GREY:HRIVF - Post by User
Post by
Honkeybillon Apr 20, 2009 7:40pm
320 Views
Post# 15931913
Is it good? Bad? Ugly?
Is it good? Bad? Ugly? It looks like the credit facility that HRG had with Standard Bank, which was in default and "guaranteed" by Severstal with they bailed us out, has been pulled out of HRG managements hands and now the "cosigner" is responsible for the debt.
If this was done to prevent the sale of assets, or to lower the current credit cost with this facility (which must be horrendus in this enviroment), and Severstal is committed to arranging new financing or using current cash flow to clean this up in the next 6-8 months (I'm using numbers that aren't my assumption nor have I even bothered to see if they are remotely correct........but.....a poster on this board was adamant that HRG was generating around 4-5 million operating profit per month based on the current POG and our known costs) then this seems to be good news.
Based on Jan's news release, where it was reported that Severstal has an arrangement with Standard on this credit facility that carried into 2010......I would guess the only reason this happened (based on being an optimistic shareholder and thinking that Severstal would only act in my best interest) is to lower credit costs.
The other reason...........not so good reason.........is it gives Severstal a bigger stick to beat the current shareholders with. I'm sure they would like to do just that but I'm having a hard time believing that Sprott (3%), Fidelity (3%) and Merril (2%) will just lay down and take their lumps.
The other scenario (and I could be way, way out in left field here) is Standard approached Severstal and offered them some kind of deal to allow Standard to assign the debt to them. I'm sure any way a bank can get "loans in default" moved to another line on their balance sheet is worth doing for them. It doesn't seem like much debt (27 million? the owner of Severstal has that in the ashtray of his Bentley) but having Severstal own it now has to look better for Standard.
I could be nuts.........in fact, most people I know think I am!