Cardboard Posted May 20, 2016 Author Share Posted May 20, 2016 $550,000 at par of these things traded today between $8.50 and $9.50 in 37 transactions. That is roughly $50,000 in total and an average of $1,350 per trade..... This is mostly, if not all retail. And when you read on some of the forums on Stockhouse, you realize pretty quickly that a bunch of people have no clue what these are, what is a capital structure, what is a prospectus, etc. And some do buy these things and get shocked later about paying things like accrued interest! Actually, there has been a carnage recently in many Canadian juniors that are in the process of selling assets or that have a banker's gun to their head. Many are now micro-caps with valuation below NPV of Proven Developed Producing reserves. The other amazing thing is that the Canadian dollar is down around 4.5% to the USD since the end of April while oil has continued its ascent. Even if they are not likely to attract U.S. based bids for their assets, they are still cheaper and more importantly, their revenues and cash flows are going up while costs have remained constant in $CAD. The situation seems perfectly setup for buyers to snap up assets on the real cheap from worried investors while fundamentals have turned. Cardboard Link to comment Share on other sites More sharing options...
Cardboard Posted June 1, 2016 Author Share Posted June 1, 2016 Twin Butte has indicated that they have received a 1 day extension to their credit line last night. You have read that right! This can only mean that something is in the works and it is in its final stages. Moreover, two companies with going concern warning from their auditors and non-cooperating bankers have transacted over the last few days or Arsenal Energy and Rock Energy. Here is what I just posted on Stockhouse: "TBE is only 36% heavy oil (51% medium oil) while RE is 76% heavy oil of its overall production. RE has a lower decline rate than TBE and lower decommissioning liabilities relative to PPE values. Tax pools vs size appear similar. It is pretty clear that RRX bought RE for their Viking assets but, the price paid considering that they are inheriting a lot of heavy oil which they likely don't like is interesting. Here are most of the comparative metrics for TBE vs RE: 1) TBE would sell for $513 million on boe/d basis. 2) $352 million based on 2P reserves. 3) $254 million based on PDP NPV. 4) $458 million based on 6.6 times multiple of cash flow at $50 U.S. WTI." Based on the above, it is clear that Twin Butte's convertible are partially to fully covered or $85 million at par and roughly $210 million of bank debt, working capital deficit, severances and free cash flow since March 31. A lot more covered than the current $9 price indicates! The metrics of the two Arsenal Energy transactions also provide a similar conclusion. While there is never any guarantee and with oil acting pretty poorly today, it seems that these debentures continue to offer a very favorable risk/reward ratio. Cardboard Link to comment Share on other sites More sharing options...
influx Posted June 1, 2016 Share Posted June 1, 2016 Twin Butte has indicated that they have received a 1 day extension to their credit line last night. You have read that right! This can only mean that something is in the works and it is in its final stages. Moreover, two companies with going concern warning from their auditors and non-cooperating bankers have transacted over the last few days or Arsenal Energy and Rock Energy. Here is what I just posted on Stockhouse: "TBE is only 36% heavy oil (51% medium oil) while RE is 76% heavy oil of its overall production. RE has a lower decline rate than TBE and lower decommissioning liabilities relative to PPE values. Tax pools vs size appear similar. It is pretty clear that RRX bought RE for their Viking assets but, the price paid considering that they are inheriting a lot of heavy oil which they likely don't like is interesting. Here are most of the comparative metrics for TBE vs RE: 1) TBE would sell for $513 million on boe/d basis. 2) $352 million based on 2P reserves. 3) $254 million based on PDP NPV. 4) $458 million based on 6.6 times multiple of cash flow at $50 U.S. WTI." Based on the above, it is clear that Twin Butte's convertible are partially to fully covered or $85 million at par and roughly $210 million of bank debt, working capital deficit, severances and free cash flow since March 31. A lot more covered than the current $9 price indicates! The metrics of the two Arsenal Energy transactions also provide a similar conclusion. While there is never any guarantee and with oil acting pretty poorly today, it seems that these debentures continue to offer a very favorable risk/reward ratio. Cardboard Indeed, they confirmed me too. I find it lame to be honest if this is true because it is window of opportunity. While one cannot be sure, the market reaction so far (at the moment) is clear. They are certainly not doing the deal based on oil today or recent price movement :) my thought :) or at least I hope this to be the case. I am still watching How small/large is the position (%) in your portfolio? Link to comment Share on other sites More sharing options...
