JO does it again... (and Mesa recall rumor)
 

Mesa Air Group Shareholders Approve Increase in Authorized Shares of Common Stock and Use of Common Stock for Repurchases of Notes

It would appear the bond issue is temporarily solved and there is not an immediate threat of Mesa shutting its doors.

Also, with the displacement run, I have heard from a source in the recruiting dept. they are thinking of recalling upwards of 20 furloughs for an ERJ/dash class.

Maybe I'm not understanding something - how can you just 'issue' stock to buy something when you have nothing to back the stock up with? Besides, will the bond holders actually approve of this type of payment?

The Note holders would have to approve a new agreement in order for Mesa to use those stocks for the bonds. Unless Mesa has already done that, which I don't think they have. If the bond holders say NO, then I'm guessing they will demand the cash, which will force a bankruptcy due to lack of funds. We'll learn soon enough.

ExpressJet issued new stock, but we had to renegotiate with our Note holders and the new agreement had us paying a portion in cash and issueing them a bunch in stock as well.

Actually, I believe in the paperwork I received as a shareholder, it said that in the terms of the bonds, the company is allowed to issue stock in lieu of cash. It also says it in the DEF14A filing on November 22.

Keep in mind, that this is also based on the bondholders exercising their right to sell it back to the company.

Well one more hurdle down for Mesa, one to go. Im keeping my fingers crossed and hope that I get called back sometime in 2009, im #61/64 furloughs. I know many people have moved on and gone elsewhere so we will have to see how many return.... Good Luck to everyone in this screwed up industry

SEC Filing on November 24th. You are correct and at ~$.25/share it's going to take 378M shares to pay the bondholders.







OO.

Ok, they have 75 million shares out now - they are planning on issuing 825 million new shares - how would this not devalue the stock to around $.04 per share?

That was what I was wondering too. My friend is a advisor and he was the one that called me about this news artical on Yahoo news. I asked him about it after I read it. He said it all depends on how the shareholders and the bonds are handled. At this point there is just not enough information to know.

The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 4200 employees and was awarded Regional Airline of the Year by Air Transport World magazine in 1992 and 2005. Mesa is a member of the Regional Airline Association and Regional Aviation Partners.

I guess someone hid the fact that Freedom Airlines is a Mesa Company when ATW magazine was looking for a Regional of the Year (2005).

They didn't begin operating Freedom till October 2005, which was after they had already won the award.

It's just amazing the attitudes in this thread. If this was a thread about Skywest or Horizon or something there would be congratulations for the company and well wishes of guys coming back from furlough. Instead it's met with disbelief and disappointment. What is it about Mesa that sucks so much?

Jerry Ornstein and his band of merry men.

CP said we are loosing 5-8 ERJ's and closing CVG
and since the ERJ is staffed like OJ likes(less then needed) and with PBS + the loss of those birds does not mesh with bringing people back.
Just dont get your hopes up.

I've seen this coming since it came out that these bonds were due.

Lots of disappointed Mesa bashers out there tonight.

True, they can pay with stock. However...

A reasonable stock issue is one thing, but issuing TEN times the amount of your stock currently on the street, which is valued in pennies, sounds outright fraudulent.

If I were the bondholder, I don't think I'd accept money printed by JO... :p

That's why I chuckle a little bit every time I see one of those stupid "Regional Airline of the Year" stickers on the side of a Shupublicah airplane. It's like the Grammy of industry awards. They'll give those things to anyone:rolleyes:

The quote "not worth the paper it's printed on" comes to mind since copies at Staples cost $.30 a page.

Is this a Freudian slip or a play on words?

I tried to cut and paste the entire table published in the SEC filing, but at $.10/share JOe is going to need more than the 900M shares. However, the bondholders may not even demand payment if it means accepting the shares. Either way JOe wins.






eP.

The bottom line is that they still have to have investors to buy these worthless stocks. I seriously doubt that they'll find enough capital with the disclosures he has to include. Even with another public offering, if one comes, he'll have to generate a ton of capital to generate any capitalized position to secure, well........anything. Credit, equipment, flying, etc.

Good things happen to good people and JO is NOT good people.

How can JO win if the bond holders don't accept the shares?

If I was JO I'd say to the bondholders: "Here, you can take this old BigWheel as payment. It's worth 7 billion Mesa-dollars. Whether you take it or not, I'm calling us even."

That's how it works, right?

What is the meaning of the methane molecule avatar???

haha beats me... that's why I'm asking. Never seen anything like this before. 1100% new shares on a penny stock. Don't even know how the regulators are ok with this.

Why's that? Do you consider this good news?

Don't worry this might go strait to the bond holders however it's just one last push before they're delisted. Not good news for the company.

haha, no it doesn't have to do with flatulence, if that's what you're thinking.

To me it symbolizes our (humankind's) almost hopeless dependence on fossil fuels. I figured I'd just put up a methane molecule rather than one of the more complex hydrocarbon chains (which probably wouldn't fit, and nobody would recognize anyway).

And yes, I know methane can be derived from "renewable" sources. So maybe there's hope after all....

And now we return to our regularly scheduled Mesa bashing....

I'm not sure everyone fully understands...

