RE: Looks goodLet's try and take a balanced view on EF. In my opinion, NKWRIP wants to take an excessively negative view and Buddiee wants to take an excessively positive view. Here is my view--
EF will likely be priced at whatever a prospective buyer will pay for the assets. The Creststreet management bunch, who are still very much involved here I believe (look at the management list on the EF website https://earthfirstcanada.com/about-us/management ), will likely try to sell off the assets as they did similarly for the Creststreet Power and Income Fund. I have copied the last press release (July 29) from CPIF below for your information.
So, the question is what will the assets sell for? I believe they will sell for anywhere between 70 cents and $1.10 per share, based on the net asset value shown in the last quarterly financial statement. This is just a guess. I suppose anything can happen. Perhaps EF will be able to arrange Dokie 1 financing at a reasonable cost, the company will stabilize, and share prices will return to previous recent values (something like $1.60 per share) in the next 6 months or so. I doubt this scenario, but I suppose it could happen.
The point is, I believe that EF is undervalued at current prices. That is why I bought a bunch of shares. However I also believe that the outcome of the strategic review is uncertain, given the recent turmoil in the capital markets.
G
CPIF PRESS RELEASE, JULY 29, 2008
Names of the parties to the transaction:
Creststreet Power & Income Fund LP (the “Partnership”) and Aquilo LP, ULC
(“Aquilo”).
2. Description of the transaction:
On June 27, 2008, the Partnership completed the sale to Aquilo, an affiliate of FPL
Energy, LLC, of all of the shares of the Partnership’s two operating subsidiaries (the
“Subsidiaries”), being Mount Copper Wind Power Energy Inc. (54MW) and Pubnico
Point Wind Farm Inc. (30.6MW) for $121.6 million, plus the assumption of $30 million
of senior secured debt of the Subsidiaries (the “Transaction”). The Transaction was
completed pursuant to a purchase and sale agreement dated April 17, 2008 between the
Partnership and Aquilo.
Immediately prior to closing, the Partnership purchased all the shares of the Subsidiaries
that it did not already own. The Partnership also terminated immediately before closing
all management and administration agreements with third parties relating to the
Subsidiaries and the Partnership. The total cash consideration to such third parties in
respect of all purchase and termination transactions was approximately $14.2 million.
At a meeting of the Partnership’s unitholders held on June 23, 2008 to approve the
Transaction, the unitholders also approved the distribution of the net assets of the
Partnership to its limited partners on a pro rata basis and the subsequent dissolution of
the Partnership. At a meeting of holders of the Partnership’s outstanding 7% convertible
unsecured subordinated debentures due March 15, 2010 (the “7% Debentures”) and 8%
convertible unsecured subordinated debentures due September 15, 2011 (the “8%
Debentures” and, together with the 7% Debentures, the “Debentures”) held on the same
day to approve the Transaction, a resolution was passed authorizing the amendment of
the trust indenture dated January 20, 2005, as supplemented by the supplemental
indenture dated August 18, 2006, between the Partnership and Computershare Trust
Company of Canada to permit the redemption of all the Debentures.
On July 11, 2008, the Partnership redeemed all of its outstanding Debentures. Holders of
7% Debentures received $1,032.44 per $1,000 principal amount upon redemption and
holders of 8% Debentures received $1,062.33 per $1,000 principal amount upon
redemption. On the same date, the Partnership distributed its net assets to unitholders in
the amount of $6.1950 per unit, whereupon each unitholder other than a sole remaining
limited partner ceased to be a partner of the Partnership. Any remaining assets, which
will be nominal, will be distributed to the general partner and the remaining limited
partner in 2009, whereupon the Partnership will be dissolved.