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SIV is dead... IMO, the PR below is pretty well written for a Friday afternoon.
http://biz.yahoo.com/prnews/071221/clf068.html?.v=44
Press Release Source: Bank of America
Consortium Provides Update on Master Liquidity Enhancement Conduit
Friday December 21, 5:40 pm ET
NEW YORK, Dec. 21 /PRNewswire/ -- Since forging a collaborative effort in the fall, Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. have sought to provide a market-based solution to continued illiquidity in the short-term credit markets. Such a solution was intended to support the return of stable market conditions, an orderly unwinding of structured investment vehicles (SIVs) and the avoidance of a "firesale" of SIV assets.
During the last three months, the bank consortium has gathered broad market participation to discuss and address this shared goal. More than 20 banks, SIVs and investment managers participated in this dialogue. The Master Liquidity Enhancement Conduit (MLEC) was conceived as a "buyer of last resort" for SIV assets, if and when other traditional and nontraditional sources of liquidity did not emerge. The design phase for MLEC was completed, producing a turn-key structure. BlackRock, a recognized leader in global investment management services, was retained as advisor. Bank of America, Citigroup, JPMorgan Chase and BlackRock also thank the US Treasury and other global regulators for their support through this process.
Over this same time period, conditions in the short-term credit markets steadily evolved, as awareness of market pressures and potential impacts dramatically increased and multiple, diverse market-based solutions emerged. In addition to MLEC, these included moves by several bank-owned SIVs to significantly reduce SIV exposure and to develop their own liquidity support, as well as moves by non-bank owned SIVs to sell assets, allow assets to mature without reinvesting, secure other sources of liquidity and/or undertake restructurings. Recent reports show SIV assets have been steadily reduced to less than $265 billion in senior debt outstanding in early December from $340 billion at a summer peak. A continued decline is expected.
This orderly unwinding of SIVs is contributing to improved market stability. Based upon the feedback that the bank consortium and the advisor have received from domestic and global liquidity sources and from prospective SIV participants, they have determined the vehicle is not needed at this time. The consortium will continue to monitor market conditions and remain committed to work collaboratively on any appropriate solutions, including an activation of MLEC, if needed.
--------------------------------------------------------------------------------
Source: Bank of America
croumagnon
Why don't you just call the Company and discuss the slide in the PPS with them? I'm sure they would be more than happy to talk to you. Otherwise, its an investment. Enjoy it for what it is and enjoy the rest of your life. Nothing goes straight up and if the worst comes for GTCB, you can always hope the world blows up.
Peace,
10nis
croumagnon
Why do you write this stuff? Worst case scenario.... blah, blah, blah. The world could blow up tomorrow as well. Worst case scenario is easy for any investment it could go to zero.
Why don't you spend your energy being productive? Go learn more about GTC and its competitors, or go feed the poor, or go walk a dog, etc.. That would be a lot more productive than posting these pointless posts. JMHO. Thanks.
Happy holidays,
10nis
O/T - Pharming Group
For those that follow Pharming Group closely, how much lower does it go before it looks like an interesting buy? As of today's closing price Pharming is down ~68% over the past 6 trading days.
TIA,
10nis
<<"If his purpose was to artificially support the stock price for some purpose that is not apparent to me, that sounds like market manipulation, which would be illegal.
I see no lawful explanation consistent with his purchase if he knows the results are going to be bad."
We are in 100% agreement. I will be the first one to join a class action lawsuit against Cox and GTCB if he bought shares knowing the results are bad because that is manipulation in its worst form. I can not believe that is a possibility and that is why I added shares yesterday on the news of insider purchases...>>>
Class action lawsuit against a CEO who buys shares before bad news is announced? Interesting... What are you going to sue him for - the money he would have had, had he not purchased the shares?
As Windell D. Middlebrooks would say "You guys must be crazy..."
Question for the knowledge baseball fans....
I read the following somewhere - maybe Dew it was you who stated this in a post:
Steroids have been prohibited by Major League Baseball since 1991. It's the testing for steroids that didn't come until later. Hence, there is no ex post facto issue at hand.
I'm just wondering if the above is true. And if so, does anyone have a link to a MLB rule book or whatever regulations/guidelines they have written on this? Just want to forward it to a friend.
What is everyone's thoughts on the voters voting in Clemens and the rest of the players into the Hall of Fame?
Thank you for your help and your opinions,
10nis
Why doesn't someone just call the Company and talk to them about the current drop in share price? You could request them to issue a PR that they know of no reason for the drop in the share price.
10nis
I actually like hearing that croumagnon is selling some shares... Maybe by chance the selling is being done by people exactly like him?
I guess today's sell-off could be the result of some big money knowing the top-line data, but would they only be selling randomly in little junks? I doubt it. I've listed the closing prices and volume from November 1st to today at the bottom of this post (information was provided via Yahoo). Can someone show me what days this manipulation is supposedly taking place? I do have to say I'm very impressed by the manipulators and their ability to move the price down by exactly one cent over the past four days. Only 91 more days and GTCB will be history!! LOL!!
The selling could be for a number of reasons. It could be institutional money deciding to exit shares of any Company facing possible delisting or a mininuim price ($1.50), portfolio weighting changes lowering micro-cap biotech holdings, selling by hedge funds that are being liquidated, etc., etc.. Add-in year-end tax selling and potential panic selling and you have more sellers than buyers.
In the end you have to do what you have to do, however, selling shares at current levels just doesn't seem like the smartest move (IMHO) if your investment horizon is longer than a year.
