RE:RE:RE:RE:RE:RE:updateThe more I think about this the less likely I think it is that ALL the debt is coverted to equity in any deal. That would simply be too much dilution for Alpha and Ohara to swallow and there are multiple bond owners involved which is complicated to get overall agreement. Following is a scenario I believe would work for all stakeholders:
1. Catalyst or Alpha or (??) negotiates a conditional tender to the most eager bondholders to get out at say $0.25 on the dollar. Let's say hypothetically that half of bondhonders agree to that so $2.2 billion X 25% = $550 million.
2. Catalyst or Alpha then agree to terminate these bonds in exchange for $550 million equity plus 10% for management (conditional per below) in a new equity issue at $1.00 a share = 600 million new shares.
3. Catalyst or Alpha also agrees to a new operating loan to PRE of $500 million to be secured by specific assets which will get them through the oil recovery.
4. Management is is given the carrot of ownership to get their buy-in but it is conditional upon certain performance criteria of getting the company back on its feet. They aren't going to get anything for free and will actually work for the benefit of the company for a change.
Under this scenario, the debt is halved, there is 3-1 dilution which is managable and will likely get Alpha and Ohara's approval (heck they could even open the equity issuance up to all shareholders to raise more funds), and management is given reins and incentives to actually be motivated to make the comapny successful, something that obviously they don't care about at the moment, If PRE had half the debt and an unused opertaing loan share would be trading at $5 but after dilution $1.50-$1.75 so Catalyst/Alpha get their immediate lift as well.
thoughts ...... GL Zoo