Lanesborough Real Estate Investment Trust V.LRT.UN

8 Hours to the Next Postponement

[alkhor]

I am becoming convinced tha postponements of the meeting is because a major debenture holder wants the debt into units proposal be applied to the Shelter loan as well.

As is with the current proposal Debenture holders would end up owning 98.6% of the REIT. If the same deal was offered to Shelter later on, Shelter would end up owning 99% with the debenture holder having the remaining 1%, current unitholder ownwership would be reduced to almost nothing.

If both the shelter loan and debenture holders are converted at the same time, the debenture holders would own 20% of the REIT and Shelter 80%, current unitholders would end up with much less than 1%.

If you were Shelter, who also are involved in the management of the REIT, which way would you want it to go?.

[quicksilver545]

I don't think major debentureholders want to give up secured debt that could be worth much more in receivership/liquidation, to unsecured equity that trades at a current market cap of 300K.  Why would any debentureholder vote on this deal? We give up secured debt to get equity that barely trades at a market cap of 300K. Makes no sense. 

[quicksilver545]

Also I'm not sure there are any large debentureholders above 10%. If you comb through the original information circular on November 30th, it documents the following: "As at the date hereof, the trustees and officers of the Trust are not aware of any person or company that beneficially owns, or controls or directs, directly or indirectly, more than 10% of the issued and outstanding

[alkhor]

in the case of a CCAA bankruptcy, I doubt the Debenture holders or Shelter would get anything. The Mortgages and secured credit line are owed more than the value of the assets.

[quicksilver545]

That's what the company wants you to think. As has been explained before, the asset valuation on the balance sheet is based on their ability to produce income, rather than their real estate or liquidation value. Further, in receivership and liquidation, secured debentures have a history of being treated more fairly, and underlying debtholders getting a certain percentage across the board

[Isyckle]

This also is an important factor to consider im regards of the Revolving loan. the only reason the Loan is needed in the first place is not shortage of money, but the negative fair value ajustments that have been going on.  The loan is only needed to cover for the articifial losses from fair value adjustments.

[alkhor]

As I wrote a few weeks ago, the debentures holders now own 98.6% of the units. I'm  convinced the REIT management, who also have the $100MM loan will do the the exact same thing to get rid of this loan as they did to the debentures holders. First they will do a 100 to 1 consolidation, then pay off the loan with units at 5 cents each. Result, the management/Shelter will own 99% of the REIT

[Isyckle]

If this occurs, I will vote against  Consolidation and or The Fake Shelter Debt settlement 21 million times.

[Cbcdistressed]

  if you vote against the debt settlement, in the next second, they will demand the loan to be paid back. Where do you get 100 million cash to repay the debt? Please tell me. 

[Isyckle]

There is no 100 million, it's just to cover for the fair value adjustments, the 100 million doesn't exist. Change accounting method and poof! 100 million in magoc revenues. It goes both ways.

[Cbcdistressed]

  you need to stop posting this nonsense. The 100 million is on the book as debt they used the money to pay down the mortgage as the property value is lower and the original loan to value ratio doesn't make sense anymore so the bank has to cut the loan which is replaced by shelter's 100 million. now you get it.

[Isyckle]

I will review previous financial statements to confirm what you are saying.

[Isyckle]

You are correct on one thing, Shelter is paying down first mortgage loans with the proceeds of the Manitoba Revolving loans, that is backed by second mortgages.   But I encourage you to go back in the financials and the MD&A. this will be my last intervention on the subject.

[Lllennn]

@.005 your buying the DB at $130.00 imo

[quicksilver545]

Not really. At 0.005 the market cap is 3.4 million, compared with debenture debt at 33 million.  Unfortunate to see the volume just dry up from 27 million  on monday, down to only 30k today, with 21 million on the ask. We will need some kind of news to bring some attention to this stock. If they are intending to go private, they certainly have stopped buying now. 

[riverrrow]

Thanks to TD I'm out thousands of dollars.  As usual the gang in the backroom were slow to convert the debentures to common shares and by the time that happened the bids had dissappeared.  This non existent customer service is typical of the behind the scenes gang.  It's not surprising that some other recent more publicized stunts have created the rumour of a run at TD. 

[Isyckle]

Are you saying that TD are showing your trust units @ 0.0 instead of 0.005$?

[riverrrow]

I'm saying that TD was so slow in converting the debentures to shares that by the time it occurred, around noon, the buyers had pretty much disappeared and with no bid the shares are of course essentially worthless.  

[alkhor]

Probably won't make a difference, but putting your units up for sale at market price instead of $0.005 should raise their priority. Not all trades go through the TSXV.

