Replies to post #22723 on Mesa Offshore Trust (fka MOSH)

[shisya]

I dont think the "For" argument is really strong.

None is going to pay more than what the properties are worth, they may be willing to pay upto what the property is worth but not more.

I think if all parties do their DD, they all will have an understanding of what the property is worth (I believe they will all have about the same number in their heads) and then they will come to the conclusion of how much they are willing to pay for it.

By having the preffered bidder clause, even if a party pays good amount for what the property is worth, then the preferred bidder could come in and trump it by agreeing to match that. So now, instead of making a profit of X% they would be making a bit less than that because they paid more for the property by matching the price, but that doesnt change the fact that they still stand to make profit on the property.

[downsideup]

I disagree with your assessment of the purpose of the clause, and therefore with your argument "for".

It will likely be more useful for the unit holders group and the LP to begin a discussion by talking about their purposes than only arguing about the precise mechanics that exist now... and if they agree on the purposes, the rest should be fairly easy.

I don't think the purpose of the LP is likely to be even close to that which has been postured here... and if that is correct, they won't mind addressing the purposes or making adjustments that obviate the concerns.

I also disagree with "the preferred bidder may not have significant resources available to it" being useful as a dodge. The structure in the design enables posturing exactly that... but, if the LP finds the bids received don't meet their expectations, they'll have time that will allow them to shop for a deal and partners they like better than what the other bidders have offered. That DOES impose constraints, still, that include elements of cost and timing, that make it less likely to happen as the best bid price approaches fair market value. If the best bid received is fair, and the LP isn't using its own resources, it will still have to be able to sell the deal to someone else at a higher price...

I guess we'll see what happens soon enough... on reaching agreements between the unit holders group and the LP, and then we'll see what the judge might add to it...

It is still possible, of course, that she also has things she won't agree with that include things other than the structure of the mechanics...

I'm not convinced, yet, that the proposed deal is going to happen... although I expect the deal they are talking about likely contains a lot more value for unitholders than the market seems to accept now... but, I also can't recall any other situations where the price of a unit was really an option on the outcome of an auction...

It appears to me the auction contains far less price risk than the path to trial...