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correction; take away the retail bond $536m and the bank loan of $1bn and using some of Clara's figures ARCM could potentially have c.68% tradeable debt. Torture any set of figures long enough and they'll say what you want to hear. lets see if the auction actually happens.
Hi devonplay - I don't follow this stock that closely but hoping you can help explain the Reuters 21 Sept scoop.
https://uk.reuters.com/article/premier-oil-restructuring-arcm/hedge-fund-arcm-to-sell-200-mln-of-premier-oil-debt-sources-idUKL5N2GI32K
From the annual report total debt was $2,187m at end 2019
If ARCM sells $200m and is left with £240m that means their share of total debt is appx. 20 percent. However, the debt is a mixture of bank loans, retail bond and senior loan notes. I can't see ARCM getting too involved in the RB as they don't appear to like extra scrutiny and bank loans are not traded as easily as junk bonds. I read it as the journalist has possibly messed up her sums. I don't have a dog in the fight regarding the debt but ii ARCM do have that amount of debt no wonder they're trying to offload it. Sometimes traders get carried away and (I'm probably wrong) but if any of Clara's amounts are correct then there is a chance that ARCM have something close to 82% of the senior loan notes or if you add the FRN then it is c.45% of total debt. That doesn't seem right?
I could ramp and say that their nuts are in a vice and TD has a choice. I really don't know but it is possible that ARCM have been outmaneuvered and are currently "perched".
" I think that a fair position" unfair postion! This site needs an edit function. LOL
"look at the charts "
All I see forming is a choclate starfish. LOL
"That all being said, the major disposal of part of the cap table by a signifiant entity at 72% (as being reported by Reteurs, and the possible lack of interest again as being reported by Reuters) "
I of course mean, planned auction at 72%
PMO1 are an indicate to the extent they are the only elements of the cap table, outside other ordinary shares, that we can see a market price for.
Yes, they have been as lower as 32% of par, my point was that being public they may provide insight into elemets of the cap table we can't see prices for. That all being said, the major disposal of part of the cap table by a signifiant entity at 72% (as being reported by Reteurs, and the possible lack of interest again as being reported by Reuters) is interesting when the publically traded debt is now below that 72% mark.
I agree with you, I expect them to go lower, but you have to consider this in the mix. Most buyers of retail bonds hold them with the intention of keeping them to maturity. They aren't speculating in them, so aren't watching them on a daily basis.
They will also be held my institutions and family office, who will be watching on a daily basis. They aren't exclusively retail products. So there's the potential for them to lag, but that doesn't mean they aren't indicative of wider sentiment.
I don't think it does undermine my arguement. My arguement isn't that company wont be around - or whatever Happy calls it - my arguement is that I don't know what the cap table is going to be like going forward and if there's was a creditors/stakeholders waterfall, there's little chance of anything for sharehoders with the level of debt. I suspect there will be pain coming down the line for both positions, equity and debt, but it's very unlikely not to be felt by shareholders more than any other party given equities position vis-a-vis debt. I'm not sure you can decribe a credit default as teetering on the edge for business, as much as teetering on the edge for shareholders. I've also said I'm sure there's a future for the company, just less sure who the owners will be. THERE is a difference. In some terms shareholders are seen as owners of the business, in other accounting terms it's seen a who has greatest claims on the future earning of a business, and at this point it feels like creditors do. I think that a fair position given the uncertainty, PMO1 might be up of it's lows, but that doesn't mean it wont see them again.
Devon, I’d agree that the bonds are a key indicator to how the company is viewed by the wider market.
However you make reference to the drop in bond price as a concern. Yet if we look at the charts the historic lows were at the last crash 20016 and feb this year. On both occasions bonds dropped into the 30 yet now with everything up in the air and Pmo teetering on the brink the bonds are still in the 70s. Although I’m surprised they are still as high it does undermine your own argument
Surely it shows things may not be as bad as they seem. IMHO
PREMIER OIL PLC £500 million Euro Medium Term Note Programme
From PMO1's Info. Booklet:
This Information Booklet relates to the Premier Oil 5% Sterling fixed rate Bonds due 2020 (referred to in this Information Booklet as
the “Bonds”). A base prospectus dated 18 November 2013 (the “Prospectus”) which relates to Premier Oil plc’s £500,000,000 Euro Medium term Note Programme and which comprises a base prospectus for the purposes of Article 5.4 of the Directive, and final terms relating to the Bonds dated 25 November 2013 (the “Final Terms”), have been prepared and made available to the public in accordance with the Directive. Copies of the Prospectus and Final Terms are available from the
website of Premier Oil (www.premier-oil.com/ bonds) and the website of the London Stock Exchange plc (www.londonstockexchange. com/newissues). Your Authorised Offeror will provide you with a copy of the Prospectus and the Final Terms.
