as must be very clear i am not a holder of equity or bonds so can post what i think - simple and clear. i hope this is ok with others here (some lse BB's are full of idiots who just post "you are not invested so can not comment" - what total rollocks)
as you may recall i was very much involved with the death moves of afren - i exited the process poorer but with much improved understanding of how things really work!
if they do not agree to delay the due date of payment, then the bod have not got the cash to pay and remain in compliance with convenants. so the co can not meet debts as due so legally has to be put into admin.
so as a BH, is it not better to allow a bit more time? what have they got to loose, other than arguably the current coupon payments? but could the Bod pay this and then risk other creditors loosing more than they otherwise would ?
No problems m8 I'm only trying to give different scenarios somethings got to give I like all hope it's a outcome that's beneficial to all shareholders involved. Hi Peter by the way long time no see....
so in summary, i would not hold the equity here or the bonds!
sorry guys but for reasons beyond the co and the BH and the SH in my view this co should now be taken to a peaceful place and put out of its misery.
i would note i have heard many good comments about Jon F in my travels. not met him todate. IF the outcome is different to my expectations, then i will be the first in line to buy him a pint - i would expect theline behind me to be rather long....
as always - you just never know in this game.
i genuinely wish all holders (equity and bonds) the very best and hope i am wrong.
so what d the bondholders want? well firstly i would differentiate between "old holders" and "new". the old historic holders want cash payments for the coupon and the cash back at the end - so they can re-invest (here of otherwise). they do not want to hold equity - if they did they would be called equity investors!! now some of the "new" investors may have seen a route into equity on the cheap , so they may be happy to take equity.
now for the afren experience (my take only!). for a debt to equity deal, the BH will have to obtain approval from the "inhouse risk committees". these bodies are in place to stop bond funds risking money. now in the case of afren the BH put up more oney (over and above the originial bond cash invested - to the tune of $250M). and guess what - they lost most of the original bond value and part of this new money. AKA poor investment!!!
now lets say i was an II bondholder. i think the only way i can get my money beck is a debt for equity swap. great so i do this just to get something. but the co has stated via RNS that it needs cash to maintain production and this cash exceeded cash currently available - so it needs new cash as well as existing cash released to be used (which it would be on a D4E deal).
so i think the co needs new cash and this cash will exceed that which the SH can be expected to provide (as the SH regisiter is pi dominated). so it needs new BH cash, and i just do not think the Bh will put up new cash..if so admin looms in my view..(pre-pack back out of course having dumped the BH debt and the equity)
unless of course the "new" money BH are vulture funds and will put in new cash. this of course would be based on the par value of the bonds (which they have bought for pennies), so the conversion rate is going to hurt.
now i would suggest with "old money bondholders" or "new money bondholders" - a pre-pack is an option.
so my money is on the admin / pre-pack.
worth noting that the co has RNS'ed the co is in default - so any sh has little if any chance to claim any loss from that point forward - default is default simple.
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