Cardboard Posted June 1, 2016 Author Share Posted June 1, 2016 That is not something that I like to disclose publicly but, it is significant. More importantly, I hope that we can unite as a group of debenture holders to defend ourselves in the eventuality that they are trying to offer us a very low percentage relative to par to have something left over for shareholders. Debenture holders do not have the possibility of dissenting like common shareholders which can often scuttle a deal if it exceeds 5 or 10%. However, they require 66 2/3% majority from debenture holders to move forward on a change of control proposal. 50% of par is the absolute minimum IMO. 75% of par or like LRE is more what I call fair. I don't care about how large this represents in premium vs today's trading price. Capital structure is fundamental in the securities world so there is really no basis to short change debenture holders in order to give something to shareholders unless we can avoid a significant amount of aggravation by accepting less than par. Cardboard Link to comment Share on other sites More sharing options...
mrholty Posted June 1, 2016 Share Posted June 1, 2016 I wish you all the most luck on this. I have no dog in the fight as my two brokers for my accounts (Fido and TD Ameritrade) both stated that they were unable to buy the security. For those of you who bought this and are US based how did you do it? Link to comment Share on other sites More sharing options...
doughishere Posted June 1, 2016 Share Posted June 1, 2016 Here is what I just posted on Stockhouse: Gonna hijack this thread real quickly. Stockhouse any good for ideas? Link to comment Share on other sites More sharing options...
Cardboard Posted June 1, 2016 Author Share Posted June 1, 2016 Is it a sarcastic question? I do use Stockhouse to find information that I may have missed about a specific company. Sometimes you read statements from employees that turn out to be true. Sometimes there is an angle that I have missed about the business, CEO or other that a good poster will reveal. There are some really smart ones. Actually, this forum was formed after some heavy discussion on the Stockhouse Fairfax thread in 2002/2003. You would have to ask Sanjeev about the history but, a lot of folks that where on Stockhouse discussing Fairfax then moved on to this board. However, 75% + of Stockhouse posts are total garbage. Lot's of bashers and a lot of uniformed investors. Just like the Yahoo Finance boards. Cardboard Link to comment Share on other sites More sharing options...
LesPaul Posted June 2, 2016 Share Posted June 2, 2016 Another one day extension; won't lie - I chuckled when I read the headline. Canada NewsWire CALGARY, June 1, 2016 CALGARY, June 1, 2016 /CNW/ - (TSX: TBE) – Twin Butte Energy Ltd. ("Twin Butte" or the "Company") announces that its bank syndicate has agreed to extend the maturity date of Twin Butte's $85 million non-revolving credit facility by one day from June 1, 2016 to June 2, 2016 and the expiry of the revolving period of Twin Butte's $140 million revolving credit facility by one day from June 1, 2016 to June 2, 2016 to enable the Company to continue with its strategic alternatives process. As announced on December 9, 2015, Twin Butte has engaged Peters & Co. Limited and National Bank Financial Inc. as its financial advisors to advise the Company in connection with a comprehensive review and analysis of its strategic alternatives process. Strategic alternatives may include, but are not limited to, a debt restructuring, a sale of all or a material portion of the assets of Twin Butte, either in one transaction or in a series of transactions, the outright sale of the Company, or merger or other transaction involving Twin Butte and a third party, and/or alternative financing initiatives. The Company cautions that there are no assurances or guarantees that the process will result in a transaction or, if a transaction is undertaken, the terms or timing of such a transaction. Link to comment Share on other sites More sharing options...
