just released, Cubic exercised their option to extend the deal for one more time til end of aug, Cubic paid the additional deposit of $1.15 million for a total of $4.6 million that GST has received from Cubic.
Yeah, I don't see this as that much of a long term negative. (Short term, this quarter, sure, if the don't close at all.)
They close, they close, great.
They don't close, GST just made some nice coin on the deal anyway.
And they clarified all the questions asked at the last extension:
"Per the terms of the extension agreement, Cubic Energy has paid an additional deposit of $1.15 million to Gastar bringing the total non-refundable deposit received to $4.6 million, or 10% of the transaction's $46 million value."
So GST has the money, it's been paid, AND it's not refundable.
The Bankruptcy Code permits a trustee (or a debtor in possession) to recover from creditors payments made shortly before the bankruptcy filing where the payment gave the creditor more than other, similarly situated, creditors would get through the bankruptcy process.
The policy behind the statute is to diminish the advantages that a creditor might get by litigation or by aggressive collection actions that force the debtor into bankruptcy. That is accomplished by making payments received in the 90 days before the filing recoverable in bankruptcy.
Cubic Energy will go into Bankruptcy if this Deal is not done.
I'm with your, long term this is not big deal, but short term the shorts and flippers will make this mole hill into mountain. Luck I've got plenty of dry powder and will be ready to start accumulating.