I think its worth noteholders having a look at what's going on ,on the ground in the US with shale companies. Linn Energy is/was the largest Master Limited Partnership Trust ( MLPT)in the US , trading at over $30 with a market cap of $10B. Fast forward to today and its now trading at 70c and will soon file for bankruptcy. the following is an extract from Seeking Alpha -
"The inevitable bankruptcy of Linn Energy (NASDAQ:
LINE), while having an obvious impact on investors and the company, could be far more important in the larger scheme of the energy market because with its $10 billion in debt it would make it the largest oil company to file since the collapse of oil prices in 2014.
Combined with the temporary rally in the price of oil, it will probably bring a lot of companies down soon afterward, once it's understood the rise in the price of oil is too little, too late to help those oil and gas producers in serious trouble.
The problem as I see it at this time is it gave misguided hope for many companies that the upward move in the price of oil would result in the market itself bringing relief to their heavily indebted balance sheets. This won't happen unless something very unusual and unforeseen happens. Taking everything into consideration, only a production cut by OPEC and others would generate that type of support, and there is no incentive for them to do this before the weaker shale producers are removed from the market.
If they aren't, all that will happen is the market will be granted a temporary reprieve and the can kicked down the road. In this case that won't last long, and it will only prolong the pain and give the market a wrong sense of a rebound that will allow many companies under extreme stress to survive.
The oil sector in particular needs a season of house cleaning, represented primarily by shale producers operating under heavy debt loads. Until that happens, it will undermine other producers who will have market share taken away from them if the price of oil continues to rally and weaker U.S. shale producers have a temporary lifeline thrown to them. All that would do is stress the market for a longer period of time.
When Linn Energy falls, it will be followed by others. This shouldn't be considered a negative, but an overall positive the oil sector desperately needs. If shale producers are allowed to survive, it will put a lot of downward pressure on oil once again, as the oversupply continues to grow.
and from Reuters on Chesapeake the founder of the Shale revolution -
Chesapeake Energy Corp(
CHK.N), an oil and gas company struggling in the commodities rout, is considering swapping out some of its existing debt for new 1.5 lien debt, according to CapitalStructure, a provider of news and analysis on the sub-investment grade space, citing sources close to the situation.
Depending on credit agreements, companies can generally wedge 1.5 lien debt in between their first and second liens.
Chesapeake has not made any decisions on the swap yet, and the timing is uncertain, according to CapitalStructure, citing one of the sources. The swap is attractive, however, based on Chesapeake bonds' current pricing, CapitalStructure said, citing one of its sources.
The company's bond maturing in 2017 were trading at around 70 cents on the dollar on Thursday, and its bonds maturing in 2018 at around 50 cents, according to Thomson Reuters data. Those levels are considered depressed.
A Chesapeake spokesperson did not immediately return requests for comment. The company has said it has no plans to file for bankruptcy.
So if Chesapeake debt is trading at just 50c -70c in the dollar backed by proven assets/production etc, do noteholders really think that pushing AZZ into administration forcing them to try and sell their assets along with every other distressed companies assets, many of which will be significantly better quality than ours , will get them 100c in the dollar back.
These assets NEED a higher oil price and therefore will need an extension. they can either vote for resolution 1 and give themselves a chance of actually getting all their money back along with interest or they can push the company into insolvency and join the soon to be crowded space of firesales going on.