doughishere Posted June 5, 2016 Share Posted June 5, 2016 Is it a sarcastic question? I do use Stockhouse to find information that I may have missed about a specific company. Sometimes you read statements from employees that turn out to be true. Sometimes there is an angle that I have missed about the business, CEO or other that a good poster will reveal. There are some really smart ones. Actually, this forum was formed after some heavy discussion on the Stockhouse Fairfax thread in 2002/2003. You would have to ask Sanjeev about the history but, a lot of folks that where on Stockhouse discussing Fairfax then moved on to this board. However, 75% + of Stockhouse posts are total garbage. Lot's of bashers and a lot of uniformed investors. Just like the Yahoo Finance boards. Cardboard It wasn't...ive never heard of stockhouse before....CoBF history lesson. thanks! Link to comment Share on other sites More sharing options...
doc75 Posted June 8, 2016 Share Posted June 8, 2016 I'd say this portends a significantly distressed sale of the assets: http://finance.yahoo.com/news/twin-butte-provides-credit-facilities-011100596.html Link to comment Share on other sites More sharing options...
Wilson-TPC Posted June 8, 2016 Share Posted June 8, 2016 Sounds like Gear is going to snap up some assets on the cheap here. Link to comment Share on other sites More sharing options...
alertmeipp Posted June 8, 2016 Share Posted June 8, 2016 Very odd You would think they would have filed by now if they don't have a offer in place or at least getting close to one? Why don't the bank give more time to them? My guess is they have a deal that is good enough for the banks but management wants more Link to comment Share on other sites More sharing options...
Cardboard Posted June 8, 2016 Author Share Posted June 8, 2016 I agree Alertmeipp. If this company can't be sold for $250 million and some, then I don't understand anything anymore. I have seen other companies in worst situations with their bankers. See Arsenal Energy where bankers did not even respond to the regular request to extend the revolver by 365 days. At least here, there has been communication since April 30 or the first extension. And Arsenal has still been able to sell enough assets to pay all bank debt at metrics that would get you easily that $250 million. These were not prime assets by the way. Once again, they are producing 12,000 boe/d currently with 2016 exit guidance of 10,000 boe/d with no drilling, NPV of Proven Developed Producing reserves is $221 million, NPV of Proven reserves is $312 million, current EBITDA is around $65 million/year at $50 oil. Shareholders are in trouble, no doubt. However, debentures at current price, only require $13.6 million above bank debt or $209 million at March 31 and likely coming down daily with cash accumulating. Cardboard Link to comment Share on other sites More sharing options...
Wilson-TPC Posted June 8, 2016 Share Posted June 8, 2016 Rumor in Calgary is that only one buyer emerged for the whole company and it was an offshore company. The buyers wanted to shaft the banks, and the banks didn't like it. The buyers likely wanted to pay the banks back slowly, but the bankers want out completely. The banks likely thinks there's a better chance of realizing the value back through receivership. And the problem with TBE is that some of the assets won't sale, so the piece by piece transactions will need to result in a complete payback to the bank. Link to comment Share on other sites More sharing options...
Cardboard Posted June 8, 2016 Author Share Posted June 8, 2016 You live in Calgary now or is it Ingram that filled you in? This is another individual that I would add to the list of do not trust. They were apparently doing great with their heavy oil field in Lloydminster touting their capital efficiency, etc. Now they are diluting your shares to buy into a non-related light oil play??? Regarding Twin Butte, all they have to do is to sell Provost for $30,000 per boe/d which should be feasible in this market, use the $180 million to pay off the debt and find a new lender if necessary for the outstanding $20 million. Then work to repay the rest of the debt including debentures via cash flow from what is left. If it can't get done by 2018, then hand the company over to the debentureholders on maturity. Cardboard Link to comment Share on other sites More sharing options...
Wilson-TPC Posted June 8, 2016 Share Posted June 8, 2016 Ok. Good luck getting 30k per flowing. Link to comment Share on other sites More sharing options...
