BTE: Merger Medicine Debt is Kryptonite to prospective investors, both institutional and private. Ignore this fact, and watch the stock price tank into the abyss… Isn’t that where we are now.
A shout out to JohnnyDoe, Red2000, and many other longs for providing great input. Thanks
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They way a prospective investor may see Baytex at this time, is that the executives are serving the banks, and looking to join the board of an acquiring company. In this perception, that may or may not turn out to be valid, it is not a good result for shareholders. This is why institutional ownership is low in percentage terms.
Banks are making a killing on BTE Senior Notes, at the expense of shareholders who once upon a time received a monthly dividend.
Rather than be perceived myself as a doubter, I offer some solutions. Here they are:
Suspend all share buybacks until the company is debt free.
Propose a 4:10 share reverse split. (Takes us from 787 Million Shares to 315 Million Shares)
Leave the current dividend as-is, until the debt is zero. Increase it gradually afterwards.
Reduce E&D expenditures from $1.2 - $1.3 billion to $600 million max for 2025, and repeat until debt is zero.
Save 5% of free cash flow each quarter to allow for unexpected events, or future acquisitions.
Use all of the remaining free cash flow to pay down debt
Amend the bylaws to:
Prevent debt from ever being used again, to make acquisitions.
Prevent share dilution from being used in a merger
Prevent the company from being acquired while it has debt on the books.
Allow the option of share consolidation to be used in a merger.
Halt offering free shares to executives. Those who are executives should know how to buy them with their own money on the open market. If they don’t put their own money in play with BTE, then replace them, unless they are doing their job well. Well means employees and shareholders will rate them favorably, institutional ownership in the stock is 75% or greater.