Cloudbreak Discovery Share Discussion Threads

[snaptastic] 30/10/2007 10:08

The strategy for the Company going forward.. at least they have one.... maybe Hares will pump cash in to buy some of the assets back to keep some assets for shareholders?

we need this clarifying really before we get too positive on it...

[omellete] 30/10/2007 10:04

Snaptastic - I got you now

the principal terms and conditions on which Cardinal would enter into a binding sale and purchase agreement ('SPA'),


So they may well have retained a profit interest in Gas.


Not so bad now.

[omellete] 30/10/2007 10:03

snaptastic - Maybe - but it looks as if CDL did not even get the gas in storage

* A Cardinal subsidiary entering into forward sale contracts and agency
agreements with an affiliate of the Acquirer for the sale of gas and
gas condensate to fund Cardinal's short term working capital needs
through to closing of the Transaction, with the amounts payable by the
Acquirer under such contracts being deducted from the balance of the
US$19 million portion of the total consideration allocated to Cardinal
(to the extent gas is not delivered prior to closing).



Needs explaining for sure.

[snaptastic] 30/10/2007 09:59

i'm not so sure.. reading this below does it mean we sell the assets to the Kuwait company to get rid of silverpoint gor good and all thweir warrants and then maybe do a placing or something to buy back a percentage of the assets once SPC are rid off??

the principal terms and conditions on which Cardinal would enter into a binding sale and purchase agreement ('SPA'),

The strategy for the Company going forward will be outlined in a forthcoming circular;

this to me doesnt sound like curtains and if shareholders can have access to say 20/30% of the producing assets going forward then things could turn out dandy.. in theory.....

[omellete] 30/10/2007 09:54

Upside Potential - This is the problem with long RNS's in the daytime!!!

Looks like they have been given 7 pence a share and the gas in storage and production until the sale and whatthey already have and thats it.

Long term holders shafted as the assets are now gone.

Not even a small profit interest has been kept.

[omellete] 30/10/2007 09:53

Quick read - looks like they will have $19 million left over - i.e. current MCap of 7 pence a share covered.


any ideas - how much they owe to their owe to their other creditors?

Do the gas sales cover that?

[upside potential] 30/10/2007 09:47

in summary, what does this mean for us ? will the stock re-list . is there a future at all ? what value is there left etc

[relishing] 30/10/2007 09:45

Looks great for the creditors. Not so good for the poor shareholders.

[swalker] 30/10/2007 09:43

Cardinal Resources Framework Agreement


RNS Number:5923G
TIDMCDL

Cardinal Resources plc
30 October 2007


CARDINAL RESOURCES PLC SIGNS FRAMEWORK AGREEMENT FOR SALE OF UKRAINIAN
ASSETS

LONDON - Tuesday, 30 October 2007

Cardinal Resources plc (AIM:CDL) ("Cardinal" or "the Company"), the
independent oil and gas exploration and production company operating in
Ukraine, has entered into a framework agreement ("the Agreement") for
the potential sale of its Ukrainian assets, subject to contract, to
Kuwait Energy Company K.S.C.C. ("Acquirer") for total consideration of
US$71 million (the "Transaction").

As contemplated the Transaction will consist of a sale of 100% of the
share capital of Carpatsky Petroleum Inc., Raget Commercial Ltd and
Mitre Resources Limited each owned 100% by Cardinal Resources Finance,
Ltd. ("Finance"), a 100% owned subsidiary of Cardinal.

Cardinal's shares were suspended from trading on AIM on 1 October 2007
pending conclusion of refinancing discussions. As reported on 18
September 2007 and again on 16 October 2007, Cardinal has been in
ongoing discussions with one or more potential funding providers to
obtain a viable financial solution. The Directors of Cardinal have
reviewed all the options available to obtain the most value for
shareholders of the Company and have now agreed the principal terms and
conditions on which Cardinal would enter into a binding sale and
purchase agreement ("SPA"), subject to shareholders approval and other
conditions, to sell its Ukrainian assets.

The parties to the Agreement have agreed to use reasonable endeavours
to enter into the SPA no later than 9 November 2007, with closing of
the Transaction currently expected to occur by 10 December 2007.

