RE:Obsidian's banking and why discuss it here?The obvious rule of thumb is Friday after close press releases are never good news.
I am not shocked and thus have never invested a dime in OBE.
But what does this mean for BNE with a Bank review at the end of June?
If Obe is having trouble and they obviously did with the reduction then it does bring into question how BNE will navigate this...
I think the reality check is any FCF for both OBE or BNE will be used for debt reduction for many years...they can't increase capex....banks have the screws to them.
GL all but not good...
quote=blackdog]An interesting, if somewhat uncritical discussion; but one that belongs somewhere else.
Let me see if I have this Friday-after-hours news straight:
- Obsidian’s lending costs for its senior debt are going up by 2.1% on this roughly $63M.
- Obsidian’s lending syndicate has reduced its borrowing base from $550M/capped at $450M to $440M.
-$225M of which is now a term loan, due 30 Nov 2022; although we don’t yet know what rate the company will pay for this.
- $215M is now the operating line; due 30 Nov 2022; save that this will be subject to be redetermation on 30 Nov 2021; could at any time be called on 1 Feb 2022; and in any event is reduced to $180M at 31 Dec 2021; with any headroom available at that date applied to reducing the term loan. And perhaps some of the senior debt, although one would be very curious as to what flexibility the lending syndicate would give the company to payout any senior debt before the term debt. And, implied, is that Obsidian has to exceed the target of total lending syndicate borrowing of no more than $405M by an amount that will give it sufficient room to continue to have a useable operating line.
We still have not seen Obsidian’s 2020 year end; now next week’s news for sure. Hendrick estamates that it will show total borrowing at 31 Dec 2020 at $480M; with draws against the leding syndicate borrowing at $417M. Actuals will tell us something. As of yesterday Obsidian only shows four wells being drilled, and four more licenced but not spudded; we can only assume because without financing, they lacked the funds to do more.
So if I was an Obsidian shareholder, a more fulsome update than was provided on Friday would be in order: about the drill program; about how it has been funded to date; about what the draws are now; and a cash flow projection showing how it will be funded going forward. One also assumes from the latest press release that the interim CEO has been extended in his office, but there is no information on what his status is, or plans for a permanent appointment. One more perennially unanswered question.
Strikes me that Obsidian has been put on a very short leash, and has its work cut out for it generating cash to meet these terms. It has so far failed in its efforts to sell it non-Cardium assets; but it looks to me like something is going to have to go, soon, and at whatever price they can get for it.
And finally, for those who are focusing on non-news in the news, there is no mention of “the offer” which except for a few folks here, is universally expected to sink quietly out of sight on Monday evening.
Nothing to do with Bonterra, save further confirmation that “the offer” was not, in any way, compelling for Bonterra shareholders.
Again I suggest that it is time for this discussion to move over to the Obsidian board. Very lonely there, except for the odd question there about why no one has any interest in or opinion about the company; except for the short sellers...
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