(1) $1.50 per share payment to Linn Energy for rejecting offer the BRY board approved.
(2) Linn is the largest upstream MLP in the U.S. (bigger than all the next 9 combined).
(3) Without the offer BRY shares will fall to the pre-merger price.
(4) BRY shareholders will miss out on $3 in dividends during the first 12 months after
rejecting the deal with Linn.
(5) Linn's borrowing costs are below those of BRY. Linn just obtained a half a billion
dollar loan this month at 2% below BRY's borrowing costs and BRY has $200 million
coming due in the next 12 months. Does BRY want to keep borrowing and paying
$2 million more interest for each $100 million of debt?
(6) As soon as the BRY shareholders vote to approve this merger, the Linn units and
shares will rise and the differential in price will close to parity or close to parity. Why
risk a financial loss of $6 or more per share.
When you add up all the costs to a BRY shareholder rejecting the deal, I predict a loss
to each shareholder of $6-10 per share from the payment of the penalty to Linn for
breaking the deal the BRY board approved, the lost dividend/distribution for a year of
$3, and the decline in share price of BRY after they reject this deal.
BRY shareholders have to realize that BRY received no other offer for the company
that was acceptable to the board. That says a great deal.
As a retired CPA I would suggest that all shareholders vote for the transaction to merge
with Linn Energy's corporate entity in a tax free exchange.
So why are blabbering here on the BRY board???
If you are soooo sure institutionals will bite a $6/share loss, why are you here appealing to the retail investors? Since retail BRY holders will have 'no say' on the vote, why do you care if they vote NO, if this vote is under lock and key? LOL
All I see you LINE/LNCO holders posting here is to save your own #$%$ because you know you have your rears handed to you if the merger is voted down. Stop sounding like you care, and just admit that LINN's sp will drop faster than a brick in a pond if this merger doesn't go through.
As for BRY losing $6-10/share, how do you even arrived at that number? BRY was $39-40 before this merger was even announced. It did popped to $48, but that $8 premium no longer applies, maybe because as LNCO sp kept dropping, those ppl know that the merger might not go through without a re-adjustment in the ratio and had sold already.
If LINN is smart and care for this deal, they better adjust the ratio more in line with the current share prices. Otherwise, ask any sane person why they will lose a guaranteed $6/share so that ppl like you can stop your investment from sinking even much much lower.
BRY holders are not here for charity. They are here to make money, not to lose money to save your skin. So, if you and I will get the same divi amount, but I wind up losing a whopping $6/share...... why the heck would I want to do that? Why would any institutionals who holds millions of shares??? You want them to lose several millions of dollars just so to save a deal??? There are plenty of deals that can be made - this one just stinks for BRY holders, and I would doubt they are not dumb enough to vote 'yes', contrary to what you LINN holders fantasize.
Institutions & mutual funds own 81% of outstanding BRY shares. They will decide the fate of the merger. Individual owners do not have a significant say in the vote.
For BRY shareholders that don't don't like the exchange ratio, sell your BRY shares now and use the proceeds to buy LNCO. At today's closing price for BRY of $42.56 and LNCO closing price of $29.04, you would get an exchange ratio of 1.4655 shares of LNCO for each share of BRY. As an added bonus, BRY shareholders would start collecting the LNCO dividend of $.242 per month now instead of waiting for the merger to happen.
I find it funny how some ppl think that some thinks are as certain as day. Nothing is certain in life. For saying it is a certainty that a deal will be done, even moreso whereby the voting shareholder will face a loss of $5-6/share, shows the fallacy in one's thinking.
An even worse advice is to based a bad decision on a faulty premise. The faulty premise is a guaranteed outcome of the merger going through. The bad decision is to sell BRY and buy LNCO. Tell me genius, what if the premise turns out to be the merger did NOT go through??? What will happen to the person who switched to LNCO shares? Will LNCO shares rise or do a waterfall drop if such an outcome prevailed? Will such a person face even more losses than if he would not had switched at all???
Silly rabbit, Trix are for kids.....
You hit the nail on the head. Individual retail shareholders of BRY should sell BRY shares at this time and take the current price and buy, LNCO shares with the proceeds, then they get the best of both worlds, the higher BRY price and the benefits which accrue to the new entity which will result in LNCO shares increasing as soon as the BRY shareholders approve the deal.
The insiders of BRY also control a large block of BRY shares and they are voting for the sale. When you add in the mutual funds and ETFs that own shares that are voting for the merger, the smart money is going to control the vote, not those retail shareholders that are disgruntled as some of the posters on this board that do not understand the benefits of the transaction.
I don't think the fee applies if the shareholders vote no but the rest is highly probable. Since the institutions hold most of the votes, I'm guessing they are thinking along this line.