Twin Butte Energy Ltd TBTEF

Stockwatch Business Reporter

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"Debt-laden Twin Butte Energy Ltd. (TBE) was unchanged at five cents on 7.13 million shares, still below the six-cent takeover offer price it announced Friday morning. The trading activity reflects grave doubts that the takeover will go ahead. These doubts seem to stem from the fact that the suitor, Reignwood Resources (linked to China's Reignwood Group), is offering a piddling 14 cents on the dollar to the holders of Twin Butte's $85-million in convertible debentures. Two-thirds support from the debentureholders (and the shareholders) is required for the deal to go through, and is seen as unlikely to be given. So far, according to SEDAR, Twin Butte has just 0.08-per-cent debentureholder support, along with 3.9-per-cent shareholder support. TD Securities analyst Aaron Bilkoski has added his voice to the doubters of the deal. "Convertible debt holders are (rightfully) likely to decline the plan," he wrote in a new research note, predicting that "... the plan likely fails due to lack of support of from convertible debt holders and Twin Butte finds itself in receivership." He left his rating at "reduce" and suspended coverage of the stock. Twin Butte is pressing ahead anyway and has scheduled its special meeting for Aug. 10. If the meeting fails to produce enough support for the takeover -- or if some other party scuttles the deal, such as Investment Canada -- Twin Butte's lenders will be able to exercise their rights in respect of the credit agreement on which Twin Butte defaulted last Thursday, when it failed to repay an $85-million credit facility."