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Gabriel Sebastian

$2.91
Hialeah, FL
9/05/07
$976,893.05

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03/02/08
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Stock Pick by Gabriel Sebastian

RTP: RTP cannot digest ALCAN

Start trading RTP with real money!

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2 ratings
Posted 360 days ago on 11/26/08

RTP will go DOWN
$50.00 on 5/26/09
$211.90 (113.57% from time of market call)

WHen RTP bought Alcan they paid 39 Billion and now the interest for the debt has put it 40 billion. I get worried every time I hear a CEO proclaim how they can manage the debt. The scenario for this will unfold as long as commodity prices are at the bottom. With lowered demand prices get lowered and margins squeezed. RTP which deal with all metals has operating costs that make great money in a BULL market like we had over the past 5 years in commodities. Now the slack is loosened and demand has seriously waned. Even with a huge market in the foreseeable future consuming a large amount of raw materials for rebuilding infrastructure, these will most likely go to American Companies and will take a while to be implemented. Ask any major developer and you will find out a typical project can take 3 years between design and building. RTP has alot of debt coming to maturity and still will have trouble digesting the big bill it footed for buying an aluminum company during the BIG Commodity bubble. Heres the breakdown The CEO said they have 7 billion in available credit facilities, but they have a due bill of 9 Billion in Oct 2009. Depending on how profits and growth + or - in the next quarters could spell a massive exodus of stock holdings in a company up thyeir chins in debt. We saw this before, but we called it the dotcom bubble. Companies bought each other out thinking they can increase their value, making Mark Cuban who sold early very rich after selling a concept for top billing.

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Comments

Posted 2/6/2009, 10:02 am

Sell short $220,000 @ 116.50 per share thats my order, lets see if i get wiped out or they do. Going up on no news and staring down the barrel of a 9 billion payout after premuim price paid for the SECOND largest aluminum company. Alcoa, the largest now has a market cap of 6.54 billion. They paid 32 billion more than what the largest company was worth.

No wonder BHP didnt buy them

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