Lanesborough Real Estate Investment Trust V.LRT.UN

Will debentureholders take the poisoned bait?

[merriam]

I think that this is a bad deal for debentureholders.  Voting no looks like the best option to me.  Are insiders doing this out of the goodness of their hearts in order to kindly improve the prospects of debentureholders?  Personally, I doubt it.

Here are some thoughts.  If you have any contrary views (or notice any errors), please share.

• debentureholders are being asked to voluntarily take an inferior position in the hierarchy of payouts (in the event of a bankruptcy, secured debt, which the debentures presently are, rank at the top; equity or shares rank at the bottom and often (usually?) get nothing)
• debentureholders are receiving no extra compensation for subordinating their position--in fact, they are being asked to pay 5 cents for shares that are presently selling for 1.5 cents:  an immediate loss of 70% of nominal value
• the shares to be received risk not just going to a ½ cent, but I believe that they have a high chance of becoming untradeable (with no bid and an ask of $0.005/sh)--if so, risking a 100% loss
• I wonder if this offer has been structured to create the impression of a false dilemma:  accept this inferior offer or, if you reject it, get nothing in a bankruptcy.  I can think of countless other possibly arrangements that would be better for debentureholders than this one.
• I suggest that debentureholders can do better than this offer and will almost certainly do better, if they reject it.
• The status quo (the way things stand now) is a much better option for debentureholders than this proposal, in my opinion.

[quicksilver545]

I understand your position. Let me explain why I voted yes. Liabilities far exceed assets, and without improvement in real estate market in Fort Mac, this company will for sure go into receivership. In receivership, the mortgages and other secured debt will be preferentially treated when the company is liquidated. As the debentures are unsecured, there will be nothing left to distribute. I'm

[alkhor]

I believe the main reason management is converting the debentures is to keep the interest payment on the revolving loan from 2668921 Manitoba Ltd. ongoing. Who owns this numbered company, why it's mainly our old friend Arni Thorsteinson.  Basically, the management of Lanesbourgh REIT are sacrificing the debenture holders and unit holders to save their investment. The companies that have

[riverrrow]

It's not my job to make other people rich.  The debenture share price collapsed today because somebody wanted out.  The vendor(s) got as little as 1.75 cents on the dollar.  But hey, as long as management gets to keep their money it's all good, right?  Who do you think mismanaged the company or misjudged their business plan to put the company in this position.

[BobTheKnob2]

It might be instructive to look at the old Temple Hotels Inc. (former symbol TPH on Toronto). That company was operated in a similar manner by the same Shelter Canadian Properties Limited with a similar geographical location (Ft. McMurray, etc.) before it was taken out by Morguard Corporation (symbol MRC) in February 2020. I have a hunch, it may not be a very good hunch, but a hunch nevertheless.

[riverrrow]

Thanks to everybody for your valuable input.  Cheers.