Take care and good luck,
10nis
Date / Open / High / Low / Closing / Volume /
10-Dec-07 0.99 1.00 0.91 0.91 524,800 0.91
7-Dec-07 0.94 0.96 0.90 0.92 332,400 0.92
6-Dec-07 0.97 0.98 0.93 0.93 353,500 0.93
5-Dec-07 0.99 0.99 0.94 0.94 154,100 0.94
4-Dec-07 0.97 1.00 0.96 0.97 115,800 0.97
3-Dec-07 1.00 1.02 0.98 0.98 112,600 0.98
30-Nov-07 1.05 1.05 1.00 1.01 187,500 1.01
29-Nov-07 1.00 1.00 0.98 1.00 112,100 1.00
28-Nov-07 1.01 1.01 0.98 0.98 98,300 0.98
27-Nov-07 0.99 1.01 0.98 1.00 284,500 1.00
26-Nov-07 1.00 1.00 0.96 0.99 184,800 0.99
23-Nov-07 0.92 1.00 0.92 1.00 97,300 1.00
21-Nov-07 0.92 0.93 0.90 0.92 318,700 0.92
20-Nov-07 0.97 0.99 0.90 0.93 275,900 0.93
19-Nov-07 0.98 0.99 0.96 0.97 313,100 0.97
16-Nov-07 1.04 1.04 0.98 0.99 311,100 0.99
15-Nov-07 1.00 1.01 0.98 0.98 367,400 0.98
14-Nov-07 1.01 1.03 0.99 1.00 305,200 1.00
13-Nov-07 1.00 1.02 0.99 1.00 220,100 1.00
12-Nov-07 1.08 1.08 0.99 0.99 686,000 0.99
9-Nov-07 1.01 1.03 0.99 1.01 329,800 1.01
8-Nov-07 1.02 1.05 1.00 1.01 293,500 1.01
7-Nov-07 1.07 1.07 1.01 1.02 216,500 1.02
6-Nov-07 1.06 1.08 1.02 1.04 279,600 1.04
5-Nov-07 1.04 1.08 1.04 1.07 179,300 1.07
2-Nov-07 1.03 1.06 1.02 1.06 1,140,200 1.06
1-Nov-07 1.04 1.05 1.01 1.01 703,800 1.01
What has happened to this board? I thought this was Yahoo for a second. People need to relax....or is everyone facing foreclosure?
Top-line data will be in within the month and based on that data the stock price will either go up or go down and hopefully, the strong stay long while the weak-worry warts sell and go buy some mutual funds. Why doesn't everyone take the weekend off and go to the mall and buy some expensive holiday gifts for their loved ones?
Have a great weekend,
10nis
Bush's fuzzy math... 1.2 million or only 145,000 - 240,000?
http://money.cnn.com/2007/12/06/real_estate/Bush_plan_is_limited/index.htm?cnn=yes
Bush subprime plan offers help to 1.2M
Mortgage interest rates will be frozen only for ARM borrowers who are not yet in foreclosure.
December 6 2007: 5:53 PM EST
NEW YORK (CNNMoney.com) -- The Bush administration unveiled a foreclosure relief plan Thursday that the White House said could help 1.2 million distressed homeowners.
In separate announcements, President Bush and Treasury Secretary Henry Paulson said the plan will streamline the mortgage modification process for many distressed borrowers. It will offer "more relief to more homeowners, more quickly," the president said. And it will include a five-year freeze on interest rates for borrowers current with their monthly payments.
But the freeze is limited. It excludes anyone more than 30 days late at the time the mortgage would be modified or anyone who has been more than 60 days late at any time within the previous 12 months.
It also only covers borrowers with adjustable rate mortgages (ARMs) resetting beginning in 2008 and leaves out any who are judged capable of continuing to make mortgage payments at the higher reset rates.
Borrowers who can't afford the loan even at low introductory rates also will be ineligible, according to Anne Canfield, executive director of the Consumer Mortgage Coalition, which represents lenders and mortgage servicers. Those borrowers will have to work with servicers on a case-by-case basis to determine if their homes can be saved.
Of the perhaps 2 million subprime ARMS that are expected to reset through the end of 2009, only 240,000 of those would be covered by the freeze, according to an analysis made by investment bank Barclays Capital as reported in The New York Times. The Center for Responsible Lending, a group that promotes homeownership and works to curb predatory lending, estimates that only 145,000 households will qualify for the rate freeze.
Other borrowers will gain relief through FHASecure and other, lender-initiated refinancing efforts.
"I think the plan is good in theory," said Mark Zandi, chief economist for Moody's Economy.com, "but, in practice, it's going to come up short. There are too many impediments to its widespread adoption by investors and servicers."
Foreclosure rescue - saving a home
Obstacles include contractual obligations between servicers and investors as well as logistical difficulties. When loans have been sliced up and resold through the securitization process, it can be hard to determine who ultimately has the authority to decide what modifications are possible and still in the best interests of the investors.
Furthermore, said Zandi, "There's no stick in the plan; it depends on moral suasion."
Help will be available even for many homeowners who won't benefit under the the administration's freeze plan, according to Canfield.
"The industry will still work to modify these loans," she said. "We have every incentive to do that."
Delinquent loans increase financial pressure on servicers because they still have to make payments to investors, as well as tax payments to local governments, according to Canfield.
The principle aim of the Bush plan is to streamline the modification process, allowing them to get fast help. Lenders will examine readily available loan criteria, such as loan-to-value ratios, loan amount, credit scores and payment history, to make a quick determination of qualifications.
That makes it a "start in the right direction," said Darla Keegan, speaking for Novadebt, a national nonprofit housing and credit counseling agency, because it will move some borrowers through the system quickly. Mortgage counseling services are currently stretched.
For the rest, she said, "We can still see if lenders will work out agreements with lenders for these borrowers."
"Qualified borrowers will get their modifications much more quickly," said Kurt Pfotenhauer, senior vice president for government affairs with the Mortgage Bankers Association. "A whole cohort will be done on an accelerated basis."
Still, said Bruce Marks, chief executive of the Neighborhood Assistance Corporation of America, a community advocacy group, "The number of borrowers affected by the plan is very small, but it sets the precedent and standard so that more borrowers can be helped down the road."
He expects more of that help to come. "An important point is why they're doing it. They're seeing the numbers of delinquencies. They can't say publicly that it will have a huge impact on the economy, but this action says that."
