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By the way, Waterton won the auction - Hecla is the backup bidder - so much for Barrick and Newmont being all over it.
Technically, it's a South African "Rescue Plan" - the Canadian proceedings are CCAA - Companies' Creditors Arrangement Act. How did equity fare in those US auto maker bankruptcies? LOL - great example. You see 'rescue' and assume it refers to you (ie, equity in general) - the rescue is for the assets & creditors first and foremost.
I don't mean to sound like a pessimist, but this is bankruptcy....most options are off the table.
Ilene has done an amazing job here - there is a crack in the door. I don't have a dog in this fight - but in my opinion, even a bunch of letters to the court isn't going to sway this. Even if the judge is 100% sympathetic, he or she can only work with what is presented - you guys have to retain counsel if you are serious. And you have to do it tomorrow/today. If the UST is sympathetic, it can be done. The judge can't make the argument for you - but the process can be slowed down if the right things are said. If it's slowed down, there is a chance. The amount of shares doesn't matter - it's the cogency of the argument. Equity needs counsel. Shouldn't have to be that way, but it is.
>>the Borrower and GBGI shall have reached an agreement with the Facility Agent with respect to the treatment and voting of certain intercompany claims held by GBGL and GBGI against the Hollister Parties in any plan of reorganization filed by the Holister Parties
Keep in mind - the 'Facility Agent' can credit bid at the auction. Sounds to me like the DIP lender is getting more and more hooks in the Hollister carcass.
I didn't see anything I liked in the monitor report - I think the section on Hollister was written prior to the auction and submitted today - hence no detail on the results. I didn't much care for the language regarding Burnstone - 3 bids received is great, but no color on them - could be the monitor doesn't know, that the BRP is supposed to maintain some sort of Chinese wall until one is picked - I'm just speculating there, but it would have been nice to see some level of encouragement in connection with the comment. I've not read the affidavit yet - and this is my 15th post of the day, so I'll probably not be able to post my thoughts on that till tomorrow.
I agree with east600 on this question of trading - hell most bankrupt companies continue to trade well beyond confirmation - some for years on end.
>>I think they had to demonstrate they were trying to get out.
To whom? This really doesn't make any sense. You seem relatively convinced that Van Eck must know something just because they were the largest holder - I'm not even quite sure what they could have been told a month ago when they stopped selling - in the case of both Hollister and Burnstone - it's a bid structure - noone knows what the bids will be till they come in....unless you think all the bidders are loose lips with their plans. Here is an alternative hypothesis for you - both GDX and GDXJ are index funds - they are supposed to track their respective ARCA maintained indexes within certain tolerances. Up through the end of '11, the two funds held about 27 mm shares of GBG. Then in October of '12 they filed with SEC to indicate their holdings had jumped to 68 mm - clearly they had made an internal decision to overweight the index w/r/t GBG. GBG is still in the index despite their present predicament - having brought the holdings down to 25.769 mm - it would appear to me that Van Eck had simply brought the GBG holdings back in line - it even looks to be underweighted - to the index......but who wants a rational explanation like that when we can put all our chips on 'Van Eck must know something'....it's such a compelling thesis.
As Napoleon said, better to be lucky than smart.
Tell that to Van Eck? - the geniuses who hold what has to be the most embarrassing position of anyone in GBGLF - they haven't exactly been inspiring with their purchase & sale history in GBGLF shares over the past 12 months. Are you absolutely certain that they are the genius in the room?
I mispoke - the amended POR issued last night adjusted the Ad Hoc Dip lenders take from 103 mm cash plus 95% of the equity to 88 mm cash and 87.5% of the equity - with Noteholders now getting 12.5% of the new equity instead of 5%. My understanding is that this was pursuant to an agreement - equity needed for these groups to keep fighting imo.
What do you think is the likelihood of a white knight with interests aligned to your own showing up in the next week when we haven't heard so much as a peep to date? It's possible, yes - would I put my money on it even with great long odds - no.
Did you look at the blackline of the plan submitted last night? Bayside backed off and left additional money on the table for other creditors - on information and belief, this was a negotiated consensus between the parties. You know the saying, the enemy of your enemy is your friend? The unsecured creditors were the enemy of Bayside when it came to the plan previously before the court - but if they support the amended plan submitted last night, and I believe the support it even if they don't much like it, it's over but for the fat lady singing.
The banks agreed to extend if RC filed because the filing was the runway for the code section 363 auction. It's one thing to expect a deus ex machina in a Shakespeare play, quite another in bk.
Rodeo Creek is a whole owned US sub of GBG set up to own and run the Hollister mine. GBG is really just a Canadian holdco as it doesn't directly own Burnstone either. In most respects, the distinction really doesn't matter all that much.
