I don’t have a Financial, Accounting or Legal background but I can read and think.
I have read the relevant parts of the Information Circular a few times and this is my understanding;
- If the Canada Investment Review is extended Sinoenergy has the “right” to;
- Walk away without penalty
- Extend the “Outside Date” by 30 days
- Regardless of their decision LRE BOD and the Lenders can’t object.
- Upon receipt of approval from Investment Canada Sinoenergy is obligated to
- Not later that one business day before the Outside Closing Date deposit $100m in an escrow account re the Credit Facility and sufficient funds with the Transfer Agent to pay the Security Holders.
- If they fail, they are offside and the LRE BOD and the Lenders can claim the $20m penalty or grant an extension.
Although it’s frustrating it is slightly encouraging that Sinoenergy has had two opportunities to walk without penalty and both times didn’t.
I don’t understand why Investment Canada hasn’t made a decision. In the big picture this is a relatively small transaction. Possibly they have a lot on their plate, haven’t got to it and extended it because they can. They are a Politically influenced Bureaucracy with all the features.
The LRE IR Department has to be very careful with what they say. They can’t disclose or even hint at any material Info or Developments that haven’t been Officially Announced. It’s just the way it is.
These delays are frustrating. Money has a time value. It’s hard to criticize anybody that takes what they can get now and moves on to other opportunities.
I have a small position in LRE.DB. The Interest continues to accrue. If and when this deal gets done the Debentures holders will be compensated a bit for waiting. The downside is that they aren’t very liquid.
I still think that the odds are in favour of this deal eventually getting done..
It’s Never A Done Deal Until The Money Changes Hands!
We can look forward to “Twisting In The Wind For Another Month”!
As Always; Do Your Own Due Diligence; It’s Your Money !!