If the impact of subprime foreclosures increases, pressure will build for the government to do more.
The agreement does leap one of the thorniest hurdles to making wholesale mortgage modifications work: resistance from the investment community. Investors were sold a bill of goods, according to John Taylor, CEO of the National Community Reinvestment Coalition.
"They were promised a product that looked very safe and had attractive rates," he said. "Now they're getting little or nothing in return and are being asked to take bigger losses."
As the foreclosure crisis deepened it became apparent that many sensible modifications were being shot down because investors would not agree to them. An analysis by Moody's earlier this autumn revealed only about 1 percent of resetting ARMs had been modified this year.
The administration had to use its powers of persuasion to get investors aboard at all, according to Don Lampe, a real estate attorney who has testified before Congress on subprime mortgage issues. "Investor push-back probably weakened the plan," he said.
Despite all the criticism, the initiative was welcomed by nearly all the players, including consumer groups. Many wish it were stronger but were happy to see some response from the administration.
As Lampe put it, "Perfection is the enemy of progress."
The president also used the announcement as an opportunity to call on Congress to act more expeditiously on passing mortgage relief legislation, including the FHA Modernization bill, changes in the tax code, so lender concessions to borrowers are not taxed as income, and a bill enabling local and state governments to issue bonds to finance mortgage refinancings. All have been bottled up in the Senate for weeks or months.
What type of move will there be in the stock price if and when positive top-line data is released? Assuming no partnership is announced with the top-line data.
Just curious on what everyone is expecting. I'm thinking about a 50% increase in the price but don't know if that's reasonable or not.
TIA,
10nis
Why wouldn't NSTK announce GTCB as its partner in the PR if GTCB was its partner? Could it be that GTCB's U.S. partner (to be named shortly) has partnered with NSTK and since that information has not be announced, NSTK cannot announce the name of it's partner? Just throwing out the question.
10nis
OT...
I heard a speech by Paul McCulley a managing director at PIMCO (bio below) last week and they (him and Mr. Gross) believe the Fed will end up taking the fed funds rates down to at least 3.0% and probably as low as 2.5% over the coming year.
10nis
Mr. McCulley is a Managing Director, generalist portfolio manager, member of the investment committee and head of PIMCO's Short-Term Desk. He also leads PIMCO's Cyclical Economic Forum and is author of the monthly research publication Global Central Bank Focus. Mr. McCulley joined PIMCO in 1999, previously serving as Chief Economist for the Americas for UBS Warburg. During 1996-98, he was named to six seats on the Institutional Investor All-America Fixed Income Research team. He has twenty-two years of investment experience.
I would love to see Henri try to buy GTC for $1.50... It would put a floor to the stock price and it would get some big pharma M&A teams working on their own offers.
GTC being issued a going concern is non-sense with the Company's current balance sheet (based on my experience in the fine world of the Big 4). Plus, GTC management would no way allow the auditors to issue a going concern.
Any sense on when top line data will be issued? End of December or any day now?
10nis
Its nice to see today's drop was on below average volume. All the smart money is off this week and probably primarily just tax loss selling by a few folks. Enjoy the dips and load up the boat.
10nis
The pps will rise in dew time. We could wake up one day and be 100+% or 200% higher... The one thing I cannot believe is big pharma or Pharming or someone hasn't called up GTCB and said lets get it on at $3/share.
I bought more today and plan on buying more if the price stays this low, FWIW.
10nis
Don't you mean US $1.088 = CAN $1.00?
10nis
Dew... Thank you for the comment. One follow-up question I have is won't GTCB potentially need to raise some capital in mid-to-late FY 2008 (assuming it splits the cost of research/clinical trials with a partner) and wouldn't it be easiest and most beneficial if the equity was raised through a partner? But, then again who knows what the partnership terms will end up looking like.
10nis
Partnership...
All speculation for now... However, I think one of the key financial pieces of the partnership will be the price of any equity interest sold to the new partner. I would HIGHLY encourage management to negotiate selling an equity interest at a significant premium (40-50%) to the market price (current $1).
The additional $4-$5 million that a partner would pay on a 10 million share purchase would provide GTC greater financial flexibility, while putting a higher floor to the stock price. It would also show to the street that Management and its partner not only believe in the Company and its prospects but that the current market price was complete inaccurate. IMO, selling the equity interest at a premium would be a win-win situation for everyone, GTC, shareholders, and the partner. I'd actually prefer if GTC received no or very little upfront cash, while selling an equity interest at a significant premium.
I hope that made some sense since its late, I mean very early in the morning. Any one have any thoughts?
10nis
Dew - Are you going to be on tomorrow's earnings call? Just was wondering when we can expect to receive the top-line data on the Phase III U.S. trial (November or December) and why they added a U.S. partnership to their timeline of events for FY 2007 (i.e., what is management's estimate of the chances of announcing a partnership in FY 2007 (25%, 75%, 90%, etc.)?)
Probably stupid questions since management will likely answer the first question in its opening comments and the second question they would probably never answer.
Anyways, hope you'll be on the call.
Thanks,
10nis
Fed cuts rates 25bps....
http://biz.yahoo.com/ap/071031/fed_interest_rates.html
AP
Fed Cuts Interest Rate by Quarter Point
Wednesday October 31, 3:06 pm ET
By Martin Crutsinger, AP Economics Writer
Fed Cuts Key Interest Rate for a Second Time to Guard Against Recession Threats
WASHINGTON (AP) -- The Federal Reserve, confronted with surging oil prices and a slumping housing market, cut a key interest rate by a quarter-point on Wednesday, but signaled that may be all the rate relief the economy needs right now.
The central bank lowered the federal funds rate to 4.5 percent, as had been expected. But while financial markets had hoped for a clear signal that further rate cuts could be forthcoming, the central bank instead signaled that the September and October rate cuts may be it.
While economists are worried that growth will slow dramatically in the current quarter under the impact of a deepening housing slump, a severe credit crisis and record-high oil prices, the Fed sounded a more upbeat tone.
