RE:RE:RE:Norvarg...thoughts on Valiant acquisitionIf they would have used total equity and assumed the debt I would agree in spades and would have sold my position. But remember they had a $500 million dollar capex requirement for GSA and they did the prudent thing. It could have been two thirds equity and a third cash, but the lions share was cash (borrowed cash at that).
How does a company the size of Ithaca go to a lender and say hey I want to develop a new field so can you lend me $400 million and by the way I would also like to spend $359 million to acquire a peer and Oh buy the way we are asuming their $100 million in debt as well.
Hind sight is always 20/20 but nobody was sure where Brent would end up (and still do not). It was a major coup for a company the size of Ithaca to even get a $350 bridge loan on top of a $410 facility already in place....remember the were a pipsqueak doing just over 4000 bbls per day.
I am sure the bank said on the bridge loan yes we are prepared to lend to X capital but you need to raise Y through the equity route.
Gold corp just issued $3 billion in new shares to help reduce debt. Now that is a poor use of equity dilution but a desperate one. Ithacas was not desperate and the transaction ON A PER SHARE BASIS was very accretive the way did structured it particularly with the application of the tax credits and tax refund on a per share basis.