Wilson-TPC Posted June 8, 2016 Share Posted June 8, 2016 Decommissioning liability of 200 million will eat into any transaction. Hence, why there hasn't been a single buyer willing to step up and eat the whole company despite the valuation. Not rubbing salt on the wound, but I don't see a transaction happening. Bankruptcy is the only way to get rid of those liabilities. Buyers will show up then. Link to comment Share on other sites More sharing options...
alertmeipp Posted June 8, 2016 Share Posted June 8, 2016 So if there is no hope to get any deal done in next couple days. Why dont tbe just file for CCAA. They will get more time that way. With wti rising and being cash flow positive. Time is on their side. Link to comment Share on other sites More sharing options...
LesPaul Posted June 8, 2016 Share Posted June 8, 2016 Queue up the Benny Hill theme! Twin Butte Announces Extension of Credit Facilities CALGARY, June 8, 2016 /CNW/ - (TSX: TBE) – Twin Butte Energy Ltd. ("Twin Butte" or the "Company") announces that its bank syndicate has agreed to extend the maturity date of Twin Butte's $85 million non-revolving credit facility from June 7, 2016 to June 9, 2016 and the expiry of the revolving period of Twin Butte's $140 million revolving credit facility from June 7, 2016 to June 9, 2016 to enable the Company to continue with its strategic alternatives process. Link to comment Share on other sites More sharing options...
Cardboard Posted June 8, 2016 Author Share Posted June 8, 2016 It is ridiculous: a 30 day extension which followed very tense negotiation that week-end, a 1 day extension, a 1 day extension, a 5 day extension, a default?, now a 2 day extension if we count today! And the text that they are pursuing strategic alternatives is back in again. If the banks do not extend again tomorrow night, then the money will be due in full the morning of June 14. Cardboard Link to comment Share on other sites More sharing options...
influx Posted June 9, 2016 Share Posted June 9, 2016 It is ridiculous: a 30 day extension which followed very tense negotiation that week-end, a 1 day extension, a 1 day extension, a 5 day extension, a default?, now a 2 day extension if we count today! And the text that they are pursuing strategic alternatives is back in again. If the banks do not extend again tomorrow night, then the money will be due in full the morning of June 14. Cardboard Yeah, lame as I said Maybe someone needs to make money by playing this game...to buy on fear/uncertainty and then sell on supposed certainty and deal being closed Link to comment Share on other sites More sharing options...
Cardboard Posted June 9, 2016 Author Share Posted June 9, 2016 I am about certain that there is an offer on the table but, it is not really attractive. And that was to be expected since one can review all Canadian asset sales over the last 2 to 3 months and figure out that this company is worth anywhere between $250 and $350 million. Depending on how you slice the leftovers after paying bank debt, there is not that much left for shareholders. And you have to give enough to the debentureholders to get their approval. At LRE it was judged at 75% of par. Here it is probably less but, it has to be fair if not it will get rejected. Many have assumed that it was wise to side with management and own the shares but, when one reviews how much they would receive as severance on a change of control and the current dire situation, then it becomes clear that their stock holding is no longer their major incentive: getting that package, avoiding a tarnished reputation following a restructuring and getting another job becomes more important. So this whole thing of not extending the credit line Tuesday night might have been part of a ploy to drop the share price to make a low priced deal more acceptable. The shares are still down by half since Monday despite the 2 day extension announced last night. The debentures on the other hand have rebounded more and are down 25% from Monday. Bankers have other things to do than to extend credit day by day. If they really want their money back now and they keep spending so much time on this, then there must be some tangible solution for them on the table. If not, they would have pulled the plug. It can't be any different than that. Cardboard Link to comment Share on other sites More sharing options...
influx Posted June 24, 2016 Share Posted June 24, 2016 TBE.DB priced $14 via acquisition Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted June 24, 2016 Share Posted June 24, 2016 Management is betting debenture holders will take what they are offered but it's really hard to justify common shareholders getting more than debenture holders. Link to comment Share on other sites More sharing options...
alertmeipp Posted June 24, 2016 Share Posted June 24, 2016 Management holds shares. Probably why. Anyone know if decommissioning liabilities come before unsecured or not in ccaa? Link to comment Share on other sites More sharing options...
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