Southern Pacific Resource Corp STPJF

Affidavit: "...McKay and Senlac ...grossly mismanaged"

[dbinvestor]

This affidavit is a MUST READ! Go to the 2nd to last page and read the letter .

To summarize, lawyers for a group of Holders of debt ( stated as "investment advisors that manage funds" who hold over 15% 1st Lien, 70% 2nd Lien, 50% debentures) state that:

- McKay and Senlac projects are grossly mismanaged. This mismanagement has caused the financial decline.
- The problems at McKay and Senlac can most likely be fixed relatively easily and that would improve the prospects and value of the company. 
- by not fixing these issues the company is guaranteeing it fails to receive fair value

..... it says and much more  and is worth a read...

hmm the investment experts who manage funds  feel strongly enough to have a lawyer file an affidavit with the court about this...

[dbinvestor]

sorry ... in my disgust at Byron Lutes, executive Management and the Board upon reading this , I forgot to post the link..... www.pwc.com/en_CA/CA/car/stp/assets/stp-020_021815.pdf

[monzie]

I posted all this last week db with the same link it's quite an accusation against management for sure.  I'm actually surprised the 2nd lien holders weren't able to stop the CCAA from being filed. But who knows maybe they'll enter into a bidding war against the 1st lien holders. 

[rad10]

It does seem that the executive are pandering to Credit Suisse.  Attempting to railroad a quick deal etc etc.  I wonder what is going on behind the scenes - time will tell.

[nikehercules]

According to the second monitor report, it didn't sound like fixing Senlac & McKay could be done quickly during the con-call with McDaniel & the subordinated debtholders. The monitor states, "...there are no short to solutions or easy fixes available to address the Company's operational issues, particularly having regard to the costs involved and the stated timeframe for the

[dbinvestor]

My post is about getting some of the facts out that are buried in the affidavit/court docs. Seems many people woldl rather read these posts then the source documents :) I wouldnt expect a sucessful challenge to the Queen's bench on their decisionsso far  Although the bid deadline was extended to April 27 from end of March so I wonder if the complaint from the Holders about a very short

[nikehercules]

dbinvestor - good point about the monitor. Tenders are due April 2, 2015, and the Stay Period is extended to April 27th. April will be a critical month for STP.

[dbinvestor]

An updated monitor's report has just been published. From mar 8 - Apr 25 cash flow forecast they would be operating  at a 26% loss. Based on the affidavit perhaps there's room to cut for a new owner .... How about this scenario: - if you net out the restructuring vulture fees (985k) it becomes a  23% loss - If they cut the  G&A  to half (  MANAGEMENT

[dbinvestor]

Refelcting on this more I see the point of the Affidavit from the 2nd lien holders. The buyer of this train wreck will reap the reward when he takes an axe to the cost areas as is normally done after an M&A. Interestingly  and roughly speaking, if the if the price of oil rises to around 55-57$  this train wreck is around the break even ( I am not including any debt servicing costs

[bambus]

Well, looks like GASFRAC shareholders are getting ZERO ... unsecured db holders may be getting something though...

[dbinvestor]

Looks like the concerns of the 2nd lien holders about the process happening to fast as well as some things that can be done to improve the balance sheet are both correct! 1. the altex deal is gone saving money.....  thank god... 2.. the oil price has recovered to 60+ We should be close to break even now if not over. Next should be the G&A expenses. Still way  too high....