RE:RE:RE:RE:Restructurationrad10 wrote: Debt holders are a nasty bunch. Tend not to leave a lot of money on the table for shareholders. As soon as Bellatrix defaults the shareholders will be gone. Debentures trading at 50 cents on the dollar - tells you all you need to know.
This is true, but it seems to me, a default can only occur in a limited number of ways: (1) breach a covenant by carrying too much debt relative to EBITDA; (2) they fail to make an interest payment; or (3) they fail to return the pricipal when the loan matures.
Answers to each:
(1) They confirmed they are well below their covenants;
(2) Cashflow currently supports interest payments;
(3) ....this is the potential problem. Due dates are well documented and they don't have cashflow to materially deal with this. Overall debt levels are too high for most lenders to renew.
Possible solutions for #3:
(i) dilute and raise equity;
(ii) sell assets: either joint venture a production facility or 2, or sell proven properties to larger nat gas players; or
(iii) find a different lender willing to take risk and who is bullish on nat gas.
thoughts?