Long Run Explor Ltd Ord WFREF

RE:RE:RE:RE:Deal is getting done - May 24th update (direct link)

[BlueCollar51]

FYI; There are two Escrow agreements;

1. The existing $20m Escrow account that if the deal closes will be part of the payment to the Security Holders.
2. The $100m “Credit Agreement Escrow Amount” that is entirely re the Credit Facility agreement between the Lenders and the Purchasers and has nothing to do with the Security Holders.

 
To close the deal if we get there. From page 65 of the “Arrangement Agreement”;
 
(e) Purchaser shall have irrevocably deposited, or caused to be deposited with the Depositary, and Long Run shall have received written confirmation of the receipt of such funds by the Depositary, not later than one Business Day prior to the Closing Date, the aggregate amount that will be payable to the Long Run Shareholders under the Arrangement, and, if applicable, the aggregate amount that will be payable to the Long Run Debentureholders under the Arrangement; and
 
 
(f) Purchaser shall have irrevocably deposited, or caused to be deposited, with their solicitors for deposit into escrow pursuant to an escrow agreement the Credit Agreement Escrow Amount not later than one Business Day prior to the Closing Date and such solicitors shall have confirmed the receipt of the same to Long Run.
 
 
All that the agreement “is not subject to Purchaser Financing” means is that the Purchaser can’t use a failed PP or whatever as an “Out” to walk away without paying a Penalty.
 
It’s up to them to raise the Cash required one way or another. Either they do or don’t.
 
Think about this. Had they received Investment Canada approval BEFORE the Changchun Shareholder approval they wouldn’t have been able to proceed until they got that done which would have been a bit “awkward” to say the least.  We are past that and it’s not an issue.
 
As Always; Do Your Own Due Diligence; It’s Your Money !!

Bookends wrote:

 

BlueCollar51 wrote:
 
I don’t have any evidence or inside info. to back it up but I suspect that there may have been some “foot dragging” by Sinoenergy that caused the delays in the review process. It would have been a bit “awkward” if had they received IC approval before the Changchun shareholder approval.
 

Well, perhaps that is not the case either. As far as I know, Sino is only required to put up more or less 100 million into the escrow account 1 or 2 days after the IC approval... They most likely have the 100 million on hand which would be the entitlement of the holders (shares and debs)
 

 

They are required to pay back the lending syndicate, but 6 months following the deal. If they are rather confident on getting the financing to repay LRE's debt, perhaps it was their plan to do it in that fashion at this time. Regardless, as holders, this is not our business as our money is already on hand. Besides, is this deal even conditional to the purchaser getting the financing?

For what it's worth, I've trimmed down 2/3 of the position I had to lock in some gains... The potential downside was a scary risk and as I was thinking about it... Even if I think the deal will get done, I don't think risking 100% for 15% makes a lot of sense. But that's my own risk tolerance.

Anyways, thanks for sharing your thoughts BlueCollar... You have done quite a bit of research and it's generous of you to share with us. Much appreciated.