Ok, Now I get it. LNCO and Bry are negotiating over a "special dividend" for BRY shareholders that would make it unnecessary for LNCO to adjust the stock swap agreement. BRY understands that they are overvalued and LNCO undervalued. Both know that if either walks away both their stocks are going to get pounded. No one wants to talk now but it is clear that the merger is going to go through. the only question is how much is the "special dividend' going to be and a lot of that depends on Monday's earnings report.
Ask yourself why LINN tried to acquire BRY through a share swap, and not a cash buyout?
Because LINN have a terrible cash position. They had to borrow to even make a 1.25 ratio stock swap. Now you think they will have several hundred millions lying around for a cash payout?
Look at the current DCF. It is not even close to 1. Meaning your company is paying more out in dividends than it is making in income. So you think they will have more money to pay out to BRY, why they are already struggling to pay your lofty 11%. Unless you are willing to suffer for the greater good of the company by taking a divi cut, remember money doesn't grow on trees or pennies fall from heaven.
No doubt, the "special dividend" post was likely made by a nervous nelly.
It seems obvious that many people think the Linn-Berry deal is dead. The lack of a conference call, which appears to be ominous, may not actually mean the deal is dead. It may mean that the deal is being renegotiated. It is possible that Linn's attorney's advised against the call for fear of someone saying something out of turn. Could be simply a precaution.
I for one am not convinced the deal is dead. Now, I don't for a minute think the deal will go through at the 1.25x ratio, in fact, I think Berry institutional holders will likely be letting Berry management and Linn management know that they want to be made whole. In other words, Linn needs to boost the ratio to the point that they aren't leaving "equity" on the table. No self respecting institutional investor is going to leave $5-$10 on the table in the "hopes" that LNCO price recovers and they recoup the loss. Instead, they have all the leverage. Linn needs Berry, for the oil and oily PUDs. Plus, the all equity transaction is materially better than having to finance with debt and push the balance sheet even further into stress. A ~1.6x ratio is needed to keep the Berry holders whole.
I'm content to see how this plays out on Monday (or Friday) and continue being amused by the blatant spin on this board by those with an agenda.
Friday could be a real trick or treat for LINE/LNCO holders..
the institutional holdings of bry is so large . the divy so low, if the institutions dumped / sell to who///??They may assume the merger would put lnco back to 40. and therefor their interest would be, in terms of linc stock 50 bucks ie 1.25 x linco price . Or not!!