Connacher Oil & Gas Ltd CLLZF

RE: RE: RE: RE: RE: Unbelievable CEO statement

[algrove]

You can get a copy of the Q1 MD&A by either going to SEDAR or by going to the company's web site:

Here are two quotes to save you some time:

1. From the covering letter to the Q1 financials:

"As we reported in our 2008 Annual Report, during Q1 2009 we reluctantly had no choice but to cancel
an outstanding $150 million and US$50 million credit facility, secured from a syndicate of banks in late 2007."

2. From page 13 of the MD&A:

"In March 2009, we cancelled our $150 million and US$50 million revolving banking lines of credit as we were unable to secure accommodation or relief from an interest coverage covenant that would have become operative at the end of the first quarter of 2009."

Basically, based on the small print in the first lien debt facility that was supposed to fund Algar, the Banks were going to declare a condition of default even though not one penny had been drawn yet under the facility.  This would have triggered a cascading effect on CLL's other indebtedness, namely the second lien notes.  It was an absurd situation but technically within the Banks' right, leaving CLL with no option but to cancel the facility.  The banks that were happy in 2007 to provide the commitment wanted out and they got their wish.

This was explained in more detail by the CEO on BNN.  As you can imagine they would not want to burn their bridges with the banks and had to be restrained in print in what they said, but they said enough for anyone serious enough about understanding the situation to understand it.

Good luck with your new investments.