Frontera Energy Corp T.FEC

RE:More on the company and Head Honcho of who controls FEC/CGX

[kcac1]

For anyone who dioes not the time or desire to read this long expose.  I am surprised the Regulators have not inrervened.  My first thought are they going to try and sell as many companies as they can as they surely are cash strapped or are they having trouble selling FEC? JMO but it sure appears to me that FEC is by far their $trongest asset to sell, particularly with CC setting it up into at least  3 sellable units. They are well past the deadlines of selling at least fund 2 and 3 and likely 4 and even 5.

And is Newtom Glassmen still suffering from some medical condition that was his reason for stepping down from extremely troubled Callidus Capital's CEO? As a footnote, Callidus sfter this 2018 article did an IPO at $15, and almost immediately begin falling and within a couple of years was taken private by its second largest shareholder for .75 

And did de Alba start up a similar fund in the States (GDA Luna) to move on from CC or did he just need more headaches?  I think all of this mattters as it will determine if CC has the Luxery of holding out for top $$ for its FEC assets and they have already failed to sell or montecize Gateway Casinos several times in the past



  Here are what I thought were some of the key bullet points from the long investivate reporting on Glassman article:

• Specifically, the reporting illuminated the risk Catalyst’s limited partners face because of the fund’s continually growing exposure to Callidus — a lender to distressed companies the fund bought in 2007 and took public in 2014 — whose performance has been disastrous. If that wasn’t bad enough, Glassman directed the fund’s plunge into a series of costly and reputation-threatening lawsuits against a host of purported enemies.:
• On both fronts, things have gotten worse
• .But the bigger questions for the limited partners who invested in Catalyst’s funds is how are they going to get all of their money back — especially if Catalyst can’t sell its holdings?
• Catalyst’s specialty is what’s known as distressed investing. In a nutshell this is how it’s supposed to work: Glassman raises money from pension funds or endowments and then seeks to buy either the stock or debt of a company that’s hit some kind of rough patch and thus available cheaply, on the view that with some capital, better strategy or new leadership, the business turns around. (The “turnaround” part is key because private equity funds, unlike hedge funds, don’t offer regular redemptions to their limited partners, and so are set up with an eight- to 10-year lifespan.)

• So when an opportunity presents itself, the fund looks to monetize their investment and sell it via an initial public offering — or to another company — for a windfall with most of the profits flowing to its LPs. But of the billions of dollars Glassman has raised in Catalyst’s five funds, only the first has since cashed out, back in 2013. The second fund was supposed to have cashed out more than four years ago in the spring of 2014. But Catalyst has repeatedly extended the deadline, and it’s now due to conclude in the fall of next year, just before its third fund is slated to cash out.

• So why is Glassman not paying back LPs, some of whom are among the most prominent institutional investors in the US and Canada?
• The answer appears simple: He doesn’t have the money because — at least in the case of Funds II and III — it’s been sunk into a series of investments whose performance has often been nothing short of brutal
• The mess starts with Catalyst’s 72.2 percent ownership stake in Callidus, a block amounting to almost 41.25 million shares, primarily concentrated in Funds III and IV, with 24.8 and 10.8 million shares, respectively; Fund II has 4.7 million.
• Through Sept. 30 CA$112 million of Catalyst LP cash had been either loaned or guaranteed in the hopes of stabilizing Callidus and, according to a trio of disclosures posted April 30, a lot more of their money will be headed that way.
• Afterward, look at Callidus’ third-quarter interim financial report, where the mounting loan losses have left its shareholders with no tangible book value — or what’s left after the physical and marketable assets are sold and the liabilities paid off — the most common measurement of a company’s worth. As of Sept. 30, Callidus has a CA$40.9 million deficit.
• Why does this paper deficit matter? In a bankruptcy, if a company’s current liabilities exceed its tangible assets, the subordinated lenders have to make up the difference by taking a so-called haircut, or accepting less than the amount they are owed.
• Since Catalyst’s cash is Callidus’ sole lifeline, it’s a valid risk for the limited partners of Catalyst Fund’s III and IV, whose capital is behind the CA$377.2 million subordinated bridge lending facility. Moreover, the situation is bafflingly circular: Catalyst’s “advances” are how Callidus is paying the principal and interest on the subordinated loans owed to the fund. In the most recent interim management discussion and analysis Callidus reported that Catalyst has pledged to extend the maturity date of the loan for as long as necessary.
• Meanwhile, language in that interim filing suggests that the Ontario Securities Commission is beginning to put a foot (lightly) down over the quality of Callidus’ financial reporting, and has placed the company on its refilings and errors list for the next three years. This list warns the public of companies that have either failed to disclose all material information or whose filings contained an inaccuracy. Additionally, the OSC made Callidus discontinue its references to yield enhancements, a term dreamed up to make impaired loan write downs more palatable by claiming that they would be offset by the increases in borrower principal and interest payments.
• Catalyst Fund II is a case in point: Of its five remaining investments – in Therapure BioPharma, Callidus, Gateway Casinos & Entertainment, Sonar Entertainment and Natural Markets Food Group – two are deeply troubled (Callidus and, as Glassman noted in an August Globe and Mail article, Natural Markets), leaving only Therapure and Gateway with the potential to be sold in the near term.
• Gateway, held in Catalyst Funds II and III, is equally as speculative as Therapure and has a recent history that includes numerous failed efforts to sell it both publicly — in this case in 2012 — and to other casino companies. On Nov. 20, Catalyst filed the initial prospectus for its failed IPO.
• One thing to note is the humdinger of a related party transaction between Catalyst and Gateway involving the company’s purchase of CA$217 million in net operating losses from a bankrupt unit of Natural Markets Restaurant Corp., permitting Gateway to avoid the avoid making a cash tax payment this year on its paper profits.
• Catalyst Fund III, scheduled to wind up next December, also has a portfolio that tries a limited partner’s soul. In addition to the aforementioned 24.8 million Callidus shares, and its half of the subordinated bridge facility (currently worth CA$188.6,) it owns at least three other struggling companies – Natural Markets Restaurant Corp., Advantage Rent-A-Car and Mobilicity.
• Arguably the biggest risk to Glassman’s wealth from this legal combat might be the CA$500-million counterclaim West Face launched in 2017 against Catalyst, Callidus, Glassman and colleagues James Riley and Gabriel de Alba, as well as Black Cube and their alleged sub-contractors. Catalyst tried to have the counterclaim thrown out this year but on June 15 Ontario Superior Court Justice Sean Dunphy, in a handwritten endorsement, denied the fund’s bid. This case is moving towards the discovery process.