Cobalt International Energy Inc. (fka CIEIQ)

[Diggie-HH]

this is the reason !
.... ???? .... any thoughts?

--------------from Seeking Alpha

Cobalt International Energy
Auction Results

The results of the Cobalt International Energy's auction (docket 542) last week were a disaster. The bids were for a total of only $577.9 million. In addition, they are selling their Angola assets for $500 million.

31.1m: Heidelberg bidder - W&T Offshore, Inc.
1.8m: Shenandoah bidder Navitas Petroleum US, LLC
$339m: North Platte bidder Total E&P USA, Inc. and Statoil Gulf
$181m: Anchor bidder Total E&P USA, Inc.
$25m: Exploration assets bidder Total E&P USA, Inc.
The total bids did not even trigger any management sale incentive payments,which had payments starting at $1.25 billion in asset sales. A major reason for the difference in bids versus investor estimated value is that there are so many additional risks and expenses associated with bidding for assets compared to negotiating to buy them. There is a very real risk that a plan is not confirmed and assets are not sold. The bids could be just a waste of time and money because there is no assurance the deals will actually close, escpecially given a statement a few weeks ago by a lawyer for Cobalt who said no parties agree to accept the current plan.

Amended Plan

Judge Marvin Isgur did approve (docket 563) the adequacy of the amended disclosure statement (docket 562) on March 8. The voting record date was March 5 and solicitation for acceptance deadline is march 12. The new date for the confirmation hearing is currently set for April 3.

Cobalt shareholders, Class 10, are getting nothing:

Existing Interests in Cobalt shall be deemed canceled and extinguished, and shall be of no further force and effect, whether surrendered for cancelation or otherwise, and there shall be no distribution to holders of Interests in Cobalt on account of such Interests.

1liens are getting full recovery including their disputed "make-whole" claim under the third amended plan (use red-lined docket 554 it is easier to see changes). They filed an objection (docket 525), but it seems the newly amended plan satisfies 1lien's objections.

The $1.4 billion in general unsecured claims are getting zero recovery. Even 2lien holders are not getting close to full recovery and are estimated to only get 52% (assumes certain intercompany claims are not allowed, “make-whole” premiums on higher end of potential range, nonpayment of remaining amounts due pursuant to the Sonangol settlement, and certain unencumbered exploration lease) to 87.9% of their claim (assumes certain intercompany claims are allowed, “make-whole” premiums on lower end of potential range, payment of remaining amounts due pursuant to the Sonangol settlement, and no unencumbered exploration leases).

A major issue with 2liens is 1lien's claim for "make-whole". Since the bids for asset sales were so low, 2liens recovery is significantly impacted by the amount of the "make-whole" claim. If they would have received bids high enough to cover 2lien's full claim the "make-whole" issue would not be important to 2liens, but would be important to the unsecured creditors. The general unsecured claim holders are expected to aggressively fight the "make-whole" claim. Even if the unsecureds win, 2liens would have to get full recovery for them to get anything. At this point, that is unclear.

I am not certain that even the Fourth Amended Plan will be confirmed. I would not be surprised if new litigation from some stakeholders could delay the plan's confirmation or even result in amending the current plan.