Post by
mrmomo on Oct 18, 2023 12:07pm
Regarding the "possibility" of a TO......
I see that some folks are getting desperate here as is the company's mgmt, when a company's poor perfornace & faltering share price leads to takevoer/buyout discussions. Well, the add my two cents to everyone else's, i'll just contribute the following comments. Of course this is in addition to what i've ALREADY recently stated regarding this subject matter.........
I'll start withbthe following premise, Birch mgmt have ONLY three options in front of them. One, the most obvious & usually traveled path, do NOTHING & wait it out. Meaning, wait for NG prices to recover to more "sustainable" levels so they don't have to make the hard decisions or choices they don't prefer to make. Two, make those difficult decisions ASAP, before their sutation worsens. This implies massive cost cutting measures, reduced capex and killing the divvy for good. And lastly an eventual EXIT strategy, which implies selling out ot larger entity or merging with another. Which one do you believe is more likely?
To answer that as accurately as possible, we must understand that there were/are two critical time stamps here. One pre J Tonken's reign and one POST. Why is this important? Because while he was in charge of THINGS, maybe the possibility of cutting the divvy or selling out were very remote or not possible. So let's just say that IF Jeff was still there, it would most definitely be option number ONE for some time. Regarding the divvy, maybe Mr. Tonken had made some "promises", some promises that he couldn't afford/keep, to some VIPs to retain the divvy.....no matter what. And as far as selling out goes, it was COMPLETELY out of the question.....when HE was there!
But now that's Mr. Tonken is gone, or at least NOT in charge of most the the decisions that matter in the company, then this paves the way for BOTH the divident conundrum to be resolved more quickly and the "possibilty" of exploring different options of increasing s/h value through some "possible" M&A. For the divvy, i'll just say it now, now that Jeff is GONE, no more, the divvy is toast and there's a high probability it will be gone by January 2024. But as far as M&A goes, this is a totally different, more complicated monster and needs to be looked at more deeply, closely.
Here, with M&A, as stated previously, Birch's options are limited. As potential suitors with deep pockets, you only have Canadian UnNatural, Cenovus, Arc, Whitecap and maybe Vermillion. I highly doubt that both Whitecap & Cenovus want a highly leveraged NG producer with NO hedges to add to their massive portfolio of mostly profitable oil assets. Vermillion is possible and they could be a dark, unexpected acquirer for Birch. Even though the assets of Birch arent part of the core assets or objective of the comany, they've done SUCH a move in the past, so i wouldn't completely rule them out. So what you basically have left is Canadian UnNaturelle & Arc. And like i said previously, you better cross your fingers, pull out the holy water and crucifixes AND HOPE to Jesus.... its Arc.
The other option, is a merger of equals. And here you have a couple of candidates ranging from Kelt, to Nuvista, to Paramount, Advantage a few others. Problem here, as ALREADY stated previously by me, is Birch going to the negotiating table with a handicap & short hand. If they CAN manage to bluff their way into an acceptable deal like a true promoter, then THIS would be the best & preferred option for all suffering Birch s/h. In this scenario, i think Kelt or Advantage would be the best (and most probable!!) merger partners for Birch........for all sorts of VALID reasons.
So the final question folks will be asking themselves, at what prices would THAT take place & when? For the latter, it's tough to tell. Maybe late this year at the latest Q1 2024. For the former, imho, it depends WHO it is and how motivated they are for acquiring Birch's currently "unprofitable" assets. I've already stated my targets in ANY scenario, and its can as low as $7 to as high as $9 per share. And idon't believe that ANY aquirer will overpay for Birch's assets more than what the market is dictating or has established.
More of my 2 cents worth for the day.......
GLTA