The central bank also expressed continued worries about inflation and said it believed after the two rate cuts, the risks between week growth and higher inflation were roughly balanced.
"The odds of another rate cut at the December meeting are substantially less than they were before this statement," said David Jones, chief economist at DMJ Advisors in Denver. Jones said he still expected one more rate cut to deal with a weak economy but that it will most likely come at the Fed's January meeting.
Wall Street sagged a bit immediately after the announcement, but then quickly regained its footing and was up more than 120 points in late afternoon trading.
In a brief statement explaining the decision, Federal Reserve Chairman Ben Bernanke and his colleagues said that the central bank now judges that "the upside risks to inflation roughly balance the downside risks to growth."
By stating that risks are now roughly balanced, the Fed was seen as signaling that it judges that further rate cuts may not be necessary.
The Fed's decision came on a 9-1 vote with Thomas Hoenig, president of the Kansas City regional Fed bank dissenting, arguing that he preferred no change in the funds rate. The Fed had lowered the funds rate by a bolder half-point at its Sept. 18 meeting.
Commenting on the economy, the Fed struck a more positive tone than it did last month when it expressed concerns about the toll the August credit crisis would take on housing and the overall economy.
In the current statement, the Fed said, "Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance."
The central bank said the pace of the economic expansion "will likely slow in the near term, partly reflecting the intensification of the housing correction."
The Fed met on the same day the government announced that the overall economy grew at a stronger-than-expected 3.9 percent rate in the July-September quarter. Many economists believe growth will dip to around 2 percent in the current quarter and may slow even further to around 1 percent in the first three months of next year.
On inflation, the central bank said the reading on core inflation, which excludes energy and food, had "improved modestly this year" but expressed worries about what the recent increases in energy prices and other commodities might do to inflation pressures going forward.
The committee said that "some inflation risks remain," a signal that it will be hesitant to cut rates further because of concerns on inflation.
The Fed had pushed the federal funds rate up a record 17 consecutive times in quarter-point moves over two years. The last increase occurred in June 2006. From that time until last month, the rate was left unchanged as the central bank watched to see whether its credit tightening had the desired effect of slowing the economy enough to lessen inflation pressures.
However, the Fed's goal of a soft-landing in which growth slows and inflation is contained has been threatened by the most severe housing downturn in more than two decades. Economists are worried that the credit crisis this summer will make home sales and prices fall even further, threatening consumer confidence and causing consumers to cut back on their spending.
Bernanke, who took over as Fed chairman in February 2006 from Alan Greenspan, came under criticism in August when the Fed left rates unchanged and declared that inflation was still the primary threat facing the economy.
But two days after that meeting when a severe credit crunch hit financial markets around the globe, the Fed went into action, providing billions of dollars in cash to the U.S. financial system, slashing the rate at which it makes direct loans to banks and then on Sept. 18 cutting the funds rate by a bigger-than-expected half point.
Lyle Gramley, a former Fed board member and now an economist with Stanford Financial Group, put the chances of a recession at around 40 percent, saying the Fed's primary concern right now is what is happening in housing and how much of a spillover that will have on the overall economy.
"It is possible that the housing industry will take us over the edge into a recession," he said, noting that every housing downturn of the past 60 years with the exception of two have triggered recessions.
CNE and Penn West to merge....
http://biz.yahoo.com/prnews/071031/to336.html?.v=29
Press Release Source: Canetic Resources Trust
Penn West and Canetic to merge and create Canada's flagship energy trust
Wednesday October 31, 2:49 am ET
The combination will form the largest conventional oil & gas trust in North America and create a world-class Canadian platform to compete against global energy companies and deliver superior unitholder returns. The Combined Trust will have a diverse and high quality asset base, a large portfolio of development opportunities, an experienced and strong organization, and a healthy balance sheet with significant financial capacity.
CALGARY, Oct. 31 /PRNewswire-FirstCall/ - Penn West Energy Trust ("Penn West") (TSX - PWT.UN; NYSE - PWE) and Canetic Resources Trust ("Canetic") (TSX - CNE.UN; NYSE - CNE) are pleased to announce that they have entered into a combination agreement (the "Combination Agreement") that provides for the strategic combination of Penn West and Canetic to form Canada's flagship energy trust (the "Combined Trust"). The Combined Trust will be the largest conventional oil and gas trust in North America with an enterprise value of over C$15 billion and current production of over 200,000 barrels of oil equivalent ("boe") per day. The combined asset portfolio will include interests in a significant number of Western Canada's highest quality conventional oil and natural gas pools and will also include a number of non-conventional growth opportunities including oil sands, coalbed methane, shale gas and enhanced oil recovery. At closing, this strategic merger of assets and people will operate under the Penn West name and will be led by a combined management team and Board of Directors.
Under the terms of the Combination Agreement, Canetic unitholders will receive 0.515 of a Penn West unit for each Canetic unit on a tax-deferred basis for Canadian and U.S. tax purposes. Immediately prior to the closing of the combination, a one-time special distribution of $0.09 per unit will be paid to Canetic unitholders. The special distribution will keep Canetic unitholders whole, in cash distributions, for a period of six months. Canetic unitholders will receive an aggregate value of C$15.84 per Canetic unit based on the closing price of Penn West units on the Toronto Stock Exchange ("TSX") as at October 30, 2007 which represents a premium of 7.1 percent to the closing price of Canetic units on the TSX as at October 30, 2007. On completion of the combination, Penn West unitholders will own approximately 67 percent and Canetic unitholders will own approximately 33 percent of the Combined Trust. Penn West units will continue to be listed on both the TSX and the New York Stock Exchange ("NYSE").
The combination is subject to stock exchange, court and regulatory approval, and the approval of at least 66 2/3 percent of Canetic unitholders. It is expected that the Canetic unitholder meeting to vote on the combination and closing will occur in mid January 2008. An Information Circular is expected to be mailed to unitholders of Canetic in December 2007.
