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I agree. You would assume the market was aware of the prospect of this, in which case why was it not priced in. Sellers can only be those of a nervous disposition. You have to keep faith in the prospect of a partner or a buyout. If it is to be a partner then more likely to be private capital than a major which is probably why they have spent so much time on planning the development.

You cannot assume that all the CB’s are in the hands of the original holders. From September last year to March this year they were priced at a 70% discount and from March to July at a 50% discount since when the price has risen to around 65% of par (or a 35% discount). The ad hoc group hold almost 70% of the total which leaves 30%+, and it is reasonable to speculate that many of the holders outside the ad hoc group purchased in the market at a discount and indeed some may now be sitting on a healthy profit. So do not assume that all of the current holders will be reluctant to sell at today’s price.

bartlebobton

If you are going to quote from the judgement you cannot be selective in quoting only those bits which suit your agenda. You have to read it all. Zacaroli never suggested the company would be certain to have sufficient cash to repay in full, but he did also say:

“125. For the reasons I have set out above, given that the relevant alternative involves on each side’s case the Company’s continued profitable trading for at least a further year, I do not think this question requires me to be satisfied – in order to find against the Company – that the most likely outcome from the relevant alternative is that there will be a return to shareholders at some point in the future. In my judgment, the fact that there is a realistic prospect (based on one, other or a range of the possibilities outlined above, including through refinancing any shortfall) that the Company will be able to discharge its obligations to the Bondholders, leaving assets with at least potential for exploitation, is enough to refute the contention that the shareholders will be no better off under the relevant alternative than under the Plan.”

He is clearly of the opinion that any shortfall can be managed by one means or another.

Hasiba
I've just read that and it's rather interesting . I suspect MGW has a fair idea of who it is.

It would be so nice if you were to await a formal introduction.
But does daddy need an introduction?

A Memior, its available on Amazon.

fandg2

“If you don't pay me back and then can't afford to pay me back cos you've paid someone else, I'll be ****ed off with you.”

Bear in mind that not all of the current bondholders will have purchased at the issue price. It’s a fair bet that some have bought in the market at a discount. Last year the picture being painted by the board was pretty dire and as with shareholders who decided to jump ship how many of the bondholders might also have been so inclined. As far as the bondholders are concerned does it make any difference to them if another decides to sell and who buys, be that the Company or an institution/investor. Well if you think about it it does because if bought by an institution/investor the debt is still there to be repaid in full whereas if the Company buys it is reducing the debt and actually improving its prospect of payment on redemption and this is where the logic of the Boards argument for not buying fails.

You must understand that buying bonds in the market is not the same as redemption. There are restrictions preventing a partial redemption although this is possibly open to negotiation with the bondholders. The bonds can be traded. The market may be restricted by liquidity but essentially there is a possibility that anyone, including the Company can buy them. The Hurricane board have themselves said “there is an alternative of a smaller “under the radar” bond buy back of, for example, up to 10% of the nominal value.”
I was advocating this over 12 months ago and I emailed the Company to ask if it was being considered but received no reply, not even a “we cannot comment”. I also submitted the same question to last years AGM and yes it went un-answered.
From mid-September last year through to March this year the bonds were priced at 30% of their par value so 10% of nominal value i.e., $23m could have been bought for $7m saving $16m plus the interest saving of a further $2.6m and if $18.6m does not sound much just remember they were quite happy to send $17m on legal costs for the shareholder rip off. The Adhoc committee represents only 70% of the bondholders so how much more of the remaining 30% might the Company have been able to pick up at a discount with a bit assiduous buying by their broker?
It was a missed opportunity which in my opinion amounts to negligence.

adoubleuk

The paper trail could well be interesting and just remember paper shredders only work on paper.

dflynch

Despite all the claims of NGR1616, Slift and others the evidence submitted by HUR confirms that buying the bonds in the market is possible. It was considered by the board in October last year and documented.
Read pages 34 to 38 of the exhibit to Chaffe3.

