Monday, August 03, 2015 5:17:45 PM
cases.primeclerk.com/AlliedNevadaGold/DownLoad-DownloadPDF?id1=MTY1MzEx&id2=0&id3=0
Document #795 is a filing by SG, the former counsel for the equity committee. There is also a transcript with the document about a June 1, 2015 hearing talking about issues with the EC.
1: It seems that SG withdrew for a few reasons. One was that there was some conflict with parties being part of or involved as prior clients to the firm, and this was not discovered until later in the case.
2: There seems to be problems where the company wanted to talk with debt holders without the EC counsel being present. I am not sure why this matters.
3: There seems to be questions on what is or is not privileged information between SG and the EC. It also looks like the EC may have wanted to do things that SG did not agree to do, and this may have been one of the reasons for them to withdraw from the case.
4: There seems to be some question as to what the company is worth as a going concern and a question of did the EC get information or not.
There is mention that the EC holds about 0.5% of the common stock, which does not sound like a lot, but with 126 million shares outstanding, that would be around 630,000 shares. In the past this would have been several million dollars worth of stock.
I still think the EC would be better off negotiating for warrants. It is a simple solution that allows the company to come out of bankruptcy without having to fight endlessly about the value of the company. You set the strike price properly so the warrants only have value once the unsecured gets paid in full. The secured class shouldn’t object since they are getting some cash and new loans. The unsecured shouldn’t object since the warrants only have value if the Newco common pay them off at 100%. If the unsecured does not get paid in full, then the warrants never have any value, as it should be. On the other hand, if the company does make money, and the unsecured gets value for their claim, then the old shares can get equity in the amounts above that, which is fair.
Louis J. Desy Jr.
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