Transaction highlights:
-----------------------

Cardinal to sell, subject to shareholder approval, 100% of its
Ukrainian assets for a total consideration of US$ 71 million;

US$ 52 million to be applied in full discharge of all indebtedness owed
by Cardinal to an affiliate of Silver Point Capital LLP, the current
holder of the PIK Notes issued by Cardinal (Silver Point Capital LLP
and their respective affiliates together, "SPC");

All warrants held by SPC in Cardinal and Finance and the special share
held by SPC in Finance to be cancelled at closing;

The balance of US$19 million to be available at closing of the
Transaction to Cardinal for satisfaction of other creditors, including
transaction expenses and expenses incurred by SPC and its affiliates.
The strategy for the Company going forward will be outlined in a
forthcoming circular;

A Cardinal subsidiary entering into forward sale contracts and agency
agreements with an affiliate of the Acquirer for the sale of gas and
gas condensate to fund Cardinal's short term working capital needs
through to closing of the Transaction, with the amounts payable by the
Acquirer under such contracts being deducted from the balance of the
US$19 million portion of the total consideration allocated to Cardinal
(to the extent gas is not delivered prior to closing).

Key terms of the Transaction:
-----------------------------

US$52 million of the consideration, on closing of the Transaction, will
be paid to SPC in discharging irrevocably all the indebtedness owed by
Cardinal and its subsidiaries and affiliates to SPC with respect to the
notes issued by Cardinal under the terms of an instrument dated 23
December 2006 (as amended on 28 February 2006 and as amended and
restated on 22 December 2006) (the "PIK Notes") and with respect to any
other creditor arrangements between Cardinal and SPC (subject to
Cardinal settling the out of pocket expenses of SPC including, without
limitation, all legal, financial and other advisory costs and expenses
of SPC). SPC will also transfer to Cardinal for no or nominal
consideration, and Cardinal will cancel, all warrants held by SPC in
Cardinal and Finance, and the special share in Finance.

The balance of US$19 million of the consideration (less amounts
received from forward gas sales to the Acquirer to the extent not
settled prior to closing) will be available at closing of the
Transaction to Cardinal for satisfaction of its other creditors,
including transaction expenses and expenses incurred by SPC in
connection with Cardinal's default condition. The strategy for the
Company going forward will be outlined in a forthcoming circular. In
addition to its portion of the Transaction consideration, post-closing,
Cardinal's only material assets will be its 6.75% shareholding in
Condor Exploration, Inc. ("Condor") and its administrative and
technical services agreement with Condor pursuant to which it is
entitled to a minimum of US$1 million per year in revenue as announced
on 9 August 2007.

It is contemplated that the definitive SPA will be entered into by the
parties no later than 9 November 2007. Cardinal would provide customary
warranties to the Acquirer in the SPA, subject to Cardinal's liability
thereunder being limited to a six month period post-closing and a
financial cap of US$10 million. SPC has agreed, subject to certain
termination events, not to enforce its rights under the Notes in
respect only of existing defaults until the SPA has been signed andit
is contemplated that a similar agreement will be entered into for the
period between signing and closing of the SPA, for the period up to
closing of the Transaction.

The consent of shareholders of Cardinal to the proposed transaction is
required pursuant to AIM Rule 15 and will be sought at an Extraordinary
General Meeting ("EGM") held in accordance with the AIM Rules. A
circular convening the EGM, and which will set out Cardinal's investing
strategy going forward, will be posted to shareholders shortly after
signing of the SPA.

In the event that Cardinal does not obtain shareholder approval to the
Transaction, it will be required to pay to the Acquirer an amount equal
to its out of pocket expenses incurred in connection with the
Transaction not exceeding US$1.25 million (plus VAT). In the event that
shareholder approval is not obtained and the Transaction does not
complete, it is also highly probable that Cardinal would need to
implement an insolvency procedure which would be highly unlikely to
provide any return to Cardinal's shareholders.

The Transaction is currently expected to close on 10 December 2007,
subject (amongst other things) to:

Successful completion by the Acquirer of confirmatory legal, financial
and technical due diligence;

Successful negotiation and execution of an SPA by 9 November 2007;

Shareholders approval being obtained at the EGM in accordance with AIM
rules; and,

The approval of the Transaction by the Ukrainian anti-monopoly
authorities.

If closing of the Transaction has not occurred by 10 December 2007, the
amount of consideration to be allocated for the repayment of
indebtedness to SPC shall be increased to reflect a portion of the
interest that continues to accrue on the amounts owed to SPC from 1
December 2007, at a rate of 10% per annum, if closing occurs by 20
December, or at a rate of 21% per annum if closing occurs after 20
December 2007.

In any such case a corresponding reduction shall be made to the US$19
million portion of the consideration amount to be otherwise allocated
for the use of Cardinal.

Under the Agreement Cardinal undertakes and agrees that it shall not
directly or indirectly solicit or invite enquiries, proposals or offers
relating to a relevant Transaction from any third party.

