Afren Share Discussion Threads

[ldlv] 21/10/2015 23:21

you understand me well...your arguments are only excuses...we are monitoring the situation very closely and this will be a life time project for many.

The bridge Loan arranged in very questionable circumstances would be challenged.

[ldlv] 21/10/2015 20:33

But WHY KEEP banging with the FULL debt!!! Between $200m and $1.7b there is plenty of room! Why the black or white position? Somenthing in between will do it for all parts.

[hvs] 21/10/2015 17:19

lol !!!!!!!!

A bit late late now aint it ???????

I LOVES NIGERIANS

[dangersimpson2] 21/10/2015 17:09

Unless you have someone willing to make an offer at a level that makes all debt holders whole and funds any ongoing capex/opex then you still have a zero for shareholders. I agree with Jak if you had $1.8b of funding then you wouldn't be on advfn!

[ldlv] 21/10/2015 16:45

what if we hypothetically have the evidence? What if the assets are sold and the price paid for them is significantly lower than the offer of the investor and its European partner?

[hvs] 21/10/2015 16:33

I LOVES NIgerians.

[dangersimpson2] 21/10/2015 16:31

Do you have any evidence that someone came with a better offer and were rebuffed? If they were approached with a serious funded offer for the operating company then I would be surprised if they didn't forward it to debt holders - it would prob need c.$1b behind it to pay off all senior bond holders and fund the WC shortfall and offer something to noteholders. It would seem a bit daft to offer $1b for something you could pick up for $200m based on yout ST article though. It's not like there is brands or IP, the licenses are the value not the people/technology. It also makes it highly unlikely that any offer was even considered at the $1.8bn level that would see a token amount returned to shareholders.

[ldlv] 21/10/2015 16:07

dangersimpson2 isn't it Alixp/advisers responsibility to facilitate those discussions and make aware the creditors of that option that would bring better return that the $200m published in the Sunday Times? just asking?

[dangersimpson2] 21/10/2015 14:10

I have, it will not happen becasue debt holders don't want it. I don't know why because I'm not a debt holder. It's them you have to convince that they will see a higher return under the restructuring scenario. They have a choice to accept or not - all indications are that they don't want to.

If you borrow a tenner off me and can only pay me back a quid, but you have a mate who will sell you some magic beans for £1. You may make a proposal that you want to spend the money on the beans and promise to climb the beanstalk and make us both rich but at the end of the day if I'd rather have the quid today that's my perogative. As a debt holder I have no moral imperative to provide equity capital for your future enterprise.

[ldlv] 21/10/2015 13:45

Please address the scenario that I am talking about, it is not about the pass it is about a hypothetical situation that could be happening today.

[dangersimpson2] 21/10/2015 11:50

My opinion is it is for those who lent money to the company and are being refused re-payment on demand to decide how best to try and recover that debt. It seems that they decided that a restructuring as a going concern was not in their best interests, primarily because the amount of cash they were being asked to put in to meet the day to day costs.

I agree that all may have been better off if they could have agreed a debt to equity swap at a nominal level say 0.1p but that has to be agreed by those whose debt is being subordinated. If they decide that they don't want that then it cannot be forced on them.

I would imagine the reasons that the company is not sold off as a whole entity is that the various debt has first lein over various assets and they wouldn't agree to this. Shareholders or subordinated debt holders simply do not get to dictate terms to senior debt holders in an insolvent company.

[ldlv] 21/10/2015 10:45

what if there is an investor that is trying to rescue the company as a going concern. Apparently according to Alixp Afren plc needs $250m, according to Alixp and Alan Linn the money is not there! Management tried everything they said, the useless effort of the previous management that by the way put the company in administration is the excuse. Odd...

Imagine that the money is there, that an investor and its European partner are trying to offer a solution (that maybe involves a hair cut). But that hair cut would bring a better realization than selling the assets, while providing a solution for all the parts, Employess, shareholders, creditors...

In that case shouldn't the administrators facilitate negotiations to consider objective 1 as it could bring a better return than selling the assets for $200m (Sunday times numbers). Shouldn't the creditors be made aware of that potential solution?

Imagine that despite how hard the Investor and European partner try to discuss option 1 to rescue the company, they find an inflexible attitude and the ONLY interest of selling assets.

What would be your opinion in regards ethical and law implications of that scenario?

