This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Horsehead Provides Hedging Update

Horsehead Holding Corp. (Nasdaq:ZINC), a leading U.S. producer of specialty zinc and zinc-based products, today provided an update on its 2012-2013 hedging program. This program, implemented in June 2011 for no cash out of pocket, consisted of:
  • purchased zinc put options with a strike price of $0.85/lb,
  • sold call options with a strike price of $1.20/lb, and
  • purchased call options with a strike price of $1.81/lb.

The combination of put and call options covered approximately 8,800 tons per month during the planned construction of a new zinc plant from January 2012 through June 2013. This structure effectively resulted in a “cashless collar” for the Company with a minimum zinc price of $0.85/lb and a maximum price of $1.20/lb. Exposure to future collateral requirements was “capped” by the purchased call options at $1.81/lb.

As previously reported, these hedges were LME-registered contracts arranged though an affiliate of MF Global Holdings Ltd. As has been widely reported, MF Global Holdings Ltd. and certain of its affiliates filed for bankruptcy protection under US and UK bankruptcy laws on October 31, 2011. Subsequently, Horsehead has successfully transferred all of these hedge positions to an alternate clearing member of the London Clearing House, with all of the hedges remaining fully intact.

With forward zinc prices lower than when the program was implemented, the Company recently bought back the $1.20/lb call options for approximately $15.7 million and will realize a gain, before taxes, of approximately $13.4 million. Through September 30, 2011, the Company had recorded a net unrealized gain of $19.1 million relating to these call options. The cancellation of these $1.20/lb call options effectively eliminates both the risk of a potential cash collateral requirement and the limitation to the Company’s profitability, in the event that zinc prices increase above $1.20/lb.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 17,719.92 -78.57 -0.44%
S&P 500 2,080.41 -9.70 -0.46%
NASDAQ 5,108.6660 -18.8590 -0.37%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs