lessthaniv

Folks, I'm seeking your opinions on how you're currently viewing the disputes between China/US on currency pegging. China has said they have no intent of allowing their currency to rise quickly against the U.S. dollar. The U.S. obviously wants the renminbi to appreciate against the U.S. dollar. Some economist opinions that I've read suggest it's about 40% undervalued thereby giving China an unfair advantage in regards to International trade. I personally don't expect the Chinese government to flinch but will the U.S. lawmakers follow through on the new laws to impose import duties on Chinese goods, effectively offsetting the perceived trade advantage? At the beginning of March the IMF commented on the Chinese currency saying it was substantially undervalued. As the numbers of unemployed grow, the pressure to act seemingly increases. I'm not so sure that this move would assist the U.S. on the short term, though? After all, manufacturing jobs in China cannot be easily replaced in the U.S. on the short term. With China owning $900 Billion of U.S. government bonds, you'd expect the two sides to come to some mutually acceptable agreement. Still another way of rectifying the trade imbalance is for the U.S. to increase their exports to China. However, a common opinion seems to have developed criticizing the Chinese government of protectionism. I have to admit - I am motivated to ask this question as I have holdings in Seaspan. Depending on the final outcome, this could materially assist/hinder their business. I'm asking this question however to solicit all opinions as many holdings of the board might be affected in a similar fashion. Any thoughts?

how is Baupost relevant to McElvaine?

"my experience has been that if you believe in their philosophy/process and that they are still faithfully executing that process, the time to purchase those companies/management teams or their underlying holdings is after a period of meaningful underperformance (which often calls into question their talent or process)." valuegeek, I definitely agree that the time to invest in good talent/assets is after a period of under performance. Like you, one of the key characteristics that I like to see in any investment opportunity is a management team with skin in the game. This is what originally led me to Tim years ago and his trust. In fact, I am constantly scouring his holdings for new ideas that I can steal/research. I sincerely respect and genuinely like the guy. But I think it's important to have some perspective. I think most would agree that 13 years is a reasonable time frame to measure ones talent. In Tim's case, he has lived a double life to some extent. The first 7 years of his trust were absolutely wonderful. The next 6, not so much with his biggest two mistakes happening most recently. The result is a 13 year track record that is slightly better than an index fund. It's true to say, at this point in time, that his long term accomplishments have been buoyed by his early successes. Personally, I don't question Tim's process or philosophy. I think it's in his blood. I do question, however, his focus and execution of that process/philosophy as of late. Facts are, however unpopular, he dropped the ball. I am cheering as loudly as anyone for him to pick up the ball again, focus, and execute. And, as I suggested earlier ... I think he will. <IV

I agree Tim is a great person, one that I have had the pleasure of meeting on a couple of occasions and one that I have a great deal of respect for. Having said that, there is no denying that Tim has had a rough go of it lately. Six consecutive years of under preforming the index and most notably the last two where he unfortunately exceeded the index by a wide margin on the way down in 2008 and then significantly underperformed the index by a wide margin on the way back up in 2009. This is a value investors worst nightmare. I suspect it will be sometime before Tim surpasses his high water mark and he is able to enjoy some incentive fees again from the trust. I silently wonder if this had something to do with his decision to go back and work for Mackenzie Financial. The cynical side of me believes that his shift in focus away from the trust and towards his new Mackenzie fund may have been a contributing factor to the trust's recent under performance. I truly hope that Tim gets back on track and my gut instinct says he will. <IV

If you search the threads there is some good info. Valuation? North of here! <IV

I've been looking to find a re-entry point however I'm cognisant that "marked to market" accounting works both ways. If the market was to pull back some, book value may fall due to being marked to market and your discount to book may not look so attractive upon reflection. It's a reasonable price long term, but I'm selfishly hoping for better pricing! <IV

