Sir Royalty Income Fund T.SRV.UN

RE:RE:Nice Summary Here

[Fabozzi]

lostcauses wrote:

Thanks Fabozzi for the link, nice write-up.

Which one do you think is the most likely to happen ?

• 1 - Maybe SIR goes bankrupt. This probably isn’t great for SRV unitholders, at the very least it is another undetermined amount of time without receiving distributions.
• 2 - Maybe SIR realizes it isn’t going to be able to steal SRV and raises its bid. SIR is the buyer who can bid the most – SIR eliminates half its debt, deferred interest and royalties, and future royalties by acquiring SRV – and can easily pay a lot more and still be laughing.
• 3 - Maybe this unnamed buyer decides to buy SIR outright, and SRV finds itself with a stronger operating partner.
• 4 - Maybe SIR is able to wait out a vaccine and things just carry on. This would also would likely lead to a rerating.

I think 2 or 4 are the most likely to happen.

Logically 2 makes the most sense.  Perhaps the biggest impediment now is how much of a bump in price SIR would have to make in order to get something done.....It would make the initial offer very clearly opportunistic and reflect poorly on them in my opinion.  I think 1 is unlikely as there is interest in the sector as longer-term focused investors look past the pandemic.  Let's remember that SIR has indicated they received funding for their initial proposal so if it's 1) bank funding (which i think is unlikely) then that reduces the possiblity of bankruptcy as I'd presume funding would be available without the offer going through or 2) private equity type funding with equity upside that sees a very cheap asset and are confident of the longer-term outlook for SIR.