Highlights of the Combined Trust
- Creates Canada's flagship energy trust and the dominant
independent light oil producer in Western Canada with production of
approximately 200,000 to 210,000 boe per day in 2008 and conventional
proven plus probable reserves in excess of 800 million boe
- A large inventory of unconventional opportunities including a
multi-billion barrel (discovered heavy oil resources in place) Peace
River Oil Sands Project, coalbed methane, shale gas and enhanced
recovery from Canada's largest legacy light oil pools
- The increased size will assist in the future development of both its
conventional and unconventional growth opportunities
- Pro forma asset base rivals senior North American exploration and
production companies providing added flexibility in positioning the
Combined Trust for 2011 and beyond
- The combined assets exhibit a compelling overlap and similarities in
operating philosophies, which improve operating efficiencies, field
optimization and cost reductions availed by economies of scale. The
Combined Trust will operate approximately 80 percent of its
production
- The larger size of the Combined Trust is expected to enhance
liquidity on the Toronto Stock Exchange and New York Stock Exchange,
increase its weighting in major indices including the S&P/TSX 60
Index and should receive increased attention from both equity and
income investors
- Increased liquidity and enhanced financial flexibility will allow
expansion both domestically and internationally
- Estimated cash flow for 2008 of $2.0 to $2.2 billion and a capital
program of $900 million to $1 billion directed to further enhance the
combined asset portfolio
- Combined tax pools of over $5.5 billion at the end of 2007, plus the
ability to increase the tax base using the trust model over the next
three years, results in an efficient tax position well beyond 2011
- Safe harbour capacity for the issuance of new units under the Undue
Expansion rules set out for income trusts by the Canadian Government
will expand to approximately $8.7 billion on an equity basis in 2008,
and approximately $15 billion on an equity basis in total
- Management team and Board of Directors which combines the best and
most experienced personnel from each organization
William E. Andrew, President and Chief Executive Officer of Penn West, said, "We are bringing together two great organizations with world-class assets and people to create an aggressive Canadian player in the global markets. The Combined Trust will be well positioned to compete in North America and internationally."
J. Paul Charron, President and Chief Executive Officer of Canetic, commented, "As I have stated many times in the past, sitting still in today's dynamic market is not an option. This strategic combination brings together two organizations with complementary strategies, asset bases and management teams resulting in a strong shared future. I believe the Combined Trust is more than the sum of its parts."
Combined Management
The Combined Trust will be led by William E. Andrew as Chief Executive Officer, J. Paul Charron as President and David W. Middleton as Chief Operating Officer, and will include senior management from both Penn West and Canetic including:
Richard J. Tiede, Senior Vice President, Business Development
Thane A.E. Jensen, Senior Vice President, Exploration & Development
Todd H. Takeyasu, Senior Vice President, Finance - Treasury
David J. Broshko, Senior Vice President, Finance - Financial Reporting
Mark P. Fitzgerald, Senior Vice President, Operations
Eric J. Obreiter, Senior Vice President, Production
Brian D. Evans, Senior Vice President, General Counsel & Corporate
Secretary
Keith Luft, Senior Vice President, Stakeholder Relations
Combined Board of Directors
The combined Board of Directors will be drawn from the existing boards of Penn West and Canetic and will be led by John A. Brussa from the Penn West board as Chairman and by Jack C. Lee from the Canetic board as Vice Chairman.
Pro Forma Distributions
It is anticipated that the Combined Trust's distribution will be set at C$0.34 per unit per month beginning with the first distribution payable following completion of the combination. It is expected that this distribution level will result in a 2008 payout ratio of approximately 67 percent to 72 percent. If the closing of the combination proceeds as planned, Canetic unitholders will receive their first $0.34 monthly distribution effective with the January 2008 Penn West distribution, payable on or about February 15, 2008.
Key Operating and Financial Information for the Combined Trust
Estimated 2008 Production (boe/d)(1) 200,000 to 210,000 boe/d
45% light oil & NGLs
42% natural gas
13% heavy oil
Pro Forma Market Capitalization(2) $11.4 billion
Pro Forma Debt(2) $3.9 billion
Pro Forma Enterprise Value $15.3 billion
Pro Forma Reserve Estimates(3)
Proved (mmboe) 600
Proved plus Probable (mmboe) 800
Reserve Life Index (P+P)(4) 11 years
Estimated 2008 Cash Flow(5) $2.0 to $2.2 billion
Estimated 2008 Capital Program $900 million to $1 billion
Proposed Initial Monthly Distributions
per Unit $0.34 CDN
Total Debt to 2008E Cash Flow Ratio 1.8 to 1.9 times
Total Debt to 2008E EBITDA 1.6 to 1.7 times
Trust Units Outstanding(6) 372 million
Undeveloped Land Base (net acres) 4.3 million
Notes:
(1) Includes estimated production contribution from the pending
acquisitions of Vault Energy Trust ("Vault") and Titan Exploration
Ltd. ("Titan").
(2) Forecast debt outstanding at December 31, 2007, pro forma the Vault
and Titan acquisitions and including the estimated transaction costs
and the special distribution payment to Canetic unitholders. The
market capitalization is calculated based on the October 30, 2007
Penn West unit price of $30.59.
(3) Represents the sum of independent reserve reports for Canetic and
Penn West, adjusted for acquisitions and dispositions in 2007, as at
December 31, 2006 (pro forma the pending Vault and Titan
acquisitions).
(4) Based on reserves as at December 31, 2006 (pro forma the pending
Vault and Titan acquisitions) and estimated current production.
(5) Based on budgeted prices of US$75/bbl WTI for oil, $7.00/mcf at AECO
for natural gas and a par USD/CAD exchange rate.
(6) Pro forma the Vault and Titan acquisitions and reflecting the
proposed combination
OT - Bill Gross / zipjet
<<<< Bill is not above talking his book. IMO, he is right on this one. Depending on what variables you use the Taylor Rule calls for a FFR of about 4%. It would not be hard to see the FFR at 3.5%.