GULP. :'(

Sanj, Not sure if you saw this yet but it's a funny read. Boyd contacted Byrne for comments while writing this article and Byrne posted Roddy's questions & his responses on the Deepcapture.com website. http://www.deepcapture.com/rocker-gradient-scoff-at-law-and-roddy-boyd-shills/ __________________________ Today’s Yawn: Scoffers of Law Rocker-Gradient Ignore Court Order & Roddy Boyd Shills, Exhibit Z Posted on 14 January 2010 by Patrick Byrne To bring new readers up to speed: DeepCapture long ago exposed hedge fund towel boy Roddy Boyd through such literary gems as Mark Mitchell’s “Michael Milken, 60,000 Deaths, and the Story of Dendreon” (N.B. Chapter XII), and my own essay, “Roddy Boyd Sucks It Like He’s Paying the Rent (Fortune Magazine)“, an exegesis of the collapse of Rocker Partners and review of the journalistic fellatio Roddy performed thereon (this latter piece should be read in conjunction with “Carol Remond Tells a Joke She Doesn’t Get“). I encouraged Fortune spokeswoman Katy Reitz to follow the emerging story on Roddy: whether for that reason or others of their own, Fortune and Roddy parted ways soon thereafter, Roddy to slither into his own unique and arrest-warrant-laden world (that’s him, just above the child porn guy). As my feelings may not be obvious, even-handedness and transparency dictate that I disclose that compared to Roddy I’ve observed more intellect in a ice addict sitting on the floor of a 7-11 trying to remember how to use Comet and Pam Spray to cook meth, and more dignity in a crackhead living off $2 hand-jobs at the bus station. Followers of the Overstock story (itself a sub-plot of the DeepCapture epic) know that at the end of 2008 Gradient Analytics’ Donn Vickrey and Bettis Brothers Carr and Leland apologized for and retracted years’ worth of lies, accusations, and smears about Overstock. Given that they had made their allegations a cornerstone of their business development, their decision to apologize and recant may, I suspect, have undermined their ability to represent themselves as anything but lapdogs willing to charge for shill “research” one day those same fund managers they’ll sell out the next. Then in late 2009, Rocker Partners dropped their counter-suit against Overstock and made their own apology in the form of a $5 million check. In a process known as “discovery”, in the course of this lawsuit both sides turned over millions of pages of documents to the other. Since the turning over of documents and depositions thereon, Gradient Analytics publicly retracted their accusations and apologized, and Rocker Partners dropped their counter-suit and coughed up $5 million: the litigation-conversant reader may make her own inference as to how the weight of evidence tipped the scales of justice in this particular case. Of more immediate interest, however, is the fact that, though those millions of pages of documents are covered by protective orders of the court, and hence their disclosure by Gradient, Rocker Partners, or their esteemed counsels (e.g., Fred Norton, Esq.) would be illegal, Roddy Boyd today emerged in possession of this material, which he proceeded to use in clumsy attempt to reprise his role as minor Wall Street lick-spittle. Now having spent my share of hours in the company of all of these luminaries of ethics and right action, which one violated the court’s protective orders is difficult for me to say. I’ve had mops with more character than the lads at Gradient Analytics. David Rocker is bitter and insane (I wonder how he played it at his country club: “I swear I’m innocent, folks, but just in case, I hired David Boies’ criminal defense partner“). Of course, in four years of litigation the ever-charming Fred Norton managed (as far as I could tell) precisely one moment of humanity, and even there, his motives were not entirely clear. So I’ll call it a photo-finish. (Though if I were a gambling man, I might have to put my money on the long-shot bet: the guys at Gradient, who give off that unique scent of low-rent hustlers just bright enough to have figured out they are playing out of their league but not bright enough to back away from the table). Setting aside the issue of which of these pillars of our community