US$230,000,000 7.5% convertible bonds due July 2022 POSSIBLE BUY BACK BY HURRICANE OF BONDS 1 October 2020 EXECUTIVE SUMMARY
“(b) Smaller buy back Noting the Committee’s warning against any expenditure outside of the ordinary course and the potential risk of souring relations with the Committee, there is an alternative of a smaller “under the radar” bond buy back of, for example, up to 10% of the nominal value. This could be executed relatively quickly and straightforwardly. However, whilst potentially possible could have significant consequences for Hurricane. Pros • Quantifiable and attractive return profile for Hurricane as the CBs would be extinguished significantly below par • Will be seen as positive action by equity holders • Can be implemented immediately as no legal documentation is required (unlike a tender / exchange offer) • Can be announced after the fact, assuming purchases are not considered material and do not impact the liquidity of the CBs (this point will need to be confirmed depending on the size of the buy back) • Repurchasing CBs from smaller bondholders could remove the risk of potential hold-outs in a larger restructuring o risks pushing the CB price higher during execution of the buyback • Relatively small amount of cash resources utilised (c.US$7-8m assuming a 31-35% purchase price range could be achieved and 10% of the bonds purchased)”
NGR1616 and Slift have persistently claimed that covenants prevent buying in the market with absolutely no evidence to back up their claim. This document proves that they are wrong and members should bear this in mind when reading their posts.

HUR have at last updated their website with profiles of the two new directors:

Mr Wright has 25 years oil and gas experience with a diverse range of E&P and consultancies companies. He has a petroleum engineering background, specialising in commercial roles both in the UK and the USA with CNR, Amerada Hess and BG before becoming a consultant in 2008. As a consultant he has run multi discipline teams for various acquisition and reserve determination projects in most regions of the world including West Africa, South East Asia, USA and Europe for both oil and gas, upstream and mid-stream. Since 2015, Mr Wright and Mr Craik have issued technical and commercial guidance to shareholders with regards Hurricane’s exploration success and development decisions.
Mr Wright holds a Beng in Engineering and a MSc in Petroleum engineering. He is one of the nominee directors of the Crystal Amber Fund. Together with Mr Craik, he was appointed to the Board of Hurricane Energy plc on 29 June 2021. Mr Wright is Interim Chairman of the Company.

Mr Craik is a highly experienced petroleum explorer with over 40 years of experience in the industry. He has worked on a wide range of international and UKCS projects and petroleum reservoir systems and has held technical and managerial posts at most levels for exploration companies, including Cluff Oil, Gulf Oil, Blackfriars Oil & Gas, Sun International and British Gas. From 1996 Mr Craik worked as an independent consultant for upstream clients and since 2015, Mr Craik and Mr Wright have issued technical and commercial guidance to shareholders with regards Hurricane’s exploration success and development decisions.
Mr Craik holds a B.Sc. in Geology and an M.Sc. in Sedimentology. He is one of the nominee directors of the Crystal Amber Fund. Together with Mr Wright, he was appointed to the Board of Hurricane Energy plc on 29 June 2021.

As both have been involved, no doubt on behalf of CA for the last six years I’m sure they will be extremely interested to see it from the inside. Any thoughts on the possibility of the new chairman issuing a revised appraisal within the next month or two?

If CA are vaporised by Saba what is the worst for HUR?
It won’t happen till November and it won’t change the reservoir. The worst is that CA will have to offload their holding, most likely with a placing and yes it will hit the sp but it will not kill the Company or wipe out shareholder value as would have happened under the restructuring. We have a new board and very likely new appointments in the coming months. But you can be sure that RB will not go down without a fight. You also have to question Saba’s motive as it can only result in value destruction by forcing a fire sale so they will be taking a big hit on their 25%+ holding. The only logic is they are heavily shorting one or more of CA’s major holdings but which? Highly unlikely to be HUR.

Re: Dechert LLP's interpretation

“It's a travesty that the old board never once considered any of the options put forward by the counsel of CA.”
This is not quite true. It is in the evidence presented to the Court that they did consider buying back the bonds. The travesty is that they chose not to and they should have started when the discount was 70%.

bartlebottom
"sounding like a 5 year old with a tin drum"
Could very well say the same for your posts.

adoubleuk

You question “weak and inept”.