The Fed has taken rates too high and held them there too long. As further evidence, I would suggest you take a look that the treasury YC. The entire curve is BELOW the FFR. Why should 30 yr funds bring a lower rate than over night money?
The history of the Fed is full of examples of taking rates too high and money too tight. They did it again. Bill Gross is right this time. >>>>>>>
The Fed didn't take rates too high they didn't take rates up fast enough. The whole stupid mortgage mess was driven by the fed keeping rates too low for too long. Had the Fed increased rates faster a lot of the mortgage disaster could have been avoided and the fed could be fighting real inflation versus crushing the dollar and driving inflation higher. Also, money is not too tight. That's BS CNBC/WS talk. The credit crisis was inevitable since risk wasn't priced properly in the market. Risk is finally getting priced in and as a result there are relatively large losses.
IMO, the Fed can cut rates all they want, but its going to have very little impact on the credit crisis since the problem is finding a price where buyers and sellers of risk debt/mortgage instruments are willing to transact.
WCG....
Anyone taking a look at WCG? Just curious everyone's thoughts... If no charges are reported it could see a hell of a rise or if some serious charges are reported it could see lower lows. It should see some volatility one way or another.... It may be worth buying a straddle on some near money options.
10nis
FYI: I have never had any problems buying or selling IDIX online with Scottrade...
IDIX is trading back down to where it was earlier. Hopefully, whatever the news is its favorable.
10nis
Merrimack
I may just have to apply for the first job... Although, who really likes that stuff?
10nis
<<< NVS... I don't see that happening. Restructuring the way they did into a HIV/HCV killing machine keeps the developmental risks off the NVS balance sheet, so why would NVS buy them? I see IDIX as being packaged for sale by NVS. >>
Development risks off the NVS balance sheet? Can you please explain to a CPA what that means?
Thanks,
10nis
<<<<< U.S. Partnership >>>>>>
I don't think a potential partner really cares about the holidays. Business is business and deals can get struck at anytime.... I've worked on a number of M&A deals on or over holiday weekends.
Could it be possible that GTC has a potential partnership in place contingent on favorable Phase III results? Thus, the Company has included the potential partnership on its timeline since results should be known some time in late Q4? Any thoughts??
10nis
Pharming....
Anyone know why it made a big move today on high volume?
Thanks,
10nis
Dew,
If you called IDIX would they give you more insight in the royalty (i.e., between 15 and 30%)? Or at least a worst case rate.
10nis
IDIX was halted pending news... I'm sure it'll open shortly.
One question I have is... How does IDIX management fairly negotiate with NVS who owns a majority of the Company? Do they get in a room and hash it out? Or does NVS say...we would like to buy you guys for $10-12 in late 2008 or 2009 how much cash do you guys need to make it until then without having to go to the markets?
10nis
>>>GTC management should ink a Chinese deal (whether significant or not to the top or bottom line)... I'm sure the stock would double or triple on the news.<
LOL—they’re not that kind of company. <<<
Yeah, I know. I was just day dreaming outloud. But, what would be so wrong with listing the Company on the Shanghai index and changing the name to Money-making goats (the name looks a lot better in Chinese). =) Alright, I'll let you smart people have your board back.
Have a great night,
10nis
OT... With the way anything China related is moving in this market, GTC management should ink a Chinese deal (whether significant or not to the top or bottom line)... I'm sure the stock would double or triple on the news.
10nis
Canroy Tax Prep...
I wouldn't let the tax prep stop anyone from investing in a Canroy. The tax prep really isn't that hard but I do have an accounting background (i.e, CPA). If anyone uses a tax prep software package (i.e, TurboTax, TaxCut, etc.) the foreign tax credit prep is very easy. If your tax preparer is charging you a lot to claim a foreign tax credit you need to push back on fees or find a new preparer because its not hard nor time consuming to prepare.
10nis
CANROYS....
The strong Canadian dollar (Loonie) against the weak US dollar helps US holders since the dividend is paid in Canadian dollars(i.e., higher dividend yield).
IMO, as long as the dollar stays relatively weak and oil stays around or above $65 you cannot go wrong holding some CANROY's for another 18-24 months.
10nis
CANROYS.... This may get all of them moving higher.
http://biz.yahoo.com/iw/070924/0305997.html/
Press Release Source: PRIMEWEST ENERGY TRUST
PrimeWest Energy Trust Agrees to C$5.0 Billion Sale to TAQA Subsidiary
Monday September 24, 10:12 am ET
CALGARY, ALBERTA--(MARKET WIRE)--Sep 24, 2007 -- PrimeWest Energy Trust (Toronto:PWI-UN.TO - News) (Toronto:PWX.TO - News) (Toronto:PWI-DBA.TO - News) (Toronto:PWI-DBB.TO - News) (Toronto:PWI-DBC.TO - News) (NYSE:PWI - News) ("PrimeWest" or the "Trust") is pleased to announce that it has entered into an agreement (the "Arrangement Agreement") with 1350849 Alberta Ltd. ("Purchaser") and TAQA North Ltd. ("TAQA North"), both of which are wholly-owned subsidiaries of Abu Dhabi National Energy Company PJSC ("TAQA"). The Arrangement Agreement provides for the acquisition by Purchaser of all of the issued and outstanding trust units of PrimeWest (the "Units") and all of the issued and outstanding exchangeable shares (the "Exchangeable Shares") of PrimeWest Energy Inc. for a cash consideration of C$26.75 per Unit, all pursuant to a plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement"). The cash consideration payable for the Exchangeable Shares will be calculated on the basis of the exchange ratio in effect at the time the transaction is completed.
Using a Canadian to U.S. dollar exchange rate of 1.00, this cash consideration equates to US$26.75 per Unit. The actual U.S. dollar equivalent cash price per Unit will be based upon the Canadian to U.S. dollar exchange rate on the effective date of the Arrangement.