gave the finger to a sitting California judge (and a retired federal judge who acted as Discovery Master in our litigation), an interesting question remains: will Roddy Boyd, having lost all appearance of reputation, honor, and employment, be game for another try? And once again, Roddy doesn’t let us down. Alas, beyond his brief stint at now-defunct criminal bacchanal that was Refco, Roddy has no actual work experience by which to make sense of the material thus provided him. So I think it best to let his email tell the story, with my brief answers inserted in bold italics. From: Roddy Boyd [mailto:roddyboyd@ymail.com] Sent: Wednesday, January 13, 2010 7:04 AM To: Patrick Byrne Subject: Patrick, Roddy Boyd here. I am writing a story for Slate’s thebigmoney.com. I have set up this email account for this query and will no longer use it after 4:30 pm EST tonight. I will phrase the questions as bluntly as possible because I am not seeking to engage in an E-mail exchange. Should you need to reach out to the story’s editor, Please approach Jim Ledbetter. I believe his email address is James.Ledbetter@thebigmoney.com. Please have your response in by 4:30 pm EST. Your response will be linked to in its entirety, as well as referenced within the body of the story–I imagine it would look something like, “Patrick Byrne said, ‘xyz…..’” (To see Byrne’s full response, click here.) Answer: Thanks for the tip, Roddy, but I just decided to answer here on DeepCapture. We appreciate the link, though, and will return it once you publish. Remember, we journalists have to stick together. The story deals with Overstock’s state of affairs in the fall of 2005 and winter of 2006. Specifically, It (sic) references the problems you had with factors such as CIT because of Overstock’s losses and its percieved (sic) weak operating position. The governing theme of the piece is that financial investigative reporting on fully operational companies is imprecise (unlike say doing a post-mortem on Lehman or Enron.) In other words, the concerns of OSTK critics about liquidity and the build-your-own-jewelry initiative appear correct, but that they (likely) could never have guessed precisely why. “[A]ppear correct”, do they? Well we’re still here and doing quite well, thank you, while your patron David Rocker plays shuffleboard in Florida, muttering my name under his breath like a wino’s lament as he realizes that for years to come his own name will give off a foul stench among the smart money set he unsuccessfully aped. An Email (sic) I quote, from 11/14/05, from David Chidester to you, Jonathan Johnson and Jason Lindsey says, “Unfortunately what we feared has begun. Some factors and banks have stopped insuring our payables.” This clearly had been a problem of some duration for OSTK, since on 9/22/05, five weeks after your suit was filed, you stated in an email to your colleagues, “I just sat with CIT. They confirmed that at one time we were reasonably good (not great), and have turned to shit in the last six months.” You added: “For years, I have been hearing from accounting that we pay our vendors super-promptly.” Answer: The fact that we were considering the views held by some does not make them material any more than, for example, my saying that “Roddy Boyd is a half-bright hedge fund shill” would have been a material event for New York Post, or Fortune, or whomever was then displaying the unfortunate judgment of employing you. Some folks at CIT said one thing, some factors said another, our accounts said something else, our Paydex score (you may have to look that one up) held up throughout (and is now an 80, pretty much at the top of the vendor-payment pyramid in our industry), and CIT turned out to be the one that went under. Ohhh, the irony, the irony. The story also references emails between Rich Paongo and Chidester on January 20, 2006 which looked at the problems three of Overstock’s factors and lenders had with the company: “Not meeting projections, no profits, low cash, and slow payments .” On February 28, 2006, Joanne Dalebout, E-mailed you and your colleagues, “All [vendors] are saying that with Overstock in the papers a lot and the lawsuit they don’t think we will be in business and that we