And yes it was £150m
LOL, it's just occured to be that PMO1 was issued for £150m about the same market cap of the equity today.
I'm sure it was £150 without checking.
The previous none ORB issue, which I believe was the base Prospectus for PMO1, was £500m - again from memory.
First, ARCM are not selling their entire holding of PMO1. They are auctioning $200 mln and will retain $240 mln according to media reports.
- that's correct, I've posted that on previous occasions.
That's applicable to PMO, the difference in general is that bonds are held buy institution, so if you use PMO1 as being an indicator, as I did, then you have to accept that institual investors are not as excitable as retail investors, they won't be expecting £1 by Christmas, so it provides and insight.
Can you can buy and sell PMO1 in trades of £100, but you also know that most are traded in much greater figures than mom and pop 10k's. In general there is less retail liquidity, but also less retail specualtion.
Agree with it or not, that your choice. As far as timing is concerned, we wouldn't be having this converstation in the company's equity hadn't created, unless you poster on here can move the market to that extent. If you do, I'm afraid we'll disagree again.
Devon - I find your comments their timing to be slightly suspicious. Additionally you blend fact with fiction in several instances which is concerning especially when the correct information is available from public sources.
First, ARCM are not selling their entire holding of PMO1. They are auctioning $200 mln and will retain $240 mln according to media reports.
I don’t agree with your comment that moves in illiquid markets provide significant ‘insight’. By their nature illiquid markets can be moved by very small tickets so how much informational value is provided when a mom and pop investor sells their £10K face bond and drop the bid as there is minimal flow on the buy side? Additionally if you read the prospectus for this bond you’ll see that it was clearly aimed at retail investors.
All in my opinion only
PMO1 is now down below the indicative price Reuters reported Asia Research & Capital Management wanted. The price they waned to auction their holding of bonds off at.
Reuters did say that souces thought they might not find any buyers.
Perhaps sources were right, no one wants the exposure if they haven't already got it and those who have don't want any more.
I believe the auction is tomorrow, a whole 3 working days before the 30th. Interesting to see if there's much appetite....
There's less liquidity in the bonds, less retail investors, so when they fall it's an interetsting insite into the markets views.
What do you make of that ?
PMO1
I think I’ve read somewhere creditors/ Insituational investors can be held accountable to contribute towards decommissioning liabilities so they may not look at that very favourably?
"Decommissioning liabilities rank ahead of debt liabilities, which was one of ARCM's objections. ARCM argued that they were less likely to be repaid hence why the deal was restructured with BP retaining the major of decommissioning liabilities whilst PMO gave up the cash flows accruing from the deal date."
PMO1 is down today, glad I'm out,
Assets producing 20kbpd are not bad, bad is placing at current sp levels.
BP should invite other bids. Cairn, Enquest and Chyrsaor may all be interested.
Decommissioning liabilities rank ahead of debt liabilities, which was one of ARCM's objections. ARCM argued that they were less likely to be repaid hence why the deal was restructured with BP retaining the major of decommissioning liabilities whilst PMO gave up the cash flows accruing from the deal date.
Let's hope (no pun intended) the PMO board read your posting!
Rather than seeking a reduced price from BP, would PMO not be better off restructuring the deal with no upfront payments in return for taking a larger share of the decommissioning costs. Even better PMO could take on all of the decommissioning costs($600M) in return for a share of the 2019/2020 revenue as originally agreed($300M).
Overall cost to PMO, approx. $300M, not that different to what has been agreed, but PMO would get $100 - 300M now to sort out debt, higher production to ensure debt repayment over the next 4 years and have enough time to recover from COVID-19 and sell Zama, all in time to meet decommissioning costs.
This hopefully can only be good news,either way.Personally I would like to see them buy BP assets especially at a lower price. Happy close your short position as quick as you can and be happy again.
The article says PMO is asking a reduction in cash price. The renegotiated terms already requires PMO to pay BP additional fees when oil price is above 50 something so maybe they are just asking BP to reduce the cash upfront and move that amount to future payment when oil price is higher.
Why not go for a lower price? All the negative media works perfectly In our favour, BP know we are diluting to oblivion as it is and no one else is running around willing to take assets right now, does t say anything about the asset itself, just the current climate.
So why risk losing bp deal, unless they don't want it.
A lot of people on here were opposed to it.