RE: RE: PACE shareholders .... Great summary echo and some of the fact you presented are possibly close to the truth however,
Point 1 Severance packages are pretty standard for the oil and gas business with the surviving management awarded no severance while the leaving management team getting their contact settlements. The fact that three years ago the Charger (Provident guys) got their severance while the Midnight (Pace guys) did not and the roles reversed is ironic but they did not plan this 3 years ago. If the Pace guys are given their walking papers if this deal does not succeed they still will get their pay out unless they are fired with cause.
Points 2, 3 & 4 I agree with.
Point 5 If this deal does not succeed then the sale price of the company will be substantially less and the share price will head down to $2. Pace already tried to shop themselves silently prior to this deal and the best offer they received was the Charger/AvenEx/Pace merger proposal. Failure of this deal will result in a lower price evaluation because the failed deal. The market right now for assets or companies is a buyers market with many failed corporate deals and asset sale deals happening in this market. The buyers who have cash want these at the lowest price possible and know that the junior companies like Pace, Charger and AvenEX, etc do not have the ability to raise cash in this market do to their low share prices and a lack of available cash for struggling companies. The large investors are backing the successful teams who are feeding on the broken companies at rock bottom prices. Timing of a sale process is very important so in a down market were cash is king, assets are sold at lower evaluations than the norm. In a hot market were anyone can get money,assets are sold at higher prices. The old supply and demand scenario.
This deal is not pretty but size matters especially in this market environment were capital requirements to drill Hz wells is huge and larger companies with greater cash flow, reduced debt to cash flow, larger inventory of projects and reduced G&A costs is more the norm.
I am a Charger shareholder who recognizes that this deal is great for Charger (they are dead in the water without it) but Pace and AvenEx are one less life preserver away form being dead in the water. I have limited faith in Charger's management and the dividend model for junior oil and gas combinations is new and how sustainable it is only time will tell but the alternative is not very attractive especially heading into the shoulder season for oil and gas. I would rather get a little of my money back in the form of a dividend than wait for gas prices to turn around to lift the small and large gas weighted ships that have taken on water (debt) and are in danger of sinking.
I have been in the oil and gas business for many years. Up and down cycles with commodities is the norm and their will be a better day on the horizon but when and will these companies still be viable at that time is unknown.