CLD - Cloud Peak Energy: Capital Structure Arbitrage Opportunity
Thesis
Contrary to what many bulls are claiming, an assessment of the capital and debt structure reveals that Cloud Peak Energy (CLD) is fairly valued at best. Still, considering management is open to strategic alternatives, there might be a way to profit from these by purchasing the 12% bonds.
Liquidity is very low
I've seen it touted frequently that the company has plenty of cash ($109.5m) on its balance sheet and is even generating some free cash flow. Therefore, even though there's a heavy debt load, this situation is different than similar distressed