are too much of a risk? Also having problems with CIT not approving small orders.” Answer: It appears your understanding of “material” includes how some people react to how other people react to exaggerated hedge fund-planted media pieces written by…. You. These were not prevalent internal views or conclusions nor, most importantly, my views: I thought they were wrong, I proved to be right, and CIT went the way of the wild buffalo and your job at Fortune. Why did OSTK not reference the troubles it was having with its key credit providers in any of its public communications? Answer: So your understanding of “material” would include the report of a buyer about the rumors spread by a factor to the companies that this factor charged to justify the price of its services? Did I miss anything? As you will recall, one of the concerns that OSTK critics had was the company’s cash-flow and operational soundness. For a retailer, this would clearly appear to meet the threshold of materiality. Do you disagree? Answer: I do. And would you elaborate on this decision? Answer: Same answer. The story will also mention “Operation heist and freeze” with your “Lubbavitcher friends” from Ice.com. Answer: Right on. –Why did you not disclose, per Jonathan Johnson’s report to the OSTK board on 7/13/05, that the diamond VIE was structured as it was to avoid “Nexus in the State of New York for sales tax purposes.” Answer: Same answer plus the issue was not material plus tax is discussed in the due course of the conduct of any business plus have you ever considered trying the fact-fact-logical-inference thing instead of the stuck-on-stupid-reporter thing? –Please elaborate on Overstock’s decision to avoid paying sales tax and to not disclose the identities of Moshe Krasnanski and Meyer Gniwisch. Answer: I think you mean “collect sales taxes” and the law of this country requires us to collect sales tax in some cases and not in others and remind us again, What’s it like to go through life with a room temperature IQ? Can you hide your own Easter Eggs? Thank you, Roddy Boyd Don’t mention it, Roddy. Remember, I’m always here to help. Very respectfully, Patrick Byrne, Journalist LATE EDITION: PS I see Roddy just sent a follow-on: From: Roddy Boyd [mailto:roddyboyd@ymail.com] Sent: Thursday, January 14, 2010 12:53 PM To: Patrick Byrne Subject: one follow up question Forgive the additional query, but it is germane. The big diamond block, the trade you staked with Moshe and Meyer for about $7.5mm, appears to have originated from one Lev Leviev, a rather interesting man. Leviev, outside of his NYC and West-Bank real estate operations, is also one of the more active miner and marketers of Angolan diamonds, an area whose extraction methods and principles are quite controversial. Were those diamonds sourced from Angola? If so, could you elaborate on any debate you had with respect to doing this sort of business? thank you Roddy Boyd Answer: Fred Norton went down the same line of questioning, and I’ll give you the same answer I gave him. No they were not sourced from Angola nor were they blood diamonds, and yes I conducted an investigation to that effect before doing the deal: said investigation consisted of asking my four Lubavitch rabbi friends plus the family patriarch (himself, a Ha-Shoa survivor who spends half his day in Talmudic studies) and having them tell me what I already knew, which is, that they would never engage in or draw me into any business which was not super-clean. And thanks for playing, Roddy. From: Roddy Boyd [mailto:roddyboyd@ymail.com] Sent: Thursday, January 14, 2010 12:53 PM To: Patrick Byrne Subject: one follow up question Forgive the additional query, but it is germane. The big diamond block, the trade you staked with Moshe and Meyer for about $7.5mm, appears to have originated from one Lev Leviev, a rather interesting man. Leviev, outside of his NYC and West-Bank real estate operations, is also one of the more active miner and marketers of Angolan diamonds, an area whose extraction methods and principles are quite controversial. Were those diamonds sourced from Angola? If so, could you elaborate on any debate you had with respect to doing this sort of business? thank you Roddy Boyd

