If debt is the problem would you have advisors costing millions. Would you be aquiring shares in another company. If barda rash is so bad suspend operations and any other turkey to channel funds in a more meaningful manner.
Of course we would achieve a better price in a buoyant market. That goes without saying. You're overlooking the fact that Afren does not have the luxury of one key commodity - time.
The debt needs to be immediately attended to or Afren will simply wither on the vine because of its need for immediate cash.
Basically we're coming at it from the same angle but I think now it is clear that an asset sale without hideous dilution is probably the best course for shareholders IMO. I think the events of last week have proved that the bondholders are unlikely to improve terms and this makes the case for an asset sale more compelling in my view.
This is what its all about nothing more nothing less if the ad hoc chaps and bod done a 50% dilution i think most shareholders would accept. Even though the bond holders would have less shares they would still be worth the same. So you have to ask yourself, i think this is also about control of the company and taking it private, its the cheapest way of doing a takeover. Assets of just under 2 bill taken away from shareholders for a fraction.
I am not trying contradict anyone. Just giving my personal view.
In my view a No vote is almost like sticking the middle finger up at Bondholders so they're not going to bail Afren out if it goes into admin.
If the company genuinely needs this $30m the bondholders won't part with cash under a No vote.
But I don't think the No camp are to concerned with this as strategy for a No vote is to try and get some kind of residual value after liquidation.
Again not a contradiction just a slight weakness in the plan.
INVESTOPEDIA EXPLAINS 'Liquidation Preference' More generally, liquidation preference can also refer to the repayment of creditors (such as bondholders) before shareholders if a company goes under. The company will sell its assets, then use that money to repay senior creditors first, then junior creditors, then shareholders.
Asset prices are low in the oil industry at the moment and in forced sales one can expect low bids from buyers in search of a bargin. In my opinion a much higher price would be achieved in a more buoyant oil market with Afren trading on an even keel. We can still get to that place but only with a fair deal for shareholders and yes, by the look of it, more support from the much maligned Bond Holders.
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