I predicted this a couple of weeks back. What does it mean? It...

I predicted this a couple of weeks back. What does it mean? It buys em a bit more time. 6 months more to be precise. They pay peanuts in interest (2% over Libor according to the press) for 6 months instead of the 12% their own bank charges em. At the end of the 6 months they pay the cash call to avoid losing their 15% stake. Or will they? Line I said in an earlier post, if there’s no hope of a buyer they’ll default keeping cash in the bank so they can keep paying themselves the big bucks through to retirement. And yes it will be retirement after the mess they’ve made of this one.
What else? They lose their seat at the table until they cough up. No biggie. Woody don’t listen to em anyway.
Who covers the cash call? Must be the remaining JV players. That’s tricky for Cairns. Petrosen ain’t got a cent so it will have to borrow more off Woody to pay it’s increased share of around 12%. Cairns gonna have to cough up around 48% and Woodys gonna pay around 40%. That spells trouble for Cairns. Watch it’s sp over the next few days. If it doesn’t tumble it could mean they’re covered (by the long awaited India ruling or imminent Sangomar stake sale or bank assurances). Also I expect hedgies to be keeping a close eye on this to turn a profit on Far or Cairns or both. There’s money to be made here.