I saw Marc speak last year at a CFA luncheon in Vancouver. He's an interesting guy. I enjoyed hearing him speak. You're right though, "the bears are certainly sticking together".

If you look at a topographic map of the lower mainland you'll find the livable land is restricted by mountains to the North, an ocean to the West, a border to the South. The city itself is nestled in the western quadrant of the lower mainland. Our transportation system is very weak as compared to other major metropolitans in the world. So, the supply of quality land that is situated close to the city is somewhat limited. As long as immigration to BC continues and demand exceeds supply - I can't see the situation changing. We're definitely overvalued compared to other cities but it may stay that way for a long time. <IV

I think SD has the risk assessment correct. Eventually, SSW will have ships coming off charters and will have to either; re-charter those ships profitably; send to scrap; sell. With the current oversupply of container ships in the market place charter rates have dropped materially. But have a look at the next 5 years... SSW has done an excellent job of staggering their lease maturities which has given them stability through a very trying time. Here is what they are faced with: 2010: They don't have any renewals in 2010. 2011: 2 ships leased to CSCL enter their option period; 2 ships leased to MSC enter their option period; 2 ships leased to Maersk enter their option period. Of the 6 ships, 4 (the later) are the oldest ships in SSW's fleet with only a few more years of useful life. There is a good chance these would be scrapped. 2012: 3 ships leased to CSCL enter their option period 2013: 2 ships leased to CSCL mature. These ships have a useful life extending too 2026 at least. 2014: 3 ships leased to CSCL mature. These ships have a useful life extending too 2026 at least. So, in the next 5 years SSW will be faced with 14 ships that come to maturity and need to be dealt with in some fashion. At the same time however, SSW also has contracted lease agreement on 26 new ships all signed and agreed to when charter rates were much higher. In 5 years time SSW will have increased their operating fleet by at least 12 (26-14) ships all with attractive charter rates. Any renewals they are able to re-negotiate will be gravy. (Page 74 of the AR has the details of the new builds). In other words, SSW has the ability to weather the storm and to keep the cash flowing for a number of years. The difficult part is factoring in dilution. But if I make conservative estimates on dilution, including both the preferred and the new money needed for new builds and measure this against the distributable cash flow in the coming years .... it stock appears cheap. Let's say a normalized yield on this company should be 8%. A $9 stock price would imply Seaspan can only create distributable cash of only $.72/annum per share. Let's test that: Prior to the dividend cut, the company had distributable cash of $1.90/share annually. With 67M shares out that equates to about $125M in distributable cash. Over the next 5 years, SSW will add another 12 ships (net) to their operating fleet. See above. On the other hand, dilution will occur. Let's say we crystallize the stock price at $9 today. In 2014, the preferreds will convert at $15 but SSW will be required to pay 115% of the difference between $15 and $9 ($6) in cash. That's roughly $90M. Let's assume they don't have the cash and have to raise equity at $9 increasing dilution to about 23M shares. They also need another $200M for the new builds. Let's assume they dilute again at $9/share increasing the share count by another 22M. In total, they would have increased there share count by 45M. Add that to the 67M already outstanding and you get about 112M shares. Now if I take the estimate of 112M shares outstanding and multiply that with $.72/annum I get an implied level of $80M in distributable cash which seems ridiculous. They had $127M in distributable cash prior to this mess and will add another 12 profitable charters in the next 5 years. I would guess distributable cash will rise closer to $200M minimally or roughly $1.80/diluted share. That would imply a price of $22.50/share after all is said an done. *** I note that Sai Chu has suggested that Seaspan will have about $300M in distributable cash once all ships are operating.*** So, obviously the company feels they would be able to either extend leases on options, or re-lease the maturities favorably. Even with the most dire of expectations, the shares seems undervalved to me.

Uccmal, If he/she isn't willing to invest any time into researching SSW properly then why would you invest any of you're time trying to educate him/her? I know it's the giving season and all, but .... <IV

HA! HA! HA! Well, it's best to move on then .... <IV

http://www.lloydslist.com/ll/news/slow-speeds-help-us-all/1260545075150.htm Tuesday 15 December 2009 CONTAINER lines and their customers, so often at loggerheads, appear to be on the same side as far as slow steaming is concerned. The savings from lowering ship speeds by a few knots are colossal, and yet sailing schedules will not be disrupted much, once initial adjustments have been made. Shippers will have more stock on the high seas at any one time, and ocean carriers are unlikely to share any of the financial benefits, given the huge drop in freight rates over the past year or so. The lines need every cent they can squeeze out of their customers right now. But shippers not only are fully aware of the cost pressures that carriers are under. They can also bask in the fact that slower speeds equate to less pollution. At a time when emissions are top of the agenda as delegates attending the climate change conference in Copenhagen turn their attention to shipping, major industry players are keen to be seen as green. So it should come as no surprise that shippers are backing lines’ efforts to slow down. And now we have a prominent boxship owner, Seaspan, also supporting those of its charterers that want to throttle back, even though it will cost the company an estimated $2m a year in terms of engine maintenance, crew overtime and other related expenses. A consensus seems to be emerging along the business chain, from owners to operators and shippers, that super-slow steaming is a winner all round. Whether slow speeds will become a permanent feature of the industry is open to debate. Some experts have already gone on the record to say that liner services will never return to the fast transits of a few years ago, and so therefore it makes sense to build less powerful ships. That is a bit too extreme for others, but more immediately, priority for many container lines is to get through the coming year and shrink bottom line losses. If both their customers and owners from which they charter ships are in agreement on ship speeds, then prospects are that much brighter.

