Twin Butte Energy Ltd TBTEF

RE:RE:RE:Re: RE:In the end everything worked out the way it was meant

[Oldfart74]

PetroExplorer wrote:

Oldfart74 wrote:

cigarbutt1 wrote: So the question is: why was the syndicate in the driver's seat?
To answer that question, one may need to dissect the financials of the last years.
This was a relevant question when looking for the fulcrum security but this may be especially a relevant question for shareholders.
I sometimes invest in banking/financial institutions and I submit that the syndicate did what they had to do to maximize their return.
Leverage can be lethal. It was in this case.
Wording of the indenture and characterization issues were/are essentially irrelevant.
Hopefully tax issues/liabilities have been dealt with.

If there ever was.a case for Receivership, Twin Butte checked all the boxes.   The suggestion that the directors should have tried CCAA after the August vote is ridiculous.  At the time of the vote, the syndicate had agreed to a $20 million loss on the amount owed to them.  How was the company going to get DIP financing in a situation such as that?  The judge would have summarily dismissed the CCAA filing as impractical and harmful to the secured creditors.

Wrong Oldfart: didn't the Ad Hoc group say that they could get Debtor in Possession Financing?  They were prepared to organize a line, but wanted to get some information on the assets, for potential disposition.

Ultimately, it was only around $10 million of DIP financing that was needed, and Twin Butte managed to plod along during that time, making cashflow.  I have to think that investors were capable of kicking in $10 million (Debenture and Shareholders), to keep the company in a prolonged Connacher type of CCAA.  But the Twin Butte Directors even waived a 10 day waiting period, and let the bank accelerate the receivership filing.  The time for the groups to band together and try and keep the company going, was then.

The goal of CCAA is to be fair to all creditors, not just the secured creditors.  Actually the Receiver uses those same words in their brief, when going against the Ad Hoc Group's subordination case, saying how they must stand up for the righs of all creditors.

Ultimately the big issue was still the oil price:  it is lower than it was a year ago.  Everyone was expecting a rising price in the fall, buoyed by OPEC cuts.  But these cuts were mostly talk.  And the excessive drilling in Texas, (still to be seen how good it really is, in the long term), is still contributing to oversupply.

The DIP financing would have required approval of banking syndicate since it would be the first charge ahead of banking syndicate.  In view of the syndicate having agreed to a $20 million haircut, it is doubtful they would have agreed to DIP.  Does any serious person believe a better result could have been achieved by CCAA?