RE:RE:RE:RE:Nutall on BNNwilwal wrote: Regardless of the quality of Nutall's opinions, you do have to consider that Sprott owns a large % of LRE (11% last time I looked) so Sprott is likely close to the situation and have a quality opinion on this.
The only problem is that the Chinese have proven on deals in the past that they can suddenly and inexplicably fold up and walk away. I doubt that Sprott or Andrew can say with certainty that they really know what the Chinese are thinking right now. The $20 million break fee would not be a company killer for Sino. I suspect that this unknown part of the equation is why LRE still trades at a big discount to the sale price even when closing could come any moment.
In my “opinion” why the securities have been trading how they have is simply a function of Risk/Reward.
The “potential reward” is attractive.
Until a deal actually closes there is always Some Risk that it wont, how much is subjective.
If this deal falls apart it wont be pretty. The Lenders will most likely have had enough and force Long Run into liquidating some if not all of their assets.
In a Total Liquidation the Lenders actually have a good chance to recover most if not all that they are owed. The Debenture holders could possibly recover something but the Shareholders would most likely be SOL.
Regardless of the “Perceived Risk” of this deal failing it is NOT ZERO!
If you think of it in those parameters, it looks like the market is “Reasonably Confident” that the deal will close.
Both LRE and LRE.DB are down a bit but the volume has been far from excessive. There doesn’t seem to be any “Mad Rush” to get In or Out. It looks like “Cautious Optimism” is the order of the day.
In my “opinion” now that “All The Ducks Are In A Row” the probability of the deal closing by the end of June is Very High but not guaranteed, nothing ever is.
As Always; Do Your Own Due Diligence; It’s Your Money !! PS: All the “blathering” from Scottie99 re Investment Canada’s role in this transaction is “nonsense”!
Long Run is in this situation due to a series of decisions made by Management and the BOD that with the benefit of hindsight due to the collapse of the Oil an NG market have proved to be “Blunders”! I am not a fan of these guys but to be fair they are not alone. There is a very long list of Companies that for exactly the same reasons have found themselves in similar or worse situations.
Investment Canada’s decision will be based on;
- Will the new owners be Good Corporate Citizens?
- Will their “Investment” in Alberta / Canada provide a “Net Benefit” which is subjective.
As some of us have pointed out Sinoenergy has a presence in Alberta c/w a track record that can be assessed. Their most recent acquisition in Alberta was a small privately held company called “New Star”. Since acquiring New Star they have funded an aggressive drilling program designed to double their production.
Personally I think that the probability of Investment Canada approval is “Extremely High”! They are currently in the process of dotting the “I”s and crossing the “T”s.
PPS; Scottie99; The LRE management Has Renegotiated the terms with the Lenders more than once recently! The result is that they are currently in “DEFALUT” of the “Renegotiated Terms”. The Lenders have on at least 2 occasions agreed to temporarily “Waive The Event of Default” to give them a chance to get a transaction done!