formality. A date hasn't been scheduled yet, but the Company indiactes it should happen before December.

Risks:

The Company abandons plan to delist. Based on Plan EBITDA, the Company is trading at <3x EBITDA while peers trade ~4x. There should be some valuation support in the event the plan to delist is pulled.

 

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.

Catalyst

Cash out tender at $30

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    Description

    This idea isn't going to make anybody rich but it's exceptionally straightforward and provides a good way to make 40% in ~2 months but since it's limited to 99 shares (~$2K), this is particularly well suited for PAs or folks who run multiple accounts.

    Parker Drilling is a drilling services and tool rental company. The Company entered a pre-pack bankruptcy in Decemer '18 and emerged in March with pre-petition creditors led by Varde and Brigade controlling the equity (Varde and Brigade own a combined ~62%).

    With a float of ~$125MM and ~$25MM in LTM OCF, the ~$800K in public company operating expenses is an expense the Company doesn't want to bear so earlier this week they voted to delist. They are going to delist by reducing the number of shareholders of record to <300 by implementing a 1-100 reverse stock split. As part of the stock split, odd lot positions of 99 shares or less will be cashed out at $30.

    https://investors.parkerdrilling.com/press-releases/detail/254/parker-drillings-board-of-directors-approves-plan-to

    The Company will hold a special shareholder meeting to implement the proposal but they already have the support of Varde and Brigade (so ~62% of holders) so the vote should just be a formality. A date hasn't been scheduled yet, but the Company indiactes it should happen before December.

    Risks:

    The Company abandons plan to delist. Based on Plan EBITDA, the Company is trading at <3x EBITDA while peers trade ~4x. There should be some valuation support in the event the plan to delist is pulled.

     

    I do not hold a position with the issuer such as employment, directorship, or consultancy.
    I and/or others I advise hold a material investment in the issuer's securities.

    Catalyst

    Cash out tender at $30

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