Heads Up–GasLog LTD 8.75% Preferred Tumbles-Updated

Update–PTrader has posted a link in the comments here that indicate that the company may call this issue before too long. I had a low ball order in on this on Tuesday but with the added info and the pop in the shares Tuesday I will not have an interest in shares.

The GasLog LTD 8.75% perpetual preferred (GLOG-A) tumbled in the last 2 days by about $1. It is now trading at $25.43 down from $26.40 2 days ago.

The issue is callable 4/7/2020 and some folks probably figured out there was ‘call risk’ and wanted out.

Shares went ex dividend on 12/30 for payment 1/2/2020 so they will be building accrued dividends which with the normal 30 day call notice minimizes the call risk cost. Whether the company would be able to call this issue is an unknown.

NOTE–this is not the partnership which is GLOP–this is the parent company.

I may pick up a small position.

17 thoughts on “Heads Up–GasLog LTD 8.75% Preferred Tumbles-Updated”

    1. FWIW, I have been hearing glut problems in sector, but assuming the Boss isnt lying from Nov CC, the preferred is not a priority to redeem. Not until 2021 debt is taken care of mid to later this year…So the preferred will have short term legs if he is telling the truth.

      Alastair, just following up on the last question, I guess we would — there’s a preferred that comes to in April of 2020, that’s probably some of your more expensive debt. And I don’t ever treat it or they treat as equity or debt, but it’s some of your more expensive, I guess access to capital, relative to some of your bank debt. How should we be thinking about you know, I guess, that piece of that piece of data, and how you think about going forward, if that’s something that we think we’re going to maintain inside the capital structure, just given all these things that you’re talking about yesterday, taking on a lot more vessels, the balance the amount of debt on the balance sheet is going to be going up, just kind of curious how you think about trying to position the balance sheet over the next call it one to two years and what you expect the primary sources to be?

      Alastair Maxwell

      Great. Thank you. So the practice is obviously, permanent capital, and we can pull — really pull from second quarter of next year, but it is not a maturity. And so my gut feel is we believe that the breath in place for the time being, as I said in my prepared remarks, I think our next priority, also putting in place the financing for current newbuild program and working on the common’s amendment. So that I spoke about, I think our next priority can be dealing with the 2021 maturities, which is two bank facilities and the North bond. And we’re already working on those in terms of preparatory work. And we expect to as I said to complete those refinancing well ahead of maturity and that was sometime in the middle to early second-half of 2020 is when I would expect to have those refinancing’s completed. I think those are our initial priorities. And as I said earlier in the background, we have a continual scheduled amortization underway, which runs roughly, as we said often in the past roughly twice the rate at which the ships depreciate.

      1. Be very carful with GLOG:
        Stock has had horrendous results YTD -17.06% 1 Year -48.03% 3 Year Average -14.43% 5Year Average -7.42% all terrible
        They have a diminishing market cap of $627 million
        $207 million in cash and a whopping $3.3+ billion of debt
        Negative -$250 million of “free” cash flow
        They cannot afford their distribution of 0.60 per year
        Negative -5.5% “profit” margin
        ROE 1.84% Ouch
        ROA 3.72% Ouch again
        Run don’t walk away from this one…

        1. Hey Nomad, good to hear from you. Notice I didnt say I was buying, but its a sector I typically avoid in general. Though I would never discount a measly 100 share purchase ever though, ha.

    1. Thanks for the info Ptrader–my order execution at 25.40 didn’t happen and with your info and the fact the issue jumped to 25.71 now I will most certainly let this pass.

  1. In my opinion there’s been something fundamental going on earlier. The weird (IMO) premium that GLOG preferred enjoyed vs the 3 notes issued by GLOP has started declining after the latest round of results. Probably the technical reason you mentioned added a further reason of weakness. I still can’t understand why the GLOP family trades at substantially discount to peers. For those interested in GLOG anyway remember there’s the attractive straight bond still available without call risk and with very limited duration. Just ordinary credit risk.

  2. Thanks for making us aware Tim.
    With a 4/7/20 call date + 30 days – that means we would get the normal $0.55 payout plus 37 days = $0.22 So 25.77 at this point would be break even if called. Is that your thinking ?

    1. Gary, while the call risk may be low, the issuer does not have to wait for the call date to give a 30 day notice. The issuer could give notice in the beginning of March that it is redeeming on 4/7.

    2. Really Gary in my somewhat warped mind I don’t think it will be called at all so this is a good price.

      But worse case — yes your scenario–Jacob below says they issued notes in 2017 at 8.875% so I doubt they can get better now–shippers are so hated.

  3. I also noticed the drop and put in a buy order. This has been a good one for me through the years.

    1. Barbara–actually their financials are decent for a shipper–the biggest issue I see is they have 6-7 new builds on order and those orders gobble up cash.

  4. I think the call risk is pretty low on this one, my guess is it’s dropping due to tough nat gas prices.

    The notes they issued in 2017 pay 8.875 so I suspect they’d have trouble getting a better rate on the preferreds.

    1. My thought Jacob is it won’t get called at all–and thus an entry at 25.40-25.50 might be decent. I put a lowball order in but I don’t think it executed.

    1. Yes Grayhawk–it is 1 of those strange ducks that pays almost immediately after ex. The ex accounts for 1/2 the drop.

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