As you are aware, I was saying all along that the value here should
have been with the bonds. I still think that the bondholders are
getting very close to no recovery and that is where the trustee can
get into trouble. I tried to hedge myself between the bonds and the
shares, but the shares were and are a long shot.
I believe bondholders would have been much better off by converting into
shares (becoming, lets say, 80% holders) and replacing management
(which was always the problem). the company had decent assets, but the
worst capital allocation (capex into onshore blocks with no ng customers
... really?) I have seen in a long time.
Priority one, two and three should have been to finish the power plant.
The onshore adventure was not needed. utilizing 5000 boe of gas (30m
cf / day) and generating extra $15M-$20M revenue (with only cost being
a ten mile pipeline to shore) plus $20M generation margin would have
made this company survive through this downturn, but instead the money
went to pipe dreams.
If bondholders do not get to hold equity in the buyers (as I suspect is
going on), the trustee (wells fargo) will probably be sued and the $9.5M
in expenses related to the bk they forced (with the committee) will
not look very good for them.
