Arcan Resources Ltd ARNBF

RE:Very intriguing news release

[teevee]

This situation is actually very straight forward. Although the debentures rank ahead of equity, they are unsecured. Crescent Point and Legacy own 33% of the stock. Provided they want the assets, and if they can make a deal with ARN's bankers, they will vote against the deal. If that happens, I would then expect the banks to call the line of credit, pushing ARN into default and bankruptcy. In this case, shareholders get zero and debenture holders would be lucky to get 50 cents on the dollar. It is noteworthy that ARN previously flew trial balloons on selling assets, only to find the market was far below their expectations.  The only way left for ARN to controll this if the deal is voted down, is to put themselves into voluntary bankruptcy before the line of credit is called. What this would achieve is to let ARN choose the bankruptcy receiver, bidding and sale process instead of the creditors. If the banks realize the assets as security for their line of credit, the selling price will be determined between them and the buyers (likely Crescent Point and Legacy) with shareholders and debenture holders, all holding the bag. I therefore continue to believe it is in the best intersts of shareholders and debenture holders to vote in favor of this deal, if they continue to hold shares and debentures. Aside, in spite of all the rhetoric by the Vulture funds, the debentures are trading as if this is a done deal. This suggests that Crescent Point and Legacy are not going to jointly take any action. Whatever the outcome, it will be interesting.