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Tuesday, November 29, 2022


HORSEHEAD HOLDING CORP. (OTCMKTS:ZINCQ) hit the bb’s on Friday and $0.06 and has been exploding upwards since then and quickly emerging as a volume leader.

ZINCQ was delisted from the NASDAQ stock exchange on February 11, just over a week since the Company filed for Chapter 11 bankruptcy restructuring following a long battle with their ill-fated zinc plant that sucked the Company dry. But at current priced this might just be a huge opportunity and small cap Investors have been all over this one.

HORSEHEAD HOLDING CORP. (OTCMKTS:ZINCQ) is a U.S. producer of specialty zinc and zinc-based products and a leading recycler of electric arc furnace dust; The International Metals Reclamation Company, LLC (“INMETCO”), a leading recycler of metals-bearing wastes and a leading processor of nickel-cadmium (NiCd) batteries in North America; and Zochem Inc., a zinc oxide producer located in Brampton, Ontario. Horsehead, headquartered in Pittsburgh, Pa., has seven facilities throughout the U.S. and Canada.

ZINCQ was doing just fine before they came up with the idea for a ZINC Plant off U.S. Highway 74 in Rutherford County about 50 miles west of Charlotte, North Carolina. Horsehead had hoped the plant would have an annual zinc output of 154,000 tons a year but that never happened and the Company has been able to produce just a fraction of that.

The $490 million plant which is now idle currently needs an estimated $82 million over the next two years in fixes, replacements, upgrades and expansions if it is going to continue to run.

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On February 2 ZINCQ filed for voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware.

Jim Hensler, President and Chief Executive Officer of the Company, said: “The actions we are announcing today represent an important step that we believe will allow us to restructure the Company’s balance sheet for the long-term. Filing for Chapter 11 protection is the best available option to preserve stakeholder value. We intend to emerge with increased financial flexibility and a capital structure that will enable us to invest in growing our business.”

Lazard Middle Market LLC and RAS Management Advisors, LLC are serving as financial advisors, and Kirkland & Ellis LLP and Pachulski Stang Ziehl & Jones LLP are serving as legal counsel to the Company. Akin Gump Strauss Hauer and Feld LLP and Moelis & Company are serving as legal counsel and financial advisor, respectively, to certain senior secured noteholders and proposed debtor-in-possession lenders.

Horsehead had hoped that ”Because ZINC does reconstitute hazardous waste material there’s always a chance – and it’s a very THIN chance – that the government might step in with some bridge funding however none of this has materialized.

2016 has been a complete disaster for Horshead; on January 9 they missed a $1.9 million bond payment followed by Lead bank Macquarie Group Ltd. cutting off funding from their credit facility. This was followed by the Mooresboro plant idled on January 22 and the Company filing for voluntary Chapter 11 bankruptcy restructuring on February 2.

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All the bad news aside ZINCQ is currently trading at a mere $7 million market valuation and this is a Company with some big money assets and significant long term potential that was trading well over $15 not too long ago. If they come out of restructuring with the commons intact the returns could be significant. Small Cap speculators love ex big board Q stocks for their massive volatility, ready liquidity and ability to make spectacular short term gains and ZINCQ has not disappointed so far. We will be updating on ZINCQ when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with ZINCQ.

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Disclosure: we hold no position in ZINCQ either long or short and we have not been compensated for this article.

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