RE:Is ATH Prevented From Buying Its Own Bonds ?Who knows, this topic has been speculated on to death on this board for over the past year, even prior to the covid price crash.
Management hasn't exactly been forthcoming in regard to answering shareholders questions regarding this topic, either.
That being said, pg. 14 of the Q2 2020 MD&A says the following in regard to the company's credit facility:
Under the terms of the Credit Facility, Athabasca is required to contribute cash to a cash-collateral account equivalent to 101% of the value of all letters of credit issued under the Credit Facility. As at June 30, 2020, $41.1 million of restricted cash was held in the cash-collateral account (December 31, 2019 - $nil) of which $31.2 million was current and $9.9 million included in non-current restricted cash. The Credit Facility is secured by a first priority security interest on all present and after acquired property of the Company and is senior in priority to the 2022 Notes. The Credit Facility contains certain covenants that limit the Company’s ability to, among other things, incur additional indebtedness, create or permit liens to exist, make certain restricted payments, and dispose of or transfer assets. The Credit Facility also contains certain maximum hedging limitations. The Company is in compliance with all covenants.
Long story short, no one on this board knows why they aren't buying back the heavily discounted notes...
RatPatrol wrote: I don"t know the answer to this question, but in conversation on another O and G producer (stock symbol WTI), the company was prevented BY ITS BANKS that it MUST pay off all its senior-ranked debt FIRST, before buying junior-ranked bonds.
Something like this may be preventing ATH management from buying its own bonds , even though it would otherwise be prudent to do so.