Short-term financing:
---------------------

The Acquirer agreed to fund the short term working capital commitments
of Cardinal by entering into a forward sale contract ("The First Gas
Sales Contract") and an agency agreement for the sale of gas and gas
condensate and shall pay to a subsidiary of Cardinal the sum of
US$600,000 in accordance with the terms of such contracts ("The Second
Gas Sales Contract" and "The Third Gas Sales Contract"). Thereafter, it
is expected to enter into two further forward sale contracts to the
value of US$600,000 and US$1,450,000 respectively with delivery and
agency sale to be effected as soon as Cardinal shall be in possession
of available volumes of gas/condensate to satisfy such contracts in
priority to any other third party but no earlier than February 2008.
Cardinal undertakes to deliver gas/condensate at the following fixed
prices under the First Gas Sale Contract:

Natural gas at US$140.20 per 1,000 cubic meters (exclusive of VAT)
Gas condensate at US$455.00 per metric tonne (exclusive of VAT)

The entering into of the Second Gas Sales Contract and the paying of
the cash consideration due under it shall be subject to the execution
of the SPA. The entering into, by the Acquirer of the Third Gas Sales
Contract and the paying of the cash consideration due under it shall be
subject to execution of the SPA and Cardinal having obtained
shareholders approval for the Transaction.

Should Cardinal fail to deliver the agreed volume of natural gas/
condensate with a value corresponding to the advance payments under The
First Gas Sales Contract or/when entered into The Second Gas Sales
Contract or The Third Gas Sales Contract, it shall reimburse such
portion of the relevant advanced payment no later than by 45 days after
the agreed delivery date together with a penalty in the amount of
interest accruing at the rate of 15 percent per annum.

[xenawarriorprincess] 29/10/2007 19:33

I don't know what deal may or may not have been done.

I don't believe that Cardinal is as strapped for cash now, as they were at the end of last month. Production of very roughly 380boepd from Well#3A would cover the monthly cash shortfall in its entirety, not taking account of any money we're getting from Condor. Above that would give cash inflow - although the gas sales agreement may complicate matters.

Silver Point and the warrants have to be dealt with in some manner or another, but I don't see that Bensh needs to do a deal immediately, especially if it is a bad deal, unless he is working to some undeclared deadline. Obviously however, the sooner a decent deal is done the better.

SPC is not due to be paid off until 28th March 2008 (unless the covenant review due tomorrow decides otherwise, and even then at worst they can only serve a default notice), and Cardinals position (and hence Bensh's position) grows stronger IMHO as every week passes.

Oil - and hence condensate prices - are higher every week - oil at $93.60 as I type - possibly higher by the time I finish this post (and may well go to $200-$250 sometime next year) - Tymoshenko's appointment as PM grows closer with every day - Moldova (just West of Ukraine) which is pro-Russian has been told today it will be paying $190/1000m3 for gas in 2008 - and don't forget we've got almost 200,000boe in storage.

And if Bensh is trying to get shareholder approval - that basically means Hares and QVT, about 40% combined, and another of the big holders.

Trying to get a bad deal past Hares could be a serious problem. Don't forget Hares owned the producing Rudis field outright in 2005 and swapped it for $6M cash and 20% of Cardinal. If they are being heavily diluted they will have effectively lost all that value. Rudis probably contains something like 30Mb so I can't see them agreeing easily to giving that up.

We shall no doubt soon see what deal is done. I'm not saying by any means that Bensh holds all the aces, but I don't think Cardinal's goose is completely stuffed just yet.

Regards,

Xena

[omellete] 29/10/2007 19:08

Turbo - Are they going to shaft holders in your view?

You have some info?


Also would be good for Xena to give her view currently.

[turbotrader2] 29/10/2007 18:56

i think bad news before good

[theshareguru] 29/10/2007 18:46

thanks snaptastic,
it really needs someone to pay off silver point, then have share placement

[snaptastic] 29/10/2007 18:24

gut feeling was we should get through this but we will get a bad deal as we are desperate for cash... just how bad is yet to be seen but 7p was bad enough prior to suspension considering the assets.. spoke to her an hour ago.. i cant see Hares signing up to something that doesnt give thema ccess to upside in the future to get a return on their original investment.. thats whats in the back of my mind anyhow..

[theshareguru] 29/10/2007 18:19

snaptastic
what is your gut feeling after speaking to natalia, did you speak to her this afternoon.

[omellete] 29/10/2007 18:00

snap - Does it sound like a takover or finance?

[snaptastic] 29/10/2007 17:56

we still need a nomad as well and one is going through the books from what i can gather... we need the confidence of an adviser urgently...

[omellete] 29/10/2007 17:37

snaptastic - Thanks for the update.

[zubaydah] 29/10/2007 17:35

Thanks for update.

