My take and a Twist! Read the ending!
Forget about asset value at this time. This will be a sidewalk sale liquidition. Unless HRG can provide sound realistic cashflow projections, no lender IMO will be amenable to a workout plan and will force liquidation to recover investment.
The only hope here IMO is that Alvarez and Marsal are working with this and they should be able to establish a workable plan and determine what is needed to fund this through to postive cashflow. I'm not conviced given commodity price and HRG production costs that the operation can continue as a going concern with the sizeable payment obligations they have. I have to admit, based on historical piece meal financing and public fund raising, I have ZERO confidence in HRGs accounting department.
Decisions will also heavily weight on Management capabilities to turn this around IMO. I think we all know how they will be rated! At least we still have a couple of Sprott friendlies at the top. Buchan and farquharson leaving does concern me. I hope they were just in to complete the strategic review, pitch the company and bring in proponents (likely given Buchans extended involement with other companies).
So with Mosher in Russia, I'll assume the consultants have created some options that are now being pitched.
The unknown factor is WHO is the buyer through morgan and what is their position. I noted a little selling activity to the tune of 600,000 shares on Friday. Watch this closely, if heavy selling persists from this source, I think it's fair to assume they will not be a white knight.
Everyone is holding on tight to cash and with clouded vision in the market, prospective investors will be very cautious on investing. Proponents will also be limited due to the russian factor.
My guess is a minimum $50 million is needed provided all mines become operational. Why invest $50 million when you could probably purchase the entire operation for about the same amount. I don't know folks. Strategic investment looks unlikely. Conventional financing will be a challenge and then there is Prognoz. Prognoz worth very little right now and as I have said before could be the major contributer to this companies dimise. Not likley the Russian Govt will let foreign ownership take control of a "World Class Siver Project". Look what they did to keep Norlysk out of foreign control on thursday.
I'm writing this one off (maybe). My last wish is that some form of deal is struck before a receiver is appointed. One thing for certain, subsequent news should be transparent. Poor MGT decisions and unprecedented market conitions = BIG Challenge.
Maybe us retail investors could pull together enough dollars to make a bid for this and take it private. Anyone speak Russian???? Cross your fingers and pray for some form of preservation. Suspect Mr. Polakoff is aiding Mosher in Russia.
In closing:
Now for speculation and Hope......Sprott was holding 35 million shares of HRG and convertable debentures. Two of Sprott Resource Corp sitting on the BOD. Guess who just stumbled on to $140 million. You guessed right...Sprott Resource Corporation. Capital Gains....reinvestment of some proceeds??????? Think they have strong representation of the vote and DEEP knowledge of HRG now. Any connections here with the 10% acquired through morgan????
Extract from SRC news:
The expiry time of the Offer was 11:59 pm (Eastern) on October 24,
2008. The Offeror has agreed to take up and pay for the shares tendered into
the Offer no later than November 3, 2008, subject to an extension for payment
to November 5, 2008 with regulatory approval.
SRC owns 27,144,938 shares of PBS. If the Offeror takes up and pays for
the shares under the Offer, after giving effect to the C$84,478,886 price
reduction under the Supplemental Agreement, as part of the total price
reduction of C$381,960,000 by principal shareholders, SRC will receive net
proceeds of C$140,824,099 on the sale of its PBS shares.
It is near impossible to determine if Sprott has been liquidating under a mask but it does not seem so given volumes/house positions since Erics public comments of their position. Maybe a whit knight...who knows. Did I mention they have a good chunk of GOD as well and did a small cross friday. I'm totally fine if SRC takes majority ownership. Please Please Please.