Arcan Resources Ltd ARNBF

RE:RE:RE:RE:RE:RE:Arcan stock is

[teevee]

skeksis wrote: I know, and your reply is a non-sequitur.  You just speculated that the debt holders would call the debt if this transaction does not go through.  The debenture holders have some recourse in the event Arcan does not make interest payments on time or fails to pay them their principal in cash or shares at maturity.  However, they do not have the ability to foreclose on the company any time they feel like it.

Just so I anticipate your next message where you tell me that the bank is going to be the one who does this, answer me this: why should the bank suddenly care about this transaction?  1)  Arcan just renewed their borrowing base.  2) Arcan has violated none of the covenants of their bank line.  3) Arcan just got an offer that values 7/8ths of the company at 82.5% X $171 million of debs plus $140 million of bank debt = $281 million.  The bank debt is $150 million.  From the perspective of the bank, the only effect the failure of this deal would mean is that they know their $150 million dollar loan is secured by collateral worth much more.

I am happy to consider short opinions as well as long ones.  Just make an actual contribution to the board and explain your thinking instead of telling me I don't understand what I am buying.  I promise you I have read the filings these past two years rather carefully.

So: When you say the debt holders will "call it in," whom were you referring to, the debenture holders or the bank syndicate?  What do you mean by "call it in."  Do you mean reduce the borrowing base?  By what amount and for what reason?  Do you think the reserves have decreased or increased since December?  When do you anticipate the debt will be called?  At the next borrowing base redetermination?  What is special about that date compared to the previous redetermination?  Are you speculating on oil prices changing drastically?

I prefer to simplify the situation: Clearly, servicing bank debt and debentures does not leave sufficient free cash flow available to grow production. ARN has been treading water for a few years now, and in two years, ARN doesn't have the ability to pay out the debentures.  I believe market value is $60/flowing barrel tops. If ARN sold the property, the bank gets paid, and the debenture holders get the rest. So get your pencil out and decide how to best play this and good luck to you. The deal offered is better than that (only because the buyer intends to sink lots of fresh capital into development), so that is why I think it has a very good chance of succeeding, short of CPG and LTS getting in the way. If they do, down the road it will get very messy and no one will be happy......good luck to you.