Member Info for devonplay

I'm guessing you know what happens when a company can't pay it's creditors?
I have an interest in the company, in it's debt. It's equity should now be doing what it's job is, refunding the compant. Ay what price matters little. As long as it's able to refinance to the extent that it can settles with it's creditors calls.

"Yes that price they pick with will impact existing holders so to keep them happy they will pick a price close to current "
You miss the point, if they don't do a deal in 12 days time there aren't going to much the shareholders can do if the creditors vote to call in the debt. ""Group's creditors would have the right to vote to declare the Group's debt liabilities immediately repayable. "" You'd have to find a couple of billion, not a couple of million.

"I used to think ARCM were total chumps but they were right all along..."
Yeah, they've been short the equity, long the debt. It's the only way to play this one. You make a killing off the equity and get the double whammy when your high yield debt lets you take a position again in the equity at mighty discount.
The BP deal must be a dream for them. It's good for bond holder, in my opinion, equity holders may get some crumbs.

"In addition, since 8 July 2020 the Group's leverage and interest cover financial covenants for the testing period ended on 30 June 2020 have been deferred under the terms of the Stable Platform Agreement. Without the deferrals contained in the Stable Platform Agreement, the Group would have breached the financial covenants contained in its financing agreements in respect of the testing period ended on 30 June 2020. In the event that the Proposed Refinancing is not agreed or finalised by 30 September 2020, if the Group is unable to obtain a further deferral or waiver of the financial covenant testing for the period ended on 30 June 2020, there is a risk that an event of default may arise prior to May 2021. If such an event were to occur, the requisite majority of the Group's creditors would have the right to vote to declare the Group's debt liabilities immediately repayable. "
"In the event that the Proposed Refinancing is not agreed or finalised by 30 September 2020" "Group's creditors would have the right to vote to declare the Group's debt liabilities immediately repayable. "
Don't they know it's not an AIM company? In 12 days time....and so far less have agreed to to the proposed refinance. Who's hold the cards again? I'm guessing theirs a large correlation between the equity and debt holders, their exposure is likely to be greater to debt than equity, so equity is noise. You'd need to price at a discount to get it away, hence the highly discounted placing. Pi's are going to be diluted out of existence.

" My good God PMO isnt some AIm stock FFS ! "
Yeah, few AIM co's have managed to run up 2 billion debt, a few have reached 200 million market cap though lol
Relax, it's all in the hands of the creditors. The noise is putting off the debt holders hahaha

"The existing shareholders will not agree for such a low price."
LOL you think existing shareholders have much choice? No placing, breach of covenants, falls into creditor hands.
When you've got 200m of equity and 2b of debt, then existing shareholders are just noise. That's why only less than half of creditors have backed the deal. They can see blood in the water....why swap your debt if your getting 40-50 YTM if you can''t make a killing on the equity. Hence the placing has to be on a big discount! LOL

It's going to be in that range I'm guessing 10-15p, cant see an intitutional placing being attractive unless it's in that range, I 12p if a fair guess.

"I'm thinking max price would be 12.5p or lower"
You mean for the placing?

Hi John, I'm content as long as they can keep paying the coupon on the debt and reduce the debt pile.
I'm not so sure about the equity performance or the pref. stock. At the end of the day "notes" are gurantee and there's the asset of land that offer some security. It's not a perfect solution, but with an 11% yield, 17% yield to maturity it's worth a punt.
I'd prefer they'd keep paying us, obviously, and reducig debt before they pay the preference holders, but when they do it would be shot in the arm for all of us - as long as they've got the cash. Unitil then, happy to sit back and keep taking any cash that comes my way until 2025.

But their market cap is 105b. 105b of equity v 87b of debt
PMO is in a different magnitude.
For all intense purpose the company is creditor owned. Under 200m of equity v just under 2billion of debt.
There's no comparion with Shell.

Hi John, everyone, I thought these looked OK in terms of the broad global economic outlook.
Pleased to see the reduction in debt, I'm still holding the Sterling Bonds, current yield 11%/YTM 17%, so I'm carrying on holding. Next interest payment is December. I don't expect I'll be using my warrants any time soon, but in someways I was happy that we've had the extention of maturity.
As you say, fingers crossed.
Pref's responded OK this morning. Better than the equity. I may see if I can pick up more of the 8.75% Aug 2025.

U2 sauerkraut, Achtung Baby LOL

"The 75% creditors thing is a given, surely?"
you think, as they are the biggest stakeholder, there's always the other alternative, the company defaults and they take it private.

They haven't reached the 75% approval level from creditors, so until that's done you can't say the deal is done.
Not until that has been reached can they start the book building process. Without that approval they breach Covenants enforced bty lenders. They can cetainly speak with potential investor, but that's not the book buildiing process and it's certainy won't trigger the underwritten equity investment from debt holders.

ARCM short position down to 6.19% as of the 7th Sept 2020. Not long now?
and they are long the debt, simple hedging strategy.

"A put option on a bond is a provision that allows the holder of the bond the right to force the issuer to pay back the principal on the bond. "
I can't remember what's still in existence of the £500 million Euro Medium Term Note Programme, or how much has beem been consumed by RCF, but PMO1 has a "change of control" "put option" that requires the redemption to be at 100% on a change of control over 50%

It's more like an emergency rights issue designed to stop the company falling into breach, a techical default, of it's debt covenants. It's dilutive and in this case not much different to a public offer, with the exception of it's realy to satisfy creditors.

It's classic hedge strategy, short the equity and long the debt.

"I say creditors will push through a deal with Chrysaor as long as they are not forced to take a significant haircut. "
with the debt trading at a discount, even with a small hair cut it still offers a decent YTM, it's very conceivable that creditors push this business towards shareholder who have deeper pockets and won't be distracted by short sellers. For recent specualtors in the debt, and who are also short on the equity, a low ball offer for the equity could still provide high double digit returns on a holding in the combined asset classes.

"4bln tax credit to take here"
https://www.energyvoice.com/oilandgas/north-sea/265681/premier-oil-chrysaor-deal-articleisfree/
If they want to buy the equity, which Reuters are reporting they don't, but expect the debt holders to take a hair cut it could turn very nasty for the smallest stakeholder is this: the shareholder. When the cap. table indicates they are the very much the minority, the equity holders, the power lies with the debt holder. If push comes to shove and an buyer see's the benefit of the tax credit and the debt holders won't budge, it's not too difficult to see who's in the middle and will get squashed.