Gerry Wang was recently on Bloomberg discussing the concept of slow-steaming as it impacts SSW. Some postive words from the CEO and as I orginally suggested it's a way to begin to utilize some of the existing excess capacity. Uccmal, this does effect SSW it terms of long term growth. No new ships are being signed to long term charters at the moment due to the over-supply of container ships. The quicker the ships are utilized (increases with slow steaming) the sooner demand will pick up again. The video can be watched here: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=alqmBXu4WbpI Happy New Year Everyone! <IV

In addition to doing your research on LPHI, I hope you make some time to understand who Citron Research is and their history! (formerly Stocklemon). Run by Andrew Left. Have a look at the garbage Stocklemon printed about Fairfax back in the day. That will give you an idea about how much research they actually do vs. regurgitating garbage from short biased hedge funds. I haven't even pulled up a quote on LPHI so please don't interpret my words as an endorsement of LPHI as I don't have the slightest clue what they do. I simply quiver when I hear about Citron Research. <IV

A couple of points on this investment from my perspective as well as FFH's perspective: a) I certainly agree that last fall created significant risks for owners of H&R stock, however, I also think it was clear that market discounted the stock price well beyond what was rational. The market was focused on "The Bow" financing but in my mind failed to account for other possible outcomes. H&R had a few different options. For example; Include EnCana in the financing syndicate to lower the banks commitments;Attain financing through an alternate source (like Fairfax); Selling an interest in The Bow;Selling its Bell development project which was fully leased to Bell for 20 years and held a targeted completion date of January 2009 at the time;Sell or refinance other assets; Raise capital through debt or equity. None of these were "desired" strategies given the horrific state of the markets and most would immediately lower the value of H&R stock upon execution but no matter which way I looked at it the lower value would never come close to <$5/share! At that price the margin of safety was large. B) Secondly, right before Christmas when H&R announced the deal with Fairfax ($200M debenture) and at the same time cut the dividend, any investor could quickly calculate a fairly accurate estimate of what level of financing H&R would require from the banks. From the banks perspective they would get a dream deal: Low LVR, last facility drawn, High Rates. I made a call to two commercial lenders and presented them with this scenario. The both told me it was a deal that had a very high percentage of closing. C) Next, from FFH's perspective: Remember, Fairfax was exposed to a lot less risk that me! The private placement was conditional upon, among other things, the occurrence of the following events by closing: 1. Receipt by the REIT of construction financing commitments of no less than $400-million for the development of the Bow in Calgary; 2. Monthly unitholder cash distributions of six cents per stapled unit will be maintained until closing; 3. Toronto Stock Exchange approval. In other words, Fairfax ensured the bank financing was in place before being committed! D) Finally, remember that when "The Bow" financing did get arranged and announced to the market on April 2, 2009 .... HR.un shares were still only trading at $7.60/unit. Still a double to conservative estimates of NAV! <IV

Thanks! What's truly amazing however, is the outcome of Fairfax's deal. They got $200M in 5yr debentures paying 11.5% AND they got the warrants. With the warrants being redeemed within the first year, Fairfax will make (28,571,429 * $6.50) approximately $186M. Coupled with the interest payment on the debentures, they will have received $209M back from a $200M capital outlay that pays them 11.5% for the next 4 years! Take a look at the return they will make: (rough approximation) CF0 = -$200M CF1 = $186M + $23M CF2 = $23M CF3 = $23M CF4 = $23M CF5 = $223M IRR = 46% WOW! :o

