I spoke with the IR contact. The 8k was issued because investors have been repeatedly asking them if they were going to meet their forecast from the disclosure document released in February. The disclosure document included a forecast of $357 mm in EBITDA for 2009 down 15% from 2008. EBITDA in the first 6 months this year was down 40%. Since they will be meeting with investors next week, they wanted to get the question off the table and they feel confident they will exceed the February forecast. They did not put numbers in the 8k because they are very leery of "influencing investor's buying decisions". It is a bankrupt company and the court does not look fondly on management teams "bulling" their stocks. For the time being, I'm using $365 to $370mm in EBITDA for 2009. I know that doesn't sound like much of an increase but CL King (the only firm publishing numbers) was at $315mm before today. By the way $365 mm in EBITDA implies a 27% improvement over the second half of last year.

The February statement also included a projection for 2010 of $392 mm. I always suspected that number was low. Their first disclosure statement filed September 19, 2008 before the world ended had a forecast for 2009 of $470 mm. Right now I'm going to estimate 2010 comes in at $440 mm. Q1 this year was significantly understated due to some inventory accounting. There should be a $75 mm improvement year over year in first quarter alone.

As for when they will exit bankruptcy I misspoke last night. The company may not emerge until April. It all has to due with the schedule of the bankruptcy judge. Two days this week were reserved for filing appeals to the company's bankruptcy plan. The judge is determined to give everyone their "day in court" and they couldn't get in all the testimony in the two days. One more day is needed but the judge couldn't meet with the attorneys again until mid-October. Nothing happened at the hearings. The company feels "very good" at how things went. But now the post trial briefs and closing arguments are due in early January when before they were due in late October. The judge make take up to 6 weeks to write her opinion. From that point it takes 30 days to approve the plan, and 30 days for the plan to become effective. Basically, one day of hearings has added potentially 3 months to the bankruptcy process. In the interim it is possible there could be settlements on some of the issues negating the need for briefs and opinions but to be very conservative, April might be the emergence date. While it will be good to have the company freely trading, the extra time is not all negative. The company has a very low borrowing rate right now so their cash continues to build; the credit markets continue to thaw so the interest rate on their new debt continues to drop; and should the bankruptcy last as long as April they will have a significantly higher trailing EBITDA which will also help their credit situation.

There are a couple of ins and outs to valuing the stock (an underfunded pension plan, $11 of NOLs on the books, and some very long tail funding liabilities to the asbestos trust). Ignoring these items for the moment you can justify a $28 stock on my 2010 EBITDA estimate. That's based on a 7.5x EBITDA. If the company can get Albemarle's (ALB) multiple of 10x 2010 EBITDA it could be a $40 stock. There's a lot of "ifs" in that number but we should think of a share price in the 30s.