RE: A sliver of good news for what it's worth....24 Nov 2025 17:09
FWIW FT have just posted this
".....For credit investors, seniority matters enormously. Their place in the capital structure is critical in determining their claim over a company’s assets if it goes bust. But when companies try to restructure their liabilities out of court, who holds the debt can matter just as much as where they sit in the hierarchy. That’s particularly true when the creditor is as shrewd an operator as Swiss commodities group Glencore.
As an example, consider Tullow Oil. The company, whose market value has sunk from £12bn in 2012 to £70mn on Monday, has just six months before it needs to pay $1.3bn to its senior secured bondholders. But analysts estimate it will have only about half that much in cash on its balance sheet by the end of this year. The company’s secured bonds trade at just 79 cents on the dollar.
Tullow, which says it is now exploring “alternative options”, may well ask its senior bondholders to agree to a so-called amend and extend proposal, where they accept a longer repayment schedule in exchange for a more generous coupon.
But senior bondholders will want junior lender Glencore, whose $400mn loan expires in 2028, to agree to any proposal too. After all, it’s not great for the bondholders if Glencore’s loan is repaid before theirs. The mining and trading giant hence calls the shots, and is well placed to extract a sweeter deal than its place in the pecking order would suggest.
The wrinkle here is that while bondholders have every incentive to come to a deal that avoids pushing Tullow into bankruptcy, Glencore doesn’t. Unlike the fund managers in London and New York that hold the senior bonds, the miner and trader has experience operating upstream assets directly, and already markets Tullow’s oil. It could, at a push, take on Tullow’s equity position in its joint venture with the Ghanaian government.
Naturally, Glencore would probably prefer too that Tullow didn’t go bankrupt. And given the Swiss group is due to generate $2.4bn of free cash flow this year, according to LSEG, it doesn’t urgently need its cash back and can exercise some discretion.
Yet should the negotiation turn into a game of chicken, it would be hard for the bondholders to bet against Glencore, despite its more lowly status in the capital structure. It shows that when over-indebted companies start to creak, the balance of power could settle in surprising ways....."
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