Fairfax looking brilliant - yet again. I've cashed in my own chips on my H&R position with this recent pop in price and it appears FFH is cashing in their warrants acquired during the financing noted above, too. Pretty much a double for FFH since April / 2009, and a triple from the bottom in November/08! <IV ______________________________________ H & R Real Estate to redeem Fairfax warrants 2009-12-17 08:19 ET - News Release Mr. Larry Froom reports H&R REAL ESTATE INVESTMENT TRUST ANNOUNCES AGREEMENT TO REDEEM THE FAIRAFAX WARRANTS AND A $150MM CONVERTIBLE UNSECURED SUBORDINATED DEBENTURE ISSUE H & R Real Estate Investment Trust (H&R) has signed a definitive agreement that provides H&R with the opportunity to redeem up to 28,571,429 warrants issued to Fairfax Financial Holdings Limited and an affiliate. The warrants were issued to Fairfax on April 24, 2009, pursuant to a warrant indenture, and have an exercise price of $7.00 per stapled unit and an expiry date of April 24, 2014. Subject to regulatory approval, which H&R expects to receive, the redemption will occur no later than Jan. 29, 2010, at a cash redemption price of $6.50 per warrant (representing a fixed reference price of $13.50 per stapled unit less the warrant exercise price of $7.00). The net amount payable by H&R to Fairfax would be approximately $185.7-million assuming redemption of all of the warrants. The redemption of the warrants will simplify H&R's capital structure and is accretive to H&R's net asset value and AFFO on a fully diluted per unit basis. H&R intends to finance the net redemption value with funds available from operations and other available sources of financing, which may include a portion of the net proceeds from the convertible debenture offering (described below). H&R has also entered into an agreement to sell, to a syndicate of underwriters co-led by RBC Capital Markets and CIBC World Markets, on a bought deal basis, $150-million principal amount of 6.00-per-cent convertible unsecured subordinated debentures due June 30, 2017. Closing is expected to occur on or about Dec. 30, 2009, subject to regulatory approval. The net proceeds from the offering will be used for general trust purposes, and to the extent necessary, finance a portion of the net redemption value. H&R's president and chief executive officer Tom Hofstedter said: "We are very pleased to have entered into this agreement with Fairfax, a company that we have worked with for many years and for whom we have the highest regard. We believe that redeeming the warrants and the issuance of cost-effective long-term financing provides significant benefits to our unitholders. In particular, H&R is redeeming the warrants utilizing a reference price of $13.50, while issuing convertible debentures with a conversion price of $19.00. In addition, the redemption is accretive to internal and financial analyst NAV estimates and AFFO on a fully diluted per unit basis." The convertible debentures will bear interest at a rate of 6.00 per cent per year payable semi-annually in arrears on June 30 and Dec. 31 in each year commencing on June 30, 2010, and will mature on June 30, 2017. The debentures will be convertible at the holder's option into stapled units at any time prior to the earlier of the maturity date and the date fixed for redemption at a conversion price of $19.00 per stapled unit. The debentures will not be redeemable on or before June 30, 2013. On and after June 30, 2013, and prior to June 30, 2015, the debentures may be redeemed in whole or in part from time to time at H&R's option provided that the volume-weighted average trading price for the stapled units is greater than 125 per cent of the conversion price. On and after June 30, 2015, and prior to the maturity date, the debentures may be redeemed in whole or in part from time to time at H&R's option at a price equal to their principal amount plus accrued interest. The offering is being made under H&R's existing short-form base shelf prospectus dated May 11, 2009, as amended. The terms of the offering will be described in a prospectus supplement to be filed with Canadian securities regulators by no later than Dec. 21, 2009. The Fairfax agreement also provides that any warrants remaining outstanding after the redemption date will be automatically exercised on a cashless basis, based on a redemption price of $13.50 per stapled unit.

