GREY:WFREF - Post by User
Comment by
tvstockon Feb 15, 2015 2:24pm
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Post# 23431935
RE:RE:Covenants
RE:RE:Covenants Bankers will be foolsih to trigger a credit crisis throughout the whole industry with only 633million of debt, while the company is still generating cash and can pay down loans gradually on top of interest payments, although at a slower pace. 633 million shared by a number of banks is no disaster, but creating a credit crisis will be.
Look back at the case of STP and CLL, banks make lots of room and lots of time for them to recover before the end game. Drastic options for LRE (if needed at all) include high interest second-lien loans, float 200M more shares at $1 and get 200M to pay down the debt, or issue $200 million of convertribles at 7-8%. Any single action will solve the problem.
In the case of SGY, management monetize their hedges for a profit of 35M and rehedge with costless collars at lower prices. That cap the upside for a while but free some precious cash. I expect more juniors to follow, LRE can do that of course.
This case is a bit different than LTS and PWT, where US vulture funds may snap up their US bonds and do something nasty. The only "term debt" here is 75M cdn convertibles, whcih even all snapped up by some vultures don't have much say comparing with the 633M of senior bank debt.