Was there corruption? The manner in which shareholders were going to be deprived of ownership might suggest so but there is no conclusive proof. In the Technical Review 11.09.20 they declared a possible 2021 activity programme for Lancaster. Was this a genuine statement or a barefaced lie to placate shareholders presented with the kitchen sink? The Ad Hoc Bondholders solicitors wrote to the Company barely two weeks later on the 23rd September warning against embarking on any significant capital expenditure and it is not unreasonable to conclude that this warning influenced the BoD in deciding their future plans for Lancaster. If you accept that there is no corruption then the BoD’s caving in to the threat made by the Bondholders suggests, in my opinion that they were weak and inept. Shortly after on the 1st October the BoD considered and rejected any form of a bond buy back and the arguments presented all suggest submission to the bondholders, again indicating weakness.

But was there corruption in the form of a deal to hand the Company to the bondholders as the expense of the shareholders? If that is so then yes scheming would be a more appropriate description rather than weak and inept, but who would have involved, one or two of the Board or the whole lot? Is it possible that all seven directors were in it or just the CEO and the CFO as it could hardly be anyone else without their inclusion, and as you know these are the two that CA have retained. Furthermore if is was just Maris and or Chaffe what were the rest doing?

As far as the Chairman is concerned I think the description inept is most appropriate for someone who tells Bernstein it’s a no brainer without bothering to check with the CFO why are not buying.

I do not deny that there may have been something underhand going on and to support this view you could point out that when asked the Company refused to supply CA with its legal advice, but again this is not conclusive. In my view the principal failing was not to inform the market following the point in time when the BoD caved in to the bondholders demands on capital expenditure. That was a decision that should have been announced immediately and that failure should be investigated by the FCA.

Good to see the bond price is up over 20%. Someone is buying and I would dearly like to know who.
This link is for the boerse frankfurt page:
https://www.boerse-frankfurt.de/bond/xs1641462277-hurricane-energy-plc-7-5-17-22

Heid Honcho
I don’t know how much you know of the 2017 fund raise. You were not to my recollection posting on this board at that time so what I am about to say may be informative and if not then my apologies but it still may be of interest to others who are unfamiliar with the history.
Along with the bond offer was a share placing at 32p per share to raise $300m. In total institutions coughed up $530m and all they had to support that faith was the RPS CPR. The bond conversion price was set at a premium to the share placing price of 32p so conversion would only be advantageous to the bondholders when the sp rose 25% above the placing price. Following the fund raise the sp made a steady recovery following a significant fall in the lead up to the fundraise (sounds familiar). At the time posters speculated on 42p being a barrier to further progress as it represented the price at which bondholders could convert and realise a modest profit. These concerns were ungrounded because the bondholders were in no rush to convert whilst the sp was rising and they were raking in the 7.5% coupon.
The options open to the bondholders are to hold to end of term and get paid back subject to the company’s ability to fund redemption or convert to ordinary shares which only makes sense if the sp is above 40p. They cannot be forced to convert so given that conversion is out of the question they are looking at redemption.
What is now quite apparent is that when the new BoD downgraded reserves the bondholders sniffed the opportunity to bag the company for themselves and put pressure on a weak and inept BoD who fell for it.
On 23rd September 2020 their solicitors Akin Gump wrote a letter to HUR essentially saying they must prioritise the interests of creditors rather than shareholders and should not to take any steps that involve making or committing to significant financial outlays outside of the ordinary course of daily business. The rest you know.

adoubleuk
There is nothing surprising about the fall in the bond price. It is a refection of the fall in the SP over the same period arising from an increasing loss of confidence. The fact the price has moved confirms there has been some trading. What we do not know is the volume, but there will be some holders who have bought at a massive discount and now getting 15% or more in interest. The rise in March followed CA’s results when RB mentioned the possibility of buying the CB’s and McTeirnans “no brainer”comment. I thought at the time it could have been HUR doing the buying but we now know this was not the case. The interesting question is who was buying in March. Could it have been members of the Ad Hoc group?
I’m also surprised you have not seen this chart before as the link has been posted previously. If you want to find it in the future google the CB’s ISIN XS1641462277 which can be found on the Companies website and navigating to the Corporate Bond page.

haggis_trap

You ask for thoughts but unfortunately we can only speculate.
I heard rumours of blood on the carpet.
Stobie resigns
Trice resigns
Neil Platt?
Clare Slightam?
Maybe someday someone will write a book and I guarantee it will be a thriller. The film rights will probably be worth more than the present MC.

NGR1616

The ex BoD were castigated for their attempt to deprive shareholders which the court has prevented.
Are you suggesting that they might also be guilty of insider trading?