Rochysback, I hope not. Considering that OZL has a bank holding out to not refi its funding lines, PNA could be in the same situation in a month or two.
One thing I find amazing in this market right now is how quickly the improbable becomes possible or certainly dangerous.As will be obvious from my other posts, I am on the fence about the GSJBW refi as some posters with more relevent information seem to be able to assure me that all is good. But copper is just off four year lows and the US and CN recessions threaten to push it further. I have been a CU advocate since I was a kid scavaging scrap copper wire for spending money - but it looks pretty bad to me right now.
For instance, in Portland OR there is a guy who has made lots of money selling recyclable paper and cardboard in bulk to the Chinese who make boxes from it all. The boxes are used to ship electronics like TVs etc to the West. Now that the West is not buying electronics, the boxmakers have collapsed and the recycle guy in Portland can't sell bulk box material, so he sends it to the landfill. (See National Public Radio website for the spotlight on this guy)
Likewise, if the electronic market is diving, the need for copper is less. If the Ciscos and Nortels of the world are in a slump - no copper needs.
And so we come full circle. Copper supplies build up, spot prices fall. Long term contracts (especially with Chinese) mean nothing. I was speaking with a CEO of a shipping company last week who has had every one of his long term contracts overturned by counterparties. Sure we said we would pay $5000 per day but spot is $500 per day. If you don't willingly renegotiate, we will either go under or just not pay and you can take us to court. So, for PNA and others, the same thing will happen. Long term agreements are never worth the paper they are written on. How many times I have had a counterparty sit down with me and say that they want to renegotiate well before any contractual time? Plenty. And if you value the relationship you work it out, but at a loss to your long term position.
Sorry to have gone on and on. I just see PNA as an interesting example of macro and micro forces at play.
PNA Price at posting:
8.8¢ Sentiment: LT Buy Disclosure: Not Held
