RE:RE:RE:RE:Remember - Common Shares vs DebentureHere's my take on this topic: the only way to get more (than zero) value for the shares, is to get the company into CCAA, and continue the process, as the Ad Hoc group had requested.
The only reason this is a fast receivership, is that this is the only time that National Bank is actually going to recover their loans, in a receivership. The FTI Consulting group must be ecstatic that they actually have a succesful auction, as compared to theiir other receiverships, like Hyperion, Daylight, that went on and on, with no buyers and pathetic assets. In spite of Twin Butte doing almost no work, there still was enough production to generate some positive cashflow.
In a bankruptcy auction fire-sale, conducted during a time of still low prices, the only way to get more value is to keep the auction going. Especially considering the company is making some cashflow, and a bit of capital to actually drill a few more wells, could give more cashflow.
This brings us back to the main issue that has been simmering for a year: the company had serious cash problems, yet didn't want to negotiate with the Debenture Holders in some way, to handle the debenture debt:
1. They went through a sales process that yielded poor results, with a looming bank deadline. Rather than talk to their primary unsecured creditor, they continued on with the process, pretending everything was fine.
2. They started to get daily bankline extensions. Then they finally agreed on a sale that would give the Debenture Holders, less than the Shareholders.
3. Debenture Holders complained that 14 cents on the dollar wasn't fair. The Board told them to "take it or else".
4. Bad deal was shot down, but Ad Hoc group had an alternate restructuring proposal. Wouldn't be a good deal for the shareholders, but maybe some discussion might have given a counter-proposal.
5. Bank called their loan, but instead of fending off the Bankruptcy, the Board even waived the notice period, and gave the keys to the bank. CCAA should have been filed, to say that the company was working on a restructuring plan.
6. Ad Hoc group suggested they could put a plan together, but needed to talk to certain bidders: Ad Hoc group isn't here to save $738 million of share capital, although they are acting like the de-facto board of directors.
7. Ad Hoc group couldn't get any traction with the Receiver. Ironically, the Receiver is not supposed to be at the sole disposal of the Secured Creditors.
8. Receiver finalizes a deal, but can't tell creditors what the payout might be. Still not sure what "substantial" actually means.
So the only way to get some value for shareholders, is to miraculously get this back in CCAA, so that some sort of recapitalization, might be attempted. That might mean that some assets woud be sold, like the Ad Hoc group had requested, then the company can focus on the primary Provost area.
Some way of bringing in capital, must be attempted. That means shareholders might have to come up with some money, to participate more completely in a go-forward entity. This could all take time to finalize, so it might be easier just to sell the company to some other company. Of course the first step is just getting the judge to agree that there has been some wrong-doings that occurred, with the entire process.
We will eventually know the final price, although it is confidential now. The judge will be able to see all information, and can see if other offers are fairly close. If all offers are close, that means there is some safety in the bank's loans, and the process might be able to be extended, if she feels more value can be obtained.
Still a slim chance, so we'll have to see what arguments are put forward in court, on Wednesday. Why take a "substantial payout', as a debenture holder, if a "full payout" could be obtained, in a year? That would be a better return, and keeping the company would allow some recovery for shareholders, that had to invest alot of money so the banks could lend a little bit in relation to the total capital invested, that they now want to grab.