Ed...I think it highly unlikely that RDMP would default on the notes to the benefir of a XBOR shareholder. I think it's highly unlikely that they default period. Even if the notes were not paid in full at maturity you have to guess that these are not adverserial parties and that a note extension would be negotiated or occur long before they would attempt a resolution through a forced asset sale.
The writing on the wall has long been evident. XBOR has an extremely attractive asset while RDMP has a technical and operations team with far greater resources and experience to manage the development of those assets. RDMP is likely to acquire more than 80% ownership of XBOR's stock in the coming weeks paving the way for a merger. They already have more than 50%. From reading the filings we see that operations have already merged shaving off more than $150,000/month in SG&A. When the 2 company's are officially combined they will have between 8-900 BOPD and have free cash flow. The uncertainty surrounding RDMP's liklihood of pulling off a successful merger of the companies has created a simple "wait and see" approach to the next financing. Obviously the terms on new money coming in to RDMP are much more attractive with XBOR in it than without.
Which leads to your questions about a stand alone XBOR...
"perhaps induce them to just sell off their entire XBOR position".
Any sale would carry a "tainted goods" stigma which is not beneficial in any way. Any sale of RDMP's position in this scenario would be viewed as a fire sale. The BOD had authorized a "Strategic review" process. In essence, a "go shop" process by which other company's may bid on XBOR's assets as an alternative to a RDMP merger. There is no way any company will offer consideration beyond what RDMP is with a 2:1 for stock swap. I don't see RDMP's deep pocketed existing investors allowing RDMP to lose the XBOR deal at this late stage. They are too deep into it.
"This $4M note that comes due in 2 weeks is secured by the following assets:"
Note holder is an existing large shareholder of RDMP. He gets wiped out of his RDMP quity investment if he plays hard ball with an asset sale. He'll re-fi or convert into new shares.
You have to remember that while XBOR made HUGE advances off of a small private placement, the bottom line was that the company always knew that they were facing additional capital raises. In a perfect CKCooper world which never existed, these raises were supposed to come at higher prices but we know now that didn't work out. As a result of previous management, there were restatements of XBOR's financials. Those are cleaned up now but would've been a huge hurdle to raising capital. XBOR shareholders would've been looking at a pretty nasty capital raise unless you were a Pure holder (Pre-DORL). The largest shareholder, RDMP, now has the most to lose so by combining their assets and operations any future capital raise will come on much better terms that if either were a standalone.
I think you should view RDMP's "struggles" as one on paper and not in reality. Once they clean up XBOR it becomes a much more bankable deal for both. XBOR, functionally is RDMP now. I would guess there is less than 5% of the float even left out there. I have heard that RDMP shareholders have been buying XBOR on weakness and converting into RDMP.
Seems tough that XBOR would've developed into what it always should've been without the help it will be getting from RDMP's technical team and operations. From the CFO down to the geologists the RDMP team has extensive qualifications and knowledge that XBOR never had (to no discredit to XBOR). Heck...even seaohtoo can tell you what a mess they had on their hands with certain areas from a land management perspective. I doubt XBOR could've ever cleared a substantial hurdle that existed while the new managment of XBOR sailed right thru with no problems.
Like it or not...you can assume that RDMP and XBOR are as one moving forward figure out how best to make lemonade Ed.
