I've noted before I don't discount that the intent of the effort by JPM/PXD is to use the "market function" cynically to impose maximum harm on unit holders. I see the result here as anger and fear... which is perhaps exactly what they intend it to impose ? I expect it will be more useful to parse the components of their proposal to see what elements of value it contains that might be retained or built upon.
I'm merely noting that "the market function" isn't the singularly fixed concept as that presented by them in their plan to conduct the sale. So, rather than just entirely disposing of the concept of using market functions as not timely... or as not ever being in the unit holders interest... why not explore, instead, the full range of potentials in the concept of use of the market function ??? I don't for a minute believe that all the unit holders are opposed to "market valuation" in principle... so why is it that what they have proposed as a specific use of market functions now IS objectionable ? There must be some OTHER factors in the way the proposal is structured that alters values in ways not beneficial to unit holders ? Identify those factors, and eliminate them, and then we're probably getting "closer" to a PROPER use of market functions in valuation ?
If a PROPER use of market functions is made possible... what response will you see from PXD/JPM... and what impact will that have ?
Is there a point where both will agree on what is proper ? Perhaps not... but, I do think there ARE a few things that appear as benefits available to unit holders only because they HAVE offered the conditional sale AS they have. For instance, they may have some difficulty in explaining to the judge WHY a sale with one set of conditions at a particular time is beneficial, and a sale with another set of conditions at another time is not ?
I don't think the judge is limited in her consideration to ONLY allowing or disallowing this specific sale... rather than also, or first, considering all the conditions under which a sale WOULD be fully proper, if NOT containing any conditional elements designed to harm MOSH, rather than only extract JPM/PXD from their current responsibilities ? So, rather than just asking for eliminating the potential for any sale, why not see what JPM/PXD might reveal by defining their concerns re the various conditions that might make a sale a really useful idea ?
The entering argument it seems they have... that "a sale" is a fixed market function exactly as they have postured it, that will unerringly determine "real" value... seems it ought to be examined. If the "conditions" of the sale don't in fact alter the value the market is likely to determine, then they really shouldn't care at all if the conditions under which the sale is conducted are altered ?
Later might be better... and different conditions in how the sale is conducted might make the result more meaningful ?
Can you think of no conditions under which a sale might be conducted that would have no unit holder objecting ? I suggest that if THEY only want what they say they want from the sale... a result that takes them out of the partnership while eliminating future liability... then they shouldn't care what conditions apply to MOSH holdings ? So, why is there an "all or none" condition being applied to the sale that includes the MOSH holdings, rather than only an offer to sell their holdings and position for MOSH's benefit ? Their plan, as is, forces packaging all the various points of value as if they ARE and can only be one... with THEIR liability issues detracting from the other portions values, when they aren't properly MOSH's valuation concerns, only JPM/PXD valuation concerns ? I'd say a "proper" market result... if the result was to be used to claim a particular value should be applied to an aggregate, could only be one that enabled pricing the various portions of the risks, liabilities and potential benefits of the various holdings in an aggregate separately. If the MOSH portion of interest and liability in the property is worth +5, and the PXD/JPM position, given their unique issues, is worth -4, does that mean that a proper market price of +1 should define "the real value" ?
Even if you separate out some of the liability, that doesn't mean that the price the market delivers isn't conditioned by the risks the sellers face... as motivated sellers probably won't get the price that a much less motivated seller might command ? JPM/PXD are motivated sellers, and MOSH is NOT... so how do you value THAT difference in potential that exists in a unitary sale ???
Any good auctioneer knows that the only way they can get rid of a lot of the useless crap they might have to auction off at a farm auction... is to bundle up some of the crap with the things that people really do want. In that case, the crap has a basically neutral value... if you want the good stuff, you bid what you think the good stuff is worth, minus the pain in the butt and cost involved in making a trip to the dump to get rid of the rest. The auctioneer still doesn't have any incentive to minimize the price and value obtained as a net benefit for the beneficiaries of the auction... but JPM/PXD both DO have that incentive, here... so they are NOT conducting a sale in which that common interest between the auctioneers and the beneficiaries of the sale can be assumed, or one in which the relative values being packaged together can be considered as only positive or neutral. The judge DOES need to deny any element of their efforts that IS designed to minimize the potential benefit to the beneficiaries and limit the loss that might be sustained by the others partners... while mixing the two... so that beneficiaries are burdened with losses that are not theirs, by right, and THAT is the point of division here... that the interests here are NOT interests in common... but are divided interests that ARE divided ONLY as a result of THEIR other choices and the problems that result from them.
What would the aggregate of the holdings be worth in a functional partnership, in which the operator and trustee weren't accused of doing what JPM/PXD are accused of doing, and the unit holders weren't suing them for doing it ? Maybe the "market price" that should be of most utility in court can only be determined after some period of time in which that situation DID exist ? So, the proper market result could only be obtained after the property IS developed with MOSH retaining their interest, while having it be developed with a new partner ?
I think the timing element matters NOT just in the sense of JPM opting to try to time the market bottom to low ball the price... but, it matters more broadly, when considering what is proper, in the proper pace that might be applied to the effort in deliberation over how to most PROPERLY structure a sale that would NOT be intended to skew market functions to disadvantage the unit holders ?
I don't think the offer of a sale should be discarded out of hand... rather than be seen as containing some velcro that sticks them to positions that might not work out to well for them upon closer examination... so, that closer examination ought to be encouraged...
The best outcome for MOSH would NOT be to have their offer to put THEIR portion of the assets on sale... be discarded out of hand... but to suspend it until such time as the issues can be properly developed and examined... with the judge ruling on the conditions necessary to enable a PROPER effort in conducting a sale, before REQUIRING that to occur.
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