Slate Office REIT 9 00 Convertible Unsecured Subordinated Debentures Exp 28 Feb 2026 T.SOT.DB

Debentures...

[pennylane101]

Thoughts on what might happen with the current default on the debentures? Has the debenture trustee contacted anyone?   This is my first foray into corporate convertible debentures and let me tell you, recent developments have been a shocker for me.   Very unsettling. Not only are we missing out on interest payments but now the threat of CCAA, which could take a couple of years to resolve.  What a roller coaster.  Who needs this?

[Tree2tree]

Well there is at least one optimistic scenario:  they sell some properties as proposed, raise some cash, and resume making interest payments on the debentures.  Depending on the property, maybe reduce the vacancy rate too.  There is still a wide gap between the book value of the properties, and the total debt including the debentures.  So selling selected properties should be

[Northforce13]

I just bought a bit more at 22 today.   The outcome sure appears binary.  Going to be a fun ride.   I hope they dont go to zero, my TFSA is loaded up with these and losses dont increase contribution room  :-(

[Tree2tree]

Not sure that the outcome is binary for the debentures.  On the March 31 balance sheet, there were 1.7 billion in assets and going on 1.2 billion in debts, for a net asset value of 500 million.  Within that debt are $158 million in debentures, which I understand rank behind all other debts but ahead of the common shares in the event of a liquidation.   So if a liquidation (not that

[Northforce13]

"But if a liquidation yields 1.04 billion or less, the debentures would get nothing." binary  "if a liquidation yields between 1.04 and 1.2 billion, then the debentures would get a proportion of the proceeds above 1.04 million." Yes that would be a non binary -) "At least that is my understanding, without having looked up all the fine print on SEDAR." Mine

[Tree2tree]

Thanks for all the comments.  But where did you find the quote, "asset sales are happening at 30%-40% below book value" ?

[pennylane101]

Tree,  I highly doubt that North would be selling the farm and loading up on Slate debentures if he truly believed that.  Does he believe it is a binary outcome?  Nope.  Unless he likes throwing money out the window.

[rad10]

  check the last conference call transcript.  There's a little confusion as to what was said - but it wasn't great.  One interpretation was a 30% discount to IFRS book value was optimistic, the other was 30% of IFRS book value......  have a listen then decide what Welch meant

[Tree2tree]

Thanks.  I didn't listen to the call, but what I read into the transcript is a 30% discount to book value.  That would be a steep discount, but not fatal.  I do prefer that they take time and wait for an acceptable price, rather than sell properties in a panic.  That is assuming that the market wil gradually get better and not worse, with interest rates coming down.

[Ladislav3]

TNT completed some sales recently above IFRS value, so selling at 30% of IFRS sounds to me like insanity.  The 30% discount to discount is a more reasonable interpretation, but at that valuation it does start to eat into the debentures before you get to liquidation costs.

[pennylane101]

Yes, that scenario is ideal---provided they can avoid CCAA.  The company just needs time.  Interest rates are falling and fast!  All directors should all be working towards the same goal which is survival of the company.