Why the market has overreactedThe market went panic-crazy down yesterday and you can see why given the talk about going-concern issues. It's not so bad and here's why. (I have not yet gotten a response from the company. This is just my thoughts.) First, some points of context. (1) If you follow the time-line presented in the PR, even in the worst scenario GRZ would not have to come up with any money until mid-late May 2025. Company responds to the letter by end of January. CRA might just agree with GRZ and drop the matter, though I'm sure that's unlikely. Give CRA two weeks to send a Notice of Reassessment. GRZ has 90 days to respond. Mid May equals the point where GRZ has to put up half the demanded amount to continue the fight. (2) CRA is actually being tactically smart in sending the letter now. Of course they want a hunk of money and, from their perspective, way better to NOT wait until GRZ has got their $1.1 billion. If they did that then GRZ would have the resources to fight this forever. (3) That said, CRA looks to be offering a bit of a civilized gesture. The 100% hardball approach would be to just send the Notice of Reassessment (instead of the Proposal Letter). That's what they'd probably do if they wanted $$$ from you or me under a somehow similar situation. ========== There is not going to be any going concern situation. GRZ could settle this today (okay, soon). CRA would say, fine, let's settle. But because CRA has caught GRZ at a vulnerable moment, CRA would insist on settling for something close to their terms. GRZ commits in writing to give CRA X dollars as soon as they collect their $US 1.1 billion (or even some lower threshold amount). Done. But that would no doubt require a very big X. Surely better for GRZ to respond to the Proposal Letter by the end of January--and there's no huge cost in doing so. GRZ is talking to their experts. CRA will talk to their experts. If they're true experts they should all be able to come to similar views on the likelihoods in each of the various scenarios. Should provide the basis for a possible settlement. I suppose the big question here is this. Will this wreck GRZ's ability to make a bid for Citgo? Will it scare away bidding partners? I don't see why it should. Just as before, GRZ will have to convince a bidding partner that Gramercy and the 2020 bondholders have chances that are "remote" (see GRZ November 7 letter to Court). That is the same. And the value of GRZ's $1.1 billion credit doesn't change. I suppose this would likely frighten a party that was set to lend GRZ $$ as part of a bid. So could call for a change in GRZ's % contribution to a bid. But would this derail the whole thing? I doubt it. If Citgo is worth $8 billion (given "remote" chances for Gramercy and 2020 bondholders) then it will still be worth $8 billion after CRA's Proposal Letter. ========= I'd guess the most essential audience for that PR was Judge Stark. In GRZ's November 7 letter they pretty aggressively asserted that they'd have a (superior) bid on the table soon after the data room was re-opened. (Actually, that spoke to the solidness of their partner(s) given that GRZ hadn't been allowed into the data room in three months.) GRZ has now informed Judge Stark that they have an issue--and I'm not denying there's an issue. Could it somewhat delay GRZ making a bid? I'm sure it could. And Judge Stark now understands that also. It's not like GRZ is running away from their intention to make a bid.