RE:RE:RE:Question...I agree....One more thing which is not very clear to me is why did we not pay the interest when we could have easily done that as we have enough cash to do that....right??
Many companies do this to scare the lenders and get a good deal through changing the terms of debt...May be that is what is cooking here.....Baytex,LTS and other companies have done this....in which they extend the bond maturity date....
PRE can't be bankrupt is current situation.....They just need refinancing/new financing of may be around 1B $ to survive the current crude price environment....Why don't they raise another 1B$ in financing?? The Management agreed to infuse $500M in one of the bids....why do they need to do the swap if they already have access to get that funding....Strange Management?? It fails to impress my MBA brains....Feels as if someone is intentionally trying to depresss the actual value of the company...Look at debts of other comparable companies....Meg and Baytex...they all have over 5B debt with much less production....
This extract below has a very valid point:
"Usually, the proposal for a swap arises when a borrower is struggling, often due to cash flow problems, to finance interest payments on borrowings but the value of its underlying assets is sufficiently robust and attractive to the lender to take an equity stake in the borrower in exchange for a commensurate reduction in the total outstanding debt. However, in the current economic climate, debt to equity swaps are more commonly being considered by companies who are not necessarily on the brink of insolvency but who are taking this approach (subject to lender consent) as part of a package of pre-emptive measures to shore up their finances. "
Cheers!