[Lllennn]

Only going thru big V imo

[Lllennn]

Anyone got a way out on this? 23 million available and 22k sold? 2000 gone thru Ultra but still .005, what to do with 670 million shares? Can they do warrants for units with a 2 year expiration and a .05 strike?

[Lllennn]

What is the total debt they have now? Anyone with an update?

[alkhor]

I think the only way you will be able to sell is if they do a 10:1 or even 100:1 consolidation of the units. 

[Lllennn]

Agree, I'd say 100000:1, you know how much debt they have? Other than what the Db, seems like a few mortgages and a 30 million loan that's drawn about 20 million?

[alkhor]

From thier Q3 results their main debts are: $162MM Mortgages $95MM Revolving loan from 2668921 Manitoba Ltd (Shelter) $13MM Interest owning on revolving loan.

[Lllennn]

Fk hey, I wonder who bought the 30 million shares on day one?

[BobTheKnob2]

I see where you are going with this. I think it was not explained all that well. Yes, you are more or less correct. Each dollar of the debenture was exchangeable for  approximately 26.6 units which included the accrued interest. If you use current pricing of $0.005 * 26.6 = $13.30/dollar That translates to $133.00/$1000 debenture. Absolutely you were more or less correct at current pricing.

[quicksilver545]

Ah, gotcha. Thanks for clarifying that Bob. 

[Lllennn]

So unless the 22 m sells at this only way is drop? Possibly using RS which would be using MC about 3.4 million shares total # shares at $1 then?

[Lllennn]

So a RS of  200000 for 1 share/units imo not FACT

[alkhor]

This assumes you can sell your units at half a cent.

[BobTheKnob2]

  True!!! Sad, but very true!!!

[Cbcdistressed]

Right on, this is how things will end. Sadly...they are going to do that very very soon. Shelter's 100 million loan is repayment on demand which is due even sooner than the original term of the debenture. Those $100 million will be converted to units 100%.

[BobTheKnob2]

The other alternative probability is that Shelter (or their proxy) is on the buy side scooping up cheap shares at $0.005 until they hit 10% at which time they will make an offer to take the company private. Less hassle than trying to go through a vote to create a new control person. Once it is private, they can do whatever they want. That is what they have been doing for over 20 years for the

[Cbcdistressed]

That could happen too, but there is no serious bids at the moment. On the other hand, I do want to see the new balance sheet and positive fair value adjustment 

[quicksilver545]

I guess my question would be, if they wanted to by the units and take the company private, why woudn't they have done that before, when the market cap was around 400,000? I suppose I can answer my own question by saying that they wanted to extinguish the debenture debt first, so they didn't have to worry about it. Now with the market cap around 3.3M, they could easily make an offer for

[Isyckle]

I like your take on the situation.

[alkhor]

Why pay $500,000 when they can legally (although immorally) get it for $100,000?

[quicksilver545]

How could they get it for 100k?

[alkhor]

Pay off their 100k loan the same way the debentures were paid out. A consolidation of the units first then pay half a cent for the remaining few.

[quicksilver545]

You mean their 100 million dollar loan? Somehow I doubt they would want that paid off in units, but hey, I was surprised that the debentureholders agreed to the units. 

[alkhor]

Why would they refuse to be paid in units if it meant the would own 99% of them?

[quicksilver545]

Why would they refuse? I think the better question, is why would they accept? As an example, the debentures were worth 33 million, and were converted into units at 5 cents a piece (and not lower, because the TSXV woudn't issue units below 5 cents. Didn't really matter as that diluted the existing unitholders into oblivion already, so whether it's 96% or 98% dilution really means

[Cbcdistressed]

if they want the bigger potential for the ultimate recovery in fort Mac they will convert the 100 million. If they dont then, keep the debt and raise the interest rate and keep sucking the company dry.

[alkhor]

BTW Unit holders were not asked to vote on giving 98.6% of the REIT to the debentures holders, so why would have a say in giving the units to Shelter in a similar deal?

[Cbcdistressed]

probably won't get you 5 cents a share which would mean they had the money to fully reply debenture.... so. I am happy for a 1 cent per share privatization deal

[quicksilver545]

Well there's a difference between paying back the debenture, and taking the entire company private. They didn't pay back the debenture because they coudn't, but also because they could get the whole company for about the same price.  I'd value the company more than just 6M for all their assets. 

[alkhor]

Unit holders will hopefully have one chance to vote against the current management before they screw everyone over. Unfortunately you can only with hold support and not vote against.