IF the bondholders elect to exercise their repurchase rights, Mesa has the right to repay in stock. The amount of stock is calculated by using some 5 day average stock price. There is no choice for the bondholders as this was the terms of the early repurchase and since this move was approved by the shareholders, it is all kosher.

So, assuming all bondholders exercise their repuchase rights, at an average price of .28, it would take a little over 300 million shares to repay it.

For the bond holders to see that money they still have to dump those shares. One way or another they'll have to hit the street to be worth anything. Even if they are issued to the holders at an average of .28 they still will dilute the amount now available for trading meaning anyone holding onto their shares will see them drop since their market share is also diluted with it. If the stock was issued and the price didn't change accordingly it'd be no different than them printing their own money. One way or another, regardless of who gets the shares or how they get them, once those shares leave the companies hands the price/value of the ones currently out there will plummet.

Let me spell it out like this.

Bond Holders:"Hey guys we sure appreciate the money for the bonds that are coming due".

JO:"OH... yea... errr........... lets see I need to find a way to NOT pay you that money because... well... we don't have any. I know how about I avoid declaring BK right now by simply giving you a big bag of air and calling it stock repayment since it was agreed on in the past. That way my debts to you legally taken care of yet by the time you get to cash those shares out, if ever, they'll be worth nothing anyway! YAY I've avoided less people in line at the BK courts and can keep flying current contracts right now because if I had declared BK papa DAL would cut me off at the knees. Just a little more time to get golden parachute all lined up and papers burned so I don't go to prison!!" "Hey you there's porn on all the computers upstairs go start erasing everything!".

But there is no way it will retain $.28 cents. Like everyone said, that would be like printing your own money.

Pretty much sums it up.

They may not have a choice contractually. But I'd probably take it to court if JO tried to pawn off that garbage on me.

I could start a company today and issue 1,000,000 shares of common stock (after I go through all the paperwork/hoops). Bottom line is.... there still has to be someone willing to buy it.

I think they still have to work a deal out with them. Basically I think J.O. now has an offer for the Note Holders, instead of just bankruptcy. Look for a part cash, part Stock deal like ExpressJet did. However, ExpressJet had a lot more cash to dish out to their Note Holders, where Mesa has hardly any.

I think the chances that the Note Holders demand cash is a lot higher at Mesa than it was at ExpressJet.

Plus, I think the Note Holders would get good amount of their money in the end if Mesa had to liquidate.

Nobody is stupid enough to take a bag of air, not even Mesa investors.

That's why JO has to offer them something tangible, like a BigWheel! :D

^^^This is as simple as it gets.^^^

For those that aren't quite getting it CLICK HERE and read the actual filing. Page 10 includes the table with a variable stock price (for those that keep talking about it becoming diluted). The $.28 is just what is being used now. Like DENpilot said the actual value will be based on a 5 day average. Again read the filing.

The bondholders have three options:

1.) Take the shares in lieu of cash (MESA has the right to do that, refer to the bottom of page 10 in the SEC filing).

2.) Not exercise their rights. Just because the bonds are due doesn't mean they have to collect on them, they can defer to a later time.

3.) Refuse the shares, demand cash, put the company in BK and hope to collect anything after all assets are sold. Like MESA really has that much to sell.



Of all the options, #1 is looking pretty good. At least you get something (well 900M tons of printed paper). Sell it for what you can get because it's really that or nothing at all.






OO.

I'm no accountant, so let me see if I got this straight...

You're saying Mesa can create 900 million shares of stock out of thin air, it will not go down in value because Mesa says so, and then they are allowed to use it as money to pay off debt?

If it was that easy, why would any company in the history of Earth ever need to file bankruptcy?

While he's at it, why doesn't JO just issue 57 billion shares of Mesa stock and use it to buy Delta?

I'm not really an expert on this, but from what I understand they will be issued at (5 day avg), but will be valued at current market value. (The .04 a share or whatever it may be.) So, really, they get less than what the value of their bonds are.

But you really cannot blame JO, these were the terms of the bonds when they were issued. The investors knew full well that it could come to this. Personally if it was my choice, I would ride it out a few more years.

This is not just me hating Mesa but if I were an investor I might want to take road three. Force Mesa to liquidate and get what I can now, with a bad economy and a company that is not looking so hot those shares might just end up being worthless anyway. But that is just my uneducated opinion.

First, MESA's shareholders said MESA can create 900M shares, that's what the vote was about.

Where did I or anyone say it wouldn't go down? What are you reading? Short end of it, NO, you didn't get this straight. THE VALUE OF THE STOCK WILL BE DETERMINED BY A 5 DAY AVERAGE. Read the filing for yourself. It could go up, down or remain the same.

Here you go:

That's it in plain english. Page 10.

edit: MESA has been authorized (by the shareholders) to issue up to 900M shares. They don't have to issue all 900M. Depending on the stock price it can vary from between 350M up to 900M. The table on page 10 (SEC filing) shows a stock price down to $.10/share. If it were to go to $.05/share MESA would be unable to pay the debt. However, there are still other things JOe can do, like a reverse stock split e.g. ExpressJet. XJT did a 10:1 split. For every 10 stocks you held you now get one. That took the price from $.19/share to $1.90/share. But for now JOe has bought himself some time.







OO.