Zargon Oil & Gas Ltd ZARFF

RE:Question about the Debentures

[pablo87]

These con. debs are a "product" dreamed up by the brokers.. T & C are almost identical across multiple co's multiple years.. Yes you have upside from convert into shares but the company can also con. you into shares AND you are subordinated to unsecured.. So its hardly debt, more like prefs actually with interest deductibility.. Given T&C's coupon rate should have been much higher to begin with.
In case of zargon, Hansen could have converted zar.db into shares but instead offered cash and/or an extension which turned into zar.db."A".. He did right by debbies IMO
Going forward, 5 possible outcomes:
#1 converted at 1.25 - 10% chance simply doesnt have the assets nor wti outlook. Even at $60 WTI expanding Little Bow makes little sense.
#2 extend again in 2019 - wont make sense then.
#3 convert into shares - 10% - only if wti stays at these levels long term.
#4 company bought out for less than $1.25, debs bought out (or if lucky carried on by bigger co.).. 80% chance. Hansen is a patient seller, you have to think he will get an acceptable offer for the company sometime in the next 2 years.
#5 debs no longer trade publically - possibility floated in zar paperwork. How, why I dont know.
Imo ymmv glta
L