The aggregate value of the Arrangement, including the debt carried by PrimeWest and its subsidiaries, is approximately C$5.0 billion on a fully diluted basis. The consideration per Unit pursuant to the Arrangement Agreement represents a 26.5% premium over the 30 day weighted average trading price of the Units on the Toronto Stock Exchange up to and including September 21, 2007.
"We are pleased to announce that Purchaser and TAQA North have entered into an agreement for Purchaser to acquire the PrimeWest Units and Exchangeable Shares at a price that delivers substantial value to our investors. PrimeWest has built a high quality asset base with a large portfolio of development opportunities. This investment by Purchaser will result in ongoing development and growth of the asset base," stated Don Garner, President and CEO of PrimeWest.
The Arrangement Agreement also permits PrimeWest to maintain its current monthly distribution at an amount not greater than C$0.25 per Unit payable in each of the months of October and November 2007. Therefore, if the effective date of the Arrangement occurs in November, the final distribution to Unitholders will be paid on November 15, 2007. However, if the Unitholder meeting is held on or before November 30, 2007 and the effective date of the Arrangement is delayed beyond the third business day of the following month, the Arrangement Agreement permits PrimeWest to continue to pay monthly distributions. If PrimeWest is permitted to pay distributions after November, the distribution amount will be set at the discretion of the Board of Directors of PrimeWest but will not exceed $0.25 per Unit per month.
Complete details of the terms of the Arrangement are set out in the Arrangement Agreement which will be filed by PrimeWest on SEDAR and EDGAR and will be available for viewing under PrimeWest's profile on www.sedar.com and on www.sec.gov/edgar.shtml.
PrimeWest is suspending the operation of its premium distribution, distribution reinvestment and optional trust purchase plan with respect to any distribution on the Units occurring after October 15, 2007.
The Arrangement is subject to court and regulatory approval and other conditions that are typical of transactions of this nature, including the approval by the holders of at least 66 2/3% of the Units, Exchangeable Shares and unit appreciation rights, voting together as a single class, represented in person or by proxy at the Unitholder meeting.
An information circular regarding the Arrangement is expected to be mailed to securityholders in late October 2007 for a meeting expected to take place in late November, with completion of the Arrangement anticipated shortly thereafter.
In accordance with the terms of the indenture governing PrimeWest's convertible debentures, Purchaser will make an offer to purchase all outstanding debentures for a cash consideration equal to 101% of the face value thereof, plus accrued and unpaid interest, within 30 days following the effective date of the Arrangement.
Recommendation of the Board of Directors
The Board of Directors of PrimeWest Energy Inc. has unanimously approved the Arrangement and based, in part, on the fairness opinion from PrimeWest's financial advisor discussed below, determined that the Arrangement is in the best interests of PrimeWest and the holders of its Units and Exchangeable Shares and is fair from a financial point of view to such holders. Therefore, the Board has resolved to recommend that such holders vote their respective securities in favour of the Arrangement. Each member of the Board of Directors of PrimeWest Energy Inc. has indicated his intention to vote his Units and Exchangeable Shares in favour of the Arrangement.
Under the Arrangement Agreement, PrimeWest has agreed that it will not solicit, initiate, or encourage any discussions concerning the sale of material assets or any other business combination and that it will provide Purchaser with an opportunity to match competing, unsolicited proposals for a period of 48 hours. The Arrangement Agreement also provides that PrimeWest shall pay a non-completion fee of C$75 million to Purchaser if the Arrangement is not completed in certain circumstances.
Financial and Legal Advisors
CIBC World Markets Inc. is acting as sole financial advisor to PrimeWest with respect to the Arrangement and has provided the Board of Directors of PrimeWest Energy Inc. with an opinion regarding the proposed transaction. Subject to review of final documentation, this opinion indicates that the consideration to be received by the holders of Units and Exchangeable Shares of PrimeWest under the Arrangement is fair, from a financial point of view, to all of such securityholders. PrimeWest's Canadian legal advisors are Stikeman Elliott LLP and its US legal advisors are Paul, Weiss, Rifkind, Wharton & Garrison LLP.
TD Securities Inc. is acting as exclusive financial advisor to TAQA and TAQA North in the transaction. Purchaser's, TAQA North's and TAQA's legal advisors are Heenan Blaikie LLP and Latham & Watkins LLP.
About PrimeWest
PrimeWest is a Calgary-based conventional oil and gas royalty trust that actively acquires, develops, produces and sells natural gas, crude oil and natural gas liquids for the generation of monthly cash distributions to Unitholders. Trust Units of PrimeWest trade on the Toronto Stock Exchange (TSX) under the symbol "PWI.UN" and on the New York Stock Exchange under the symbol "PWI". Exchangeable Shares of PrimeWest Energy Inc. trade on the TSX under the symbol "PWX". Series I Convertible Debentures of PrimeWest trade on the TSX under the symbol "PWI.DB.A", Series II Convertible Debentures trade on the TSX under the symbol "PWI.DB.B" and Series III Convertible Debentures trade on the TSX under the symbol "PWI.DB.C".
To learn more about PrimeWest, please visit our website at www.primewestenergy.com.
About TAQA North and TAQA
TAQA North (formerly Northrock Resources Limited) is a wholly-owned subsidiary of Abu Dhabi National Energy Company PJSC ("TAQA"), a publicly listed company on the Abu Dhabi Securities Market (ADSM: TAQA). TAQA North is a Calgary-based oil and gas exploration company with operations in Northern Alberta and British Columbia; West Central and Southern Alberta; Southwest Saskatchewan; Southeast Saskatchewan; and the Northwest Territories. TAQA North was acquired by TAQA in August 2007 from Pogo Producing Company for a total purchase price of US$2 billion. TAQA is a major global energy company with strategic and financing investment opportunities in oil & gas, power, water and infrastructure across the Middle East, India, Europe and North Africa. TAQA focuses on upstream (oil & gas exploration & production), midstream (pipeline, gas storage and LNG) and downstream (power generation). The rating agencies Moody Investor Services and Standard & Poor's have assigned long-term senior unsecured debt ratings of Aa2 and AA- respectively to TAQA.