I hardly think Byrne "rolled over". Every other CEO who didn't do anything - rolled over. But Byrne? He hasn't done any such thing. We'll see what happens in the broker's lawsuit. Trial is expected in about a years time. <IV

Judd Bagley put together a short video explaining the history of this lawsuit:

http://finance.yahoo.com/news/Rocker-Pays-5-Million-to-prnews-3555312432.html?x=0&.v=1

... this stinks ... Grant Thornton has lost buckets of credibility on this one. Especially since they repeatedly "agreed" with Overstocks accounting treatment of the same issues on multiple occasions. There is more to this than we know. <IV

OofC, Slow steaming just refers to the speed of the boat. Anyone can reduce their speed. Gaf63, Agreed, but Gerry made a comment on the CC to the effect "We are all going to hear more about super-slow steaming". I trust they wouldn't be endorsing it if it was against their interests but I have no idea how it all would work?

I have been doing a little reading on the concept of "super-slow" steaming. This concept seems to have positive implications for; greenhouse gas emissions; fuel consumption; and the current over-capacity of container ships. I was intrigued after reading that Maersk recently received an environmental award for their role in developing this concept. As most will be aware, in the summer, the U.S. passed the American Clean Energy and Security Act. This is the first bill related to climate change that has passed the Senate/House. A provision in the Act allows the U.S. to impose tariffs on goods produced by nations that don't commit to reducing greenhouse gases. (We can save the discussion on protectionism for another thread but for now I am interested in how this may motivate the shipping industry on the short term.) The concept of slow steaming has always existed but the concept of "super-slow" steaming is relatively new. Engines in container ships are built for speed by the manufacturers. At 24 knots a ship has roughly 90% engine load however maximum speeds require huge amounts of fuel and consequently CO2 emissions increase exponentially. This is not economically nor environmentally optimal. At 20 knots a ship is running about 60% engine load. Fuel consumption is less and the environmental footprint shrinks. From what I gather, speeds between 20-24 knots would be the norm. The concept of slow steaming refers to reducing engine speeds to between 18-20 knots. The engine load would range from 40% -60% respectfully. Engine manufacturers have previously shunned the concept of super-slow steaming. The manufacturers suggested that engine loads below 40% could actually be causing damage to the engine. That's where Maersk comes in. In 2007 they challenged this opinion but testing the concept of super slow steaming on 110 vessels in their fleet. Maersk was able to prove that one can actually take the engine load down to 10% if monitored and executed correctly. 10% engine load is roughly 14 knots. The result was a 43% reduction in fuel per vessel and 30% less CO2 emissions. The results of Maersk's study changed the opinions of engine manufacturers and the concept of super-slow steaming now seems doable. Maersk suggests that super-slow steaming will require 1-2 more ships to maintain the current weekly schedule. Capital costs will go up however they expect 30% savings on fuel (including increased #'s of ships) that offset some of those costs. Maersk gave an interesting statistic: 8 ships running at 20 knots will produce 136,000 mt of CO2. 10 ships running at 14 knots will produce 91,000 mt CO2. This is based on a round-trip route from Asia-Europe. If fuel costs rise the motivation to move towards super slow steaming will only increase. Having said all this, the over-capacity issue is not going away anytime soon but the concept of super-slow steaming may help to work off the excesses quicker. Main Sources: http://docs.google.com/gview?a=v&q=cache:eJe5avmrvMIJ:www.toef.dk/files/foredragsholder_slides/Havne2009/S%25C3%25B8ren%2520Andersen.pdf+super+slow+steaming+%2B+maersk&hl=en&gl=ca&pid=bl&srcid=ADGEESgAFVAtrqfg9Uc0P0MAATUIez9X__e5TJs59HQrWyvdESIpYQkDimboV2E_hq-6k4UGvNPKNW9z1rSu95e-Msu9LHa-hjd4tkBeEcEHa2NuiSiWC_kOCETCb9sMD4tt7SC2HbPS&sig=AFQjCNG_nEDCcRDp8ckna8PVW-2QpCIv0w http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10588463 <IV