RE: Financials Definitely in a tight place here and really at the mercy of the lenders. Seems the same bank(s) underwrite their credit lines and both series of debentures, and are also overseeing the strategic review process. So nothing should come as a surprise to anyone.
Any ideas on how/when the bank debt has been renewed in the past?
The $16M working cap deficit is pretty scary. They won't be drilling much if they're tying expenditures to cash flow, even with their relatively low-cost drilling. And agreed that the 10% discount rate is silly at this point.
Anyone else holding the debs? They're trading 50-60 cents on the dollar, 25-35% YTM. Interesting to look at the debt picture at 60c:
Bank debt + working captial def. = 64.5M
Debentures = 86.7 x 0.6 = 52M
Decommisioning obligations = 46.5M
Total = 163M
So with debs at 60c we get liabilities approx matching the P+P NPV discounted at 15%. Seems like a reasonable bet, particularly given the potential value of the tax pools and infrastructure. Could be worth a lot to an acquirer but why of course the big question is "why buy this for a good price now when it looks like they'll just be more desperate going forward?".
Note that Anderson has the right to pay interest & principal on the debs via share issuance, so they can wiggle their way out of those obligations by diluting like crazy. (Interest must be paid in cash, but cash can be raised by issuing shares for a trustee to sell. Principal can be repaid in shares.) Surely that's helping to keep the price of the debs down at the "very low expectations" level.
I'm most hopeful for an outright sale and a tidy gain on the debs, though I've heard talk of the "confidential data room" with "interested parties" before, so it's a small position and I don't hold my breath (Hyduke, anyone?)