To learn more about TAQA, please visit their website at www.taqa.ae.
All information in this press release relating to TAQA and its subsidiaries was provided by TAQA or has been derived from publicly available sources.
Additional Information
PrimeWest will file on SEDAR and EDGAR the information circular, to be distributed to the PrimeWest securityholders in connection with their consideration of and vote on the proposed transaction, along with all other relevant documents concerning the proposed transaction. PrimeWest securityholders are urged to read the information circular and the other relevant documents filed on SEDAR and EDGAR when they become available, as well as any amendments or supplements to those documents, as they will contain important information.
Joint Conference Call
A joint conference call to discuss the Arrangement will be held on Monday, September 24th, 2007 at 12:00 Noon Mountain Daylight Time (2:00 PM Eastern). To participate in the conference, please call 1-800-633-8938. A recording of the call will be available from 2:30 PM Eastern on September 24th, 2007 until October 24th, 2007 by calling 1-800-558-5253 (in the Toronto area (416) 626-4100) and entering reservation number 21350676, followed by the number sign.
>>However, just because you plan to hold an asset until maturity doesn't mean you won't lose your shirt (all or part of it) along the way.
Yep - and as Jon points out one sure way to misprice the instruments is to generate panic selling and marking to a distorted market is bound to do that. Selling begetting selling etc.>>>
I disagree that their is panic selling. At least I don't see it...can you tell me where it is? If the real economic value of an asset falls with very little to no chance of the asset ever rising back to the same value that asset needs to be written down and the leverage partners will come a knocking as a result. If there was real panic selling I would guarantee you Mr. Buffett and his friends would be putting their significant warchests to work. I just see selling as a result of margins calls were are based on real economic declines in asset prices. Actually pricing in risk can be a real b!tch...
10nis
>>Shouldn't assets be valued at what they are worth
Yes - exactly.
But what means get you to that point?
In truth, you need to consider the holding time frame. Marking to market for traders with a short time frame makes sense. If you are an insurer and you are matching assets life to liabilities in a program then movements during the period in the value of the assets are meaningless.
There are lots of investors in these instruments that fall between these two extremes. But they tend to be longer term holders so marking to model makes more sense. Note that this issue is really a function of the current crisis. Changing to mark to market during fear induced crisis is NUTS.>>>>>
If these instruments were not levered then I could sort of see why someone could agree not marking to market assets held until maturity. However, just because you plan to hold an asset until maturity doesn't mean you won't lose your shirt (all or part of it) along the way. Plus, most of these assets are/were levered 5 or 8 or 10 to 1 and if you don't mark to market these institutions would try to lever themselves up to 1000 to 1. You have to support the providers of the leverage sometime. JMHO.
10nis
>>Part of this whole crisis by the way has been precipitated by certain assets which are not meant to be marked to market being marked to market at a time of panic. System may be safer in some ways as a result but I am still not sure personally.
Marking to market securities that have a thin market when the market is being driven by fear is NUTS. Marking to model makes far more sense despite what the stupid talking heads are saying.
What is the point of marking these type of securities to market? Market goes down - you take a hit. The market goes back up you take a gain. All of which suggests instability and warrants a higher discount rate for the asset class and the companies that hold them. It is nuts.>>>
Why does the value of securities have to go back up? I see no reason why marketing securities to market is nuts. Shouldn't assets be valued at what they are worth and I agree in thin markets the market price may not be the correct price. However, in this case the market price is probably much lower.
The market is being driven by fear or reality? The credit crunch was going to hit one day and when you have a global real estate asset bubble, banks providing credit to any PE firm with no covenants, etc., etc.. bad things were going to happen... You have to love these comments by the CFO of Etrade.
"What we're seeing in the marketplaces in respect to loans and securities is that this situation will continue aggressively through the later half of this year and all of next year," he told analysts during a conference call. "By the time you get to 2009, you will see things better on the macro-economic side -- and by then we have dramatically transformed our balance sheet."
"It is not a subprime thing, the very small portion of subprime loans we have is performing well within expectations," R. Jarrett Lilien, E-Trade's president and chief operating officer, said in an interview with The Associated Press. "Really what is going on right now is your second mortgages, home equity lines of credit, and installment loans. That's really the issue where the market is deteriorating."
<<< If the Fed drops interest rates it is a result of the employment numbers, weakening economic data coupled with tame inflation. The long overdue housing correction adjusting price growth to income and other assets is similarly exerting a negative wealth effect on spending. I disagree that a Fed rate drop will bail out the over zealous lenders and overextended buyers. Both of these groups will be part of the corrective process. It will ease some of the pressure on the commercial paper market financing inflated buyouts which in my opinion is most regrettable but all in all a rate reduction is prudent macroeconomic policy. >>>
My thoughts....
The Fed won't be dropping rates because of one negative month of payroll numbers or one month of weakening economic data. The unemployment rate is what 4.4%? Inflation is definitely not tame where I life but maybe you don't have a car or eat (with wheat and milk at all time high's). Also, export prices are rising as costs in China are rising and the dollar weak. None of the economic numbers announced would have pushed any previous Fed to cut rates. The Fed will cut rates (only 25 bps, IMO) because the Government wants it. It won't help the housing market materially as its a supply/demand issue - how many homes can one person really own? The supply of homes will reach at least a 12 month supply (up from 9.6 months today) before reversing its trend. The cost of a mortgage has gone up regardless of what the Fed does and that will keep housing demand down until housing prices correct another 15-20%.
With respect to leveraged buyouts, the entire market has changed and I don't see how lower rates are going to convince banks to open up their wallets and hand out more cheap debt. Banks are once again putting covenants in financing agreements and I think they've learned their lessons to not finance the pipe dreams of PE firms. My largest private equity clients are currently having trouble closing financing on $100 million deals. This will change however, financing of $10+ billion deals will be a thing of the past.
It should an interesting week....
10nis