the deal?, page-2

dribble dribble dribble - so we have gone from a mega raise to fund acquisition of PXD assets to a 75m raise which you think most would go to pay down debt and long overdue creditors along side selling Dimmitt to buy some other more productive/capital effecient assets/

r u being serious or funny ?


If we raise 400m and we say spend 350 on acquiring assets then you dont need to pay down debt because now debt its going to be about 1.5x ebitdax and your asset coverage doubles. No long er a need to pay down LT debt because that company profile will 1) allow upward lift in revolver limit which you can use to pay overdue creditors and give yourself plenty of liquidity to fund the next years development expense and 2) spend most of the raise on assets - their belief is assset value will go up so they want to spend as much on assets as they can - not repay debt which now becomes very manageable on the new asset base.

Bank debt is cheap so you keep but rather what the hedge fund will want is free cash flow - not only to fund future development/purchases but to pay dividends and take money out.

Elliot fund would probably be looking at 5yr hold period (just guessing but not a very long term hold due to capital intensive nature of business) so there objective will be to get controlling interest, maximise cashflows, built asset values and then sell for 2-3x investment.

3x investment well lets say they end up with 60% of company for 300m (just making up those numbers) then if oil holds or price goes up and mrkt cap 1.3bn and they sell for 15% premium for say 1.5bn then their share 900m

thats what they looking at not to reduce LT debt and dick around