Again, According to the Restructuring and insolvency in UK (England & Wales)Law stated as at 01-Jul-2015,the administration procedure is a way of facilitating a rescue of a company or the better realization of its assets.
The main aim of administration is to rescue the company as a going concern.

[dangersimpson2] 21/10/2015 00:05

There is no solution to rescue the company. The company is insolvent.

While I in no way condone the alleged unethical actions of the former management, being short has not contributed at all to the demise of the company and cannot be considered unethical.

It was obvious to those who understood corporate structure that Afren was vastly overvalued and shareholders were made aware of the reasons for that including in official documets from Afren themselves. What I do consider unethical was the people who despite this info urged others to hold onto their shares, vote against restructuring in some false hope that they would see a positive return.

If you have invested long enough you will have lost money at some point. Good investors learn from the experience. Bad investors blame others like those who were short. Sadly the bad investors never learn the lessons and end up repeating the same mistakes over and over.

This may sound harsh but the sooner you accept this as a total loss and move on the better off you will be long term. By all means try to hold those who have behaved unethically to account but know that shareholders will not get financial recompense this way - the former mangement would have to be personally fined billions of dollars and have the means to pay for shareholders to see anything. Giving false hope by suggesting a corporate rescue is even remotely possible would seem to be seriously misguided.

[hpcg] 20/10/2015 23:53

Ldlv - the assets in the subsidiaries are still functioning and will continue to function if they can pay their way. They are worth whatever anyone will pay for them. More or less all companies run there operations as wholly owned subsidiaries whilst financial assets and liabilities are rolled up to the parent. The ownership of an operating company is an asset. Selling an opco keeps the operations going and the people employed; this is what the administrators are doing. Head office jobs will go as the holding company winds up. This can only be described as normal. Why not look up some case studies?

[ldlv] 20/10/2015 22:44

Mrwhits, hopefully? There are Afren employees and 20000 Shareholders waiting for a solution to rescue the company. I think shorting is a miserable way of investment to be honest. With all the respect I find it very unethical, specially in situations like Afren.Hopefully the employees and Shareholders can find a solution and the responsible of this disaster should pay for the pain caused to so many retail investors.

[mrwhits1] 20/10/2015 21:37

@robin,

They already have a distinctive "very unlikely" return for share holders, awaiting assets to be sold in October by the liquidators on the instructions of the administrators, Alex partners.

So we have to wait for some of the biggest assets to be sold for the administrators to safely say that the debt holders get a cut,but no where near enough to cover their debts, and therefore no way any distribution to shareholders.

At that point it should be so apparent that the company will cancel their shares in crest, then, and only then, will the brokers settle their accounts, and at that point the companies like IG will be able to settle positions with those brokers, and then their clients, which is when we get our positions settled at zero.

Hopefully the bigger assets will be sold sooner rather than later.

Regards.

Mrwhits

[robindroppings] 20/10/2015 18:17

@Danger - I didn't ask IG what would cause them to release the funds, I'm afraid. However, the Help & Support section of their website says that "Once the company confirms there is no return to shareholders, which can take years, we will close all proceeds positions at the level of 0 on all accounts." Hopefully this one won't take years, but official confirmation of no return seems to be the trigger that IG use.

[ldlv] 20/10/2015 16:34

@hpcg

Restructuring and insolvency in UK (England & Wales)
Status: Law stated as at 01-Jul-2015 Jurisdiction: United Kingdom

Administration Objective. The administration procedure is a way of facilitating a rescue of a company or the BETTER realisation of its assets.
The main aim of administration is to rescue the company as a going concern.

When you said "the total interest in a company is made up of debt plus equity" explain me how the solution of selling all the assets for lets say $200m (number that appeared in the Sunday Times) is a better realisation than a hair cut and keep the company as a going concern? How can that be justified?

[hpcg] 20/10/2015 13:05

It's sell or forfeit. I see Ldlv you don't understand the concept of total cost being a function of fixed cost and variable cost, just as you don't understand that the total interest in a company is made up of debt plus equity.

[ldlv] 20/10/2015 12:29

@mrwhits1 that's a very bad excuse.

[mrwhits1] 20/10/2015 11:07

@ldlv, its a firesale, why would they get any where near asset value for anything in these circumstances.

As a buyer, why would you pay? if they need to sell then buyers will get the assets cheap, thats the way it goes.

regards