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While the debt is not due yet . Over at PMO you can see what happens over many years where you lose control of a company to your financiers . Control your own company while you have the opportunity if you have the shares in house you also control to a greater extent voting on possible hostile takeovers .
Long yes thank you, an additional 12% would take the estimated cost to $64.5 m so still possible . A company can buy back its own shares as you say .
Maybe without the price collapse the opportunity would not be available . Its at a huge discount presently and an opportunity to sort out a debt due in 24 months at 28% of its present value and with the bonus of no dilution . Looking at the company finance it can be done . O&G is by nature high risk we need to take a few measured risks now and this would cost the same as a duster drill but would be more transformative if successful .
Not quite sure at all why everyone mentions the debt as the cash in the bank nearly covers it. It’s long term rolled over debt if just over 200 million look at tlw, pmo and enq.
This is a sitting duck for a takeover
I think this has been discussed before and HUR can't force the conversion of bonds to equity. That is down to the bondholder. Therefore buying HUR shares is only beneficial if you're sure the share price will be above the strike price around maturity. As much as we all like to think that should be a possibility it's very far from a certainty. It'd be even less certain if they spent a load of capital on holding their own shares. Much better investing in producing more oil.
Refinancing the loan is the simplest option
Interesting idea, GB1.
It would actually cost about 12 percent more than your estimate, because your exchange rate is wrong.
Normally, when a company buys back its shares, they are cancelled, but it seems it can keep them as 'treasury stock' and reissue them later.
I would suggest first asking whether such a scheme would be possible.
I think, though, that if it is possible, the company would have been more interested in the idea had the price of oil not collapsed.
HUR have already said they are having to review previous spending plans.
Thanks JAdam , i thought i would throw it out there to see if some ' Financial Guru' can shoot holes in the idea . I would like to believe like yourself that this strategy or something similar would have been considered by Hurricane . Maybe its in play and they are already snapping up cheap shares , which i believe would be sound financial judgement .
We shall see
very good thinking. You could suggest ......
Should read 'cover Cb's at 25% of outstanding present debt .' you get the drift ...
Hurricane in July 2022 are required to settle the Cb's value $230m or issue 442m shares at a value of 52 cents per share . Or a combination of the two , it is Hurricanes choice .
Working on an exchange rate of $1 -1.1 Sterling , IF Hurricane could purchase 442m shares over the next few months at an average price of (13 cents ) 11.8p Sterling . The cost to company would be approx $57.5m .
Sit on them until July 2022 and with a production and oil price recovery Hurricane can settle the Cb's with shares having covered them at 25% of current value . Also having zero dilution .
Possible ??
Not too sure I’ll be around to wait for the SP to get to 45p but I think the drop in SP was seriously overdone and am hoping to get back to the mid teens in a reasonable time.
Gla and looking forward to seeing what happens in June.