[snaptastic] 29/10/2007 17:26

RB in Ukraine.. spoke to Natalia.. a possibility we may get an update tomorrow.. not defo but possibly if the lawyers do their bit tonight.. she sounds confident that we are not going bankrupt and it looks like shareholders will get to vote on a few options to go for as far as restructuring.. time will tell if we manage to get an ok deal or if we get shafted... if we get the option to see the company through to high production rates then i will see it as a big positive... lets see...

[omellete] 29/10/2007 15:44

Xena- Any news?

Views?

TIA

[jam2day] 28/10/2007 00:40

sounds familiar - worth a read,as its quite I have posted the whole article


Investors hold their breath as the referee steps in
By Philip Stafford

Published: October 26 2007 03:00 | Last updated: October 26 2007 03:00

The London Stock Exchange's fine for Nabarro Wells highlights its desire to protect Aim's reputation more effectively. But cases such as the takeover battle at Global Marine Energy can do little for investor confidence.

GME designs and manufactures drilling systems with interests in the Asia-Pacific region and Mexico. Earnings over the past year have been hit by contract slippages and the loss of orders. It began a strategic review in December 2006 as the company struggled to keep going. Indeed full-year results for the year to March 31 came out on the last possible day before the shares were suspended - on September 28.

Brent Fitzpatrick, who took over from executive chairman Philip Wood last summer, described the figures as "disturbing" and "unacceptable". But just as longsuffering shareholders had some hard news to digest, the shares were suspended.

GME said it would grant exclusivity to IDM Equipment Group, which has operating plants in Houston, Texas and Ukraine, to negotiate a possible reverse takeover. In doing so it rejected several other conditional approaches. However, to sustain the business, it needed short-term financing. GME agreed a bridging loan facility with Lime Rock Partners, a private equity group, for $14m (£7m) at an eye-watering annual interest rate of 10 per cent over Libor.

GME also said it was working on a fundraising with Lime Rock to raise £10m to repay the loan, with the issue underwritten at 10p a share. The proposal would need to be put to shareholders.

But other caveats have emerged. First, Lime Rock is the majority shareholder of IDM, having made an investment in March.

Second, the loan facility comes with some pretty punishing terms. It is available until September 2008 when it becomes repayable but, in certain circumstances, early repayment can trigger up to $14m in loss on return payments.

The loss of return payment will not apply if the reverse takeover went ahead. However, if it failed, "the loan facility would need to be refinanced and the loss on return payment may become due".

So far so complicated. Then EMER International Group, a Hong Kong-based oil services group, entered the fray with a firm offer of 13p a share, valuing GME at about £9.4m. It marked a 30 per cent premium to the IDM offer and, to cover the short-term financing, it agreed a deal for up to $14m at the less punitive annual interest rate of 5 per cent over Libor.

Noble & Co, GME's corporate advisor, said the offer was fair and reasonable and the board accepted it. BankOra Limited, IDM's financial advisers, then disclosed to the market that EMER had made a 10.31p-a-share proposal before September 28.

Not only was it a premium of about 25 per cent from the prevailing share price for the previous month, it was not disclosed to the market and came at roughly the same day as an extraordinary meeting asking shareholders what steps should be taken to resolve the company's net assets falling to below half of its share capital.

Yet GME said shareholder value was best realised as part of IDM.

Nevertheless both offers are now dependent on shareholders approving one of the loan facilities and, by extension, one of the offers at an extraordinary meeting.

GME posted a circular to shareholders on October 8 convening the meeting for last Wednesday to approve the loan facility from IDM. GME also made available the details of EMER's cash offer of 13p a share and the working capital facility, even though the approach had not been made public at that point. However, the EGM was postponed by one week because of the EMER offer. Then on Wednesday GME cancelled the meeting altogether, blaming the strike at Royal Mail for many shareholders not receiving timely notice.

GME also said it had received legal advice that the meeting was not validly convened. A new EGM is scheduled for November 9 when investors will decide on whether to accept the EMER deal.

The management of GME is favouring the EMER deal. In the meantime shareholders must wait as Aim rules state that shares must be suspended pending a proposed reverse takeover.

IDM has yet to say whether it will make an offer for the entire share capital and limits itself to saying it will be dependent on the outcome of the EGM. As a result, the shares are likely to remain suspended until November 9 at the earliest.

But in the face of a clean offer from another party, there does not seem to be a valid reason why trading in the shares cannot resume.

"One of the great advantages of London was that Aim rules could be interpreted to get the right result," one person familiar with the situation said. "Now it seems they're getting the wrong result."

At present Gartmore, with 20 per cent of the share capital, have signed irrevocables in favour of the IDM deal but this was before the EMER bid came to light.

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[turbotrader2] 26/10/2007 17:50

is it likely to get more bad news before we start to get the good news?