Not an objection bid, but an objection to the sale. You can't top the offer, but you could object to confirmation of the sale on different grounds, ie you had a perfected lien that was somehow ignored given the terms of the APA that came out of the auction. Or, as a shareholder, you could motion that the auction was not conducted at arm's length - you can object on any grounds you want - doesn't mean the judge won't toss you out on your head. I think there is still an escape valve in that the company can rescind the auction at any point up to the sale confirmation hearing, which I believe is 5/02. This doesn't mean they can sell to someone else under the same APA for a higher price - but they could propose a completely alternative transaction - like someone acquiring Rodeo Creek instead of acquiring the Hollister/Esmerelda assets - I wouldn't hold my breath on that front. I certainly don't think for a second that this whole bankruptcy filing in Nevada to facilitate the auction is some sort of elaborate bluff to enhance the bids on Burnstone - that's ludicrous.
I'm a afraid it doesn't work that way - now is not the time for an institutional investor to stand up and be heard.....that time was a month ago, via attorneys who would have already motioned for appearance before the court. Control of this case is pretty handily solidified now.
The problem is you now have the secured and unsecureds apparently with a consensual plan - that is going to be a very tough coalition to get past with anything short of paying them both off in cash. There was an open window while those two factions were hostile towards each other - I don't see a judge giving much thought or time to objections now.
News on the auction is
....still not out. 1) It could have been continued till today (if I had shares, I'd call Sydley again. 2) It could have been scrapped if noone showed (I've seen that happen before but highly doubt it here) or 3) They are going to take several days before the results hit any official channel - press release, pacer docket or CCAA report - which happens more often than not and is always extremely frustrating.
Anyone looked at the amended Plan and DS that came out yesterday afternoon?
I'd say claims hurdle will be more like 700 mm at the end of the day
Onto a big pile of good smoke I'd guess :).
That's an interesting point. I wonder if Van Eck found itself in possession of MNPI and had to cease trading. That could be good or bad, but it would explain the sudden halt. I've not been paying much attention lately, have they sold any shares at all in the last 4 weeks or so?
It's not yet fully updated through 3/31/13, but if you sort by date, there has been more bailing by the institutions than buy ins - a lot more. I don't know exactly what the nature of the problems at Hollister are - but if you look at monthly production over the last 12 months - it's not a pretty picture. The MOR for March is out today - they generated 4.589 mm in gold revenue, and direct mining costs were 5.203 mm.....how much would you pay to buy into that? http://www.nasdaq.com/symbol/gbglf/institutional-holdings#.UXbXysqqnAk
Looks like they may have struck a bad bargain - I'm sure when they paid that they were expecting much better results than they've gotten from the ore body - problem is now everyone knows it ain't cheap to get the gold out. I'm less than convinced that the Barrick/Newmont types will show - maybe they will, maybe they won't - if there were big problems with the mine plan and development to date , they may not be so eager to jump into structural problems because they know how expensive it is to get out from behind them. Who knows - we find out soon enough.
Nobody shoot me....but if I had to make a wild guess for Hollister I'd go with 60 mm. (but if it went for more like 175 I'd buy back in)
If Hollister goes for a good price, I plan to jump back in - Burnstone is still the lynchpin, but a solid bid for Hollister would indicate the sector is stronger than I think it is - and I think it would forebode a better result for Burnstone.
GREAT NEWS!!!
I just saved a bundle on my car insurance by switching to GEICO!!. Sorry, I couldn't resist - something about the tension of auction day that makes me crack bad jokes.
The great part about bk is that you can get such wide divergences between share price and true value of the underlying assets....but plenty of assets get sold in bk at a fraction of their worth. Burnstone and Hollister are both worth a lot in my opinion, it's just that I have strong doubts they will be sold at a price that reflects their intrinsic worth in this current crappy environment - and it's not the current POG that concerns me - it's the difficulty that miners currently face attracting financing - they are mostly in a batten down the hatches and try to get through the storm mode for now.
I sold out when they didn't get a stalking horse for Hollister - it's a bad market and mining execs by and large on sitting on whatever cash they have. It's not impossible to see a robust auction, but the odds just didn't line up like I'd prefer to have seen.
I'm thinking if you saw dial in numbers, it was probably for the sale hearing that will follow the auction in about a week, technically the auction is not final and official until the judge signs off on it.
