Nice pickup @stumpytrunks That facility with RNC Nominees was...

Nice pickup @stumpytrunks That facility with RNC Nominees was for just over $5m and was due to be paid out on 31 October. The extension will give KB, and maybe MEL, some breathing room.

I went through the experience of being with a company that had loaned money from a lenders who became insolvent during the GFC. (albeit not in O&G) It gets ugly pretty quickly!! I am guessing it is a similar situation to what KB is in now.

- Poor results lead to an increase in redemptions and breaches of KB's own lending covenants.
- KB's own loans are called in or refinancing options are limited.
- KB will then push to default/call in any loans they can to rebalance their books. (which is what the are doing)
- KB will negotiate with their own lenders to extend/vary their own facility (which they have just done)

The fact that KB has been able to negotiate an extension is a good sign. (or a case of there was no-one else prepared to refinance KB)
If KB had not been able to negotiate this extension then RNC would have likely called in the administrators. Then the administrators would give the book a good shake to default anyone they could and then sell the book on or RNC would assume the book.

What does it all mean for MEL? Basically if we are not in default this will be a KB issue, not a MEL one. We may end up with a new lender but the loan facility terms don't change. The new lender could try to push MEL out but unless MEL defaults the loan should survive.

I'm having flashbacks just thinking about this!! The one thing I remember was how quickly things can happen. Luckily this doesn't feel like a Global crisis, more like a Keybridge crisis. The best thing MEL can do right now is have a great quarter of production and bank that gas!