FormerXBC Inc XEBEQ

RE:RE:RE:Xebec Obtains Interim Financing and Provides Update...

[AlwaysLong683]

tamaracktop wrote: If they're willing to extend even just another 3 million, it implies they're comfortable with Xebec's asset coverage or overall capacity to repay does it not? The National Bank isn't in the business of throwing money out the window... Good money after bad...I find this whole scenario both very confusing and more than a little disturbing.

TT, please read my post dated Oct. 22 at 6:21pm re. why National Bank / Other creditors may have loaned XBC the $3M. 

Here's how things may have played out:

1) XBC wanted one or more creditors to agree to relax debt covenants because they would not be able to meet their debt obligations.

2) One or more of those creditors looked at the state of XBC and said no, perhaps because they had little faith XBC and/or its management would do any better going forward, perhaps because they recognize they made a mistake in loaning them the money in the first place. or other reasons. Regardless, I'm sure the creditors knew XBC would seek CCAA protection and were willing to go through that process with them instead of letting easing debt obligations. So I think it's safe to say one or more creditors had little if any faith in things continuing as they were.

3) Now, while going through the CCAA process, the creditors want to achieve a scenario where they will get as much as they can re. what XBC owes them. There is a bidding process for XBC assets that will conclude with binding bids in early 2023. This is to the creditors advantage because the more money XBC can get for assets, the more cash XBC will have on hand if the company enters bankruptcy proceedings and thus creditors can get more cents on each dollar they're owed, or XBC may be able to pay off enough principal and interest to lower the creditors' risk going forward if XBC comes out of CCAA a restructured company. 

4) How much more than $3M does XBC owe to National (principal plus interest owed to date)? I bet it's a lot more. So, since National is already in quite deep, throwing a $3M lifeline to XBC so they can conduct the asset bid process and make it to January 2023 would be a wise move and in their self interest so that there is no fire sale of assets and XBC will get as much as they can for them. Also, interesting to know that XBC is apparently so strapped for cash that they need the $3M to make it to the January 2023 finish line.

Again, the above is just a hunch, but you can bet that creditors including National Bank are acting in their own best interest with every move they make during the CCAA process as this isn't their first rodeo re. bad debts, and they and/or other creditor(s) were the ones that would rather XBC enter CCAA protection and deal with them there than continuing to try and deal with XBC and management oustide of the CCAA process. That tells you all you need to know re. how little faith at least one creditor had in XBC going forward.