I've participated in a bk auction before. I'd guess it is telephonic, but it's definitely being conducted from the law office. Depending on how many parties are involved, it could take the better part of a day to finish - it's not like an art auction where you have an auctioneer screaming 'Do I hear 51 million.....50 million going once, going twice....sold. There is usually plenty of time allowed between each bid for the bidders to confer within their own party of participants in their bidder group. Based on past experience, we may not necessarily see a final number for several days - we may, but more often not. I'm not currently holding shares, but I'm back for the excitement of the auction - I love the binaryness of auctions - though this one is less so given that Burnstone is still an unknown. In this current crappy market of the miners, I'm honestly not expecting much.
I don't think many have noticed....most read the headline, maybe the first paragraph. The news on the hedge was bigger than the production headline. This quick move impresses me. I like the structure here with a very big shareholder working closely with mgmt. That from what I have seen is the biggest problem with these Canadian based miners....mgmt that is way too far removed from equity and equity ownership. Seizing the moment at 1350 to strategically take out almost all the bank debt. These guys I'm sure were instrumental in pushing through the convertibles, but I don't mind that too much in the bigger picture of things. Croc is now well positioned to get through this hellish downturn.
Holy Crap! By my calcs, CROC made near 80 mm on Monday compared to the week prior by closing out their hedge book at 1350....unbelievable.....my hat is off to the board.
>>What % of the debt and equity does Berg hold
roughly 95% of the debt structure - 50% of the equity.....if new money is coming in - and the lastest SLO fee app shows that is the focus - he is highly incentivized to seek a strong valuation.
No stalking horse or auction set - I don't think it's going to go down that way. My guess is that they will solicit the best offer they can and then incorporate some sort of JV via a POR....whether this leaves room for equity or not remains to be seen....but given Berg's holdings of debt and equity, I do feel his interests are aligned with ours (notwithstanding the opinions of longs who don't currently like him because they lost a lot of money)
My understanding of the ad hoc committee that applied for formal recognition was that the US trustee denied their request, but yes they did get a formal hearing end of December '12, but the judge denied request. From what I've heard, it was an a steeply uphill argument to make with this judge from the get go.
W/R/T the IP - this is not a sector I was previously familiar with so I'm slow on that curve, but would you say the Lithium Iron Magnesium Phosphate versions that A123 and Valence has court validated IP protections for have been commoditized?
Somehow I missed it when it posted to docket in late March, but the fee app for Valence's bk attorneys is up - it's not available via the Reorg page on Valence's website. There some interesting tidbits in the time sheets, namely multiple inbound inquiries about investing/acquiring the company. No names or dollar amounts - one firm identified as Korean, one as Chinese, one as a bidder in the A123 auction. Attorney's billed quite a few hours following the A123 auction and tracking down the bidders there. If anyone wants a copy - I can email the pdf.
Checked the pacer docket today - nothing new to account for today's selloff.
>>I'm sure he only cares about his own interest. The bet is on the fact that plan B is more attractive to him than plan A (own Valence completely with an obligation to keep spending money to compete with the big guys ).
Exactly! I only expect Berg to do what is best for Berg - the same expectation I carry for the principals at any company I look at.
I do think an in between is possible - KPMG and Roth have been retained to raise new capital - if it ends up going in that direction, that would be an in between. If Berg took it private himself, he would be inclined to value the IP as low as possible - even the UCC has voiced concern about such a scenario. However, if you are opening up to new equity - it's no longer in Berg's self interest to value the IP as low as possible - so in this in between scenario Berg's interests become realigned with outside shareholders. The fate of the NOLs is an important variable here - because they are highly valuable - honestly, code section 382 is so complicated and there are certain parameters that are tough to calculate from the outside - that I don't know for sure in which direction the NOLs would push - towards a sale or towards an equity infusion. I do think we can see that given changes in the industry - there is little point to Valence coming out undercapitalized - they are going to need a lot more working capital than they did before - I think this tends to push toward outright sale. And I saw Berg did an interview last month and he talked about his plans in general going forward - he mentioned two large projects that really had his interest - and Valence wasn't either of them. I'd guess he won't firesale it but would let it go for a good price - that's good enough for me at this point.
To not be SOL, VLNCQ shareholders need for two things to be true - 1) they need the company to be available for sale (because Berg could pretty easily take it private if he wants to, and given the capital structure, he would wind up with 100% of the equity via his debt position) and 2) they need a good offer (Berg ain't gonna sell it for peanuts because he doesn't need to). I honestly think both criteria are in play. If it wasn't available for sale, this case would have been over months ago, and I think there are compelling reasons for Berg to move the IP higher up the food chain at this point. On the buyer side, JCI really tipped their hand at the A123 auction - they pretty obviously need some IP - they not only doubled their original bid at auction, but they also got caught scurrying all over DC trying to block the winning bid after the fact. Those observations are not a guarantee of anything getting done at the end of the day - but given the risk/reward at the current pps - I find the shares compelling.