RE:Debenture holders better off if TBE goes bankrupt?pablo87 wrote: 3 reasons:
1st, shareholders get nothing, potentially $21M avail. to creditors
2nd, debenture holders get the same as the rest of creditors instead of current 14 cents vs 100 cents on the dollar.
3rd, assets can be sold in parts, without the management and unrelated liabilities, which could potentially be worth a lot more. In particular, would it not be odd that a strategic buyer want both the heavy oil AND the medium oil assets, not to mention they probably would want nothing to do with rest of the assets outlined in the reserves report?
I don’t think you properly understand how a Court Supervised Liquidation of Twin Butte would work.
If there is anything left after the Secured Creditors (lenders) and ALL the Creditors that rank higher than the Debentures have received 100% of what they are owed the Debentures are next in line.
If there is anything left after the Debenture holders have received 100% of what they are owed the balance would go to the Shareholders.
How much that would be available for the Debentures is a big unknown at this point. There is no guarantee that they would ultimately get more that 14% but it would be hard to do worse. It’s a good bet that the Shareholders would be SOL.
** I suspect that Twin Butte’s Management and BOD are hoping that Debenture holder “Fear” that they could get less than 14% in a Bankruptcy Liquidation which is “possible” will allow them to pick their pockets.
The problem is that in the current market assets have been selling at “Substantial Discounts” to their theoretical value. NAV and Market Value are two very different things!
The fact that Twin Butte has been shopping their assets and or the entire company for several months and all they have come up with is the current offer should be self explanatory.
It’s a buyer’s market and they are few and far between. Any company that has got into a situation where they are “Forced” to sell are at a serious disadvantage.
When you have to sell something what you paid for it and / or what you think that it should be worth is irrelevant. All you get is what the market will give you!
The Alberta Regulators recent policy re. asset sales will NOT be helpful!
https://ca.reuters.com/article/businessNews/idCAKCN0Z731Q?pageNumber=2&virtualBrandChannel=0 The vote is scheduled for Aug 11. I think that it’s VERY Probable that the “current” offer would be rejected by the Debenture holders and Twin Butte would be off to “Liquidation World”.
It’s probable that the “current” offer will be revised a bit. It’s also “possible” that somebody else will come up with a slightly better offer.
It’s also “possible” that while this process drags out that the market for assets in Alberta will improve but at this point that doesn’t seem likely.
As Always; Do Your Own Due Diligence; It’s Your Money !! PS; As I said I don’t have any skin in this game so from here on I will just watch from the sidelines, GOOD LUCK