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Availability of Debt.
As I've frequently posted debt is available in Canada. Misinformation from one particular poster does not help a Pi.
While I'm here , Majid hardly mentions Montney, but I will, because it is recognised as the jewel in the crown of the WCSB. Simonette is a small part of that play.
Spartan Delta Corp. announces strategic Montney acquisition, $150 million equity financing, $450 million credit facility and $150 million term facility
July 28, 20213:02 PM Globe Newswire
CALGARY, Alberta – Spartan Delta Corp. (“Spartan” or the “Company“) (TSXV:SDE) is pleased to announce that it has entered into a definitive agreement (the “Agreement“) to acquire Velvet Energy Ltd. (“Velvet“), a privately held light-oil Montney producer with operations primarily in the Gold Creek, Karr and Pouce Coupe areas of north-west Alberta (the “Velvet Assets“) for total consideration of approximately $743.3 million(1) (the “Acquisition“).
The Acquisition will be funded by a combination of cash on hand, a $150.0 million bought deal equity financing led by National Bank Financial Inc., as sole bookrunner, together with CIBC World Markets Inc. as co-lead underwriters (the “Financing“), a five year $150.0 million 7.7% senior unsecured term facility (the “Term Facility“) and the Company’s revolving credit facility (the “Credit Facility“). Spartan has received confirmation with respect to an increase in the available capacity under the Credit Facility from $100.0 million to $450.0 million concurrent with the completion of the Acquisition.
I should also add ; Quote, "The Velvet Assets at Karr are located between the Gold Creek and Simonette areas and will add to Spartan’s existing land position at Karr."
For the Lth prepared to wait , it is obvious Spartan Delta Corp may consider i3 a future acquisition, as Simonette lies contiguous to its Assets.
7.7% senior unsecured term facility, as opposed to 11% we will pay. We need to refinance while these deals are still available. Not paying the LN debt when it becomes due is a red flag to a credit score and not helping matters.
You are completely underestimating how difficult it would be for I3e to navigate the Loan note holders and borrow $40m.
Even if they were able to get permission from note holders and then find a bank to lend $40m in subordinated debt to a junior oiler then can you imagine how high the interest rate charges would be? 15-20% plus a large upfront fee I’d imagine.
Then, what happens if oil drops back in to the 30s? I3e would possibly go the way of many Canadian oilers before it and be cash flow insolvent. Best to stay debt free and highly operationally mobile. Debt can come at a later date for me.
I’ve not dodged any of your questions - I think I’ve answered pretty much all of them - you just don’t agree with the answers. Little point answering more if you are going to dismiss them as “fantasy”.
I was a little concerned at first with the issue of equity, but after having looked at the numbers and tried to understand and followed up with questions to Management - i’m less concerned. So I’ve done my due diligence - if your not going to believe Management - then probably you should be asking yourself whether you should be invested.
I’ll give you my response to future debt / equity if you are prepared to look at the response objectively and answer I question that I’ve felt you’ve dodged.
Anyway the weather is crap today - currently in the pub having a Carling.
As I said Tony people will believe what they want to believe. It's just some people are better at spotting bull****@artists, and less likely to believe everything. In my career the amount of bull**** that I've seen fed to the market and employees by senior mgt is extraordinary. It's about telling the market what you want them to believe, and nothing else. Either way you're free to go on believing there was no way they could access debt. It's just that I won't be joining you in that fantasy.
Anyway let's try something else, I've asked this before Tony and you side-stepped it as usual. Do you think they can access more debt now? I've seen in your previous posts talk of them now being able to take on debt for exploration and production etc, which I ridiculed as they should take on debt for the first acquisition and print shares for the next (less shares being printed). And they should take on debt for known production, and not exploration (less risky). And they should increase their hedge on the new production (even less risky).
Regardless, let's say they have another $50m acquisition on the same metrics available. Are you going to keep saying debt isn't (and was never) an option? The market simply wouldn't give such debt to a producer with £25m debt, and future 30kboepd production, +$120m NOI and 200mboe reserves. Just how much production, NOI, 2P reserves do you think they need Tony to get access to $50m debt? And what will you think if they print another 300m shares at say 15p and hand them to IIs instead for this acquisition?
I'm interested to know as I think they're going to do it again in 6-12 months and most likely in the Nth Sea this time to pick up those easy options.
GGG,
The only point worth responding to is the bit on debt - someone has corrected you before but you've left your earmuffs on:
There is a world of difference between renegotiating your debt and taking on new debt. I3e is unique to many of its Canadian peers in that its debt is relatively low compared to CF. A lot of i3e's peers have significant debt and are HAVING to renegotiate for ONE REASON OR ANOTHER . Many of having to pay down debt before restarting CAPEX PROJECTS and paying a dividend.
i3e on the other hand is paying a significant dividend and looking to significantly increase its CAPEX.
Debt is not freely available - i3e has been very clear about this. Its also widely known that Oil and Gas generally have suffered from a lack of access to Capital. In any case each Companies circumstances are different - different Senior Creditors different CF etc. Just because you could get a loan does not mean your neighbor can !
Your guessing and in fact more than that you are misleading people because you could have sought that clarification. Others have including myself have done that to try to be more fully informed before peddling rubbish on the internet.