GREY:WFREF - Post by User
Post by
JohnJBondon Jan 27, 2016 3:33pm
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Post# 24499082
My View
My ViewIf the lending syndicate didn't want this deal to go through, they would not have extended the forebearance period.
LRE's management wants it to go through.
The unnamed (but apparently significant) Chinese buyer wants it to go through, and has now obtained mgmt support for a bargin basement price (I'm assuming its the same unnamed partner in the prior version of the deal).
The shareholders want the deal to go through (short term gain). Those that don't are likely out.
The debenture holders want the deal to go through (short term gain). Those that don't are likely out.
Seems like a whole lot of win win win.
I can imagine some greed is slowing things down - ie some where there is probably a debenture holder thinking he/she should get full face value - rather than a tax loss for the unpaid amount, and should get their interest payment now, rather than upon payout.
I suspect there's a Chinaman somewhere who thinks he can squeese a few million more out of someone (likely the banks) - but given the 12-24 month upside, and the price they've already obtained, I doubt they'll push very hard.
The Chinese currancy is peged to the USD, so this deal has become significanlty cheaper in CAD since it was first proposed...........the CAD will likely continue its decline - thus making the CAD debt cheaper to the Chinese.
Personally, I expect this deal to go through.
Its not a nice tasting pill to swallow, but as long as the lending syndicate wants admendments to its credit facilities (ie a reduced line of credit), this deal is the solution for all the stakeholders.
If the lending syndicate were to leave the status quo in place, LRE would be able to carry on generating 10 million ish in cash flow per month at current oil prices, and return to normalcy by the end of the year once the oil market has returned to balance.