Part of it is they are in the same situation with regard to taxes: taxable income with no distribution to cover paying the tax you have to pay on it.
Of course, the rest is dissimilar....
Ok so I found the answer on my own. Buried in the 8k:
the incurrence of parity lien indebtedness (including the Notes) in an aggregate amount at any time outstanding not to exceed (i) $1.5 billion, plus, (ii) after following Berry’s becoming a guarantor of the Notes or is otherwise merged with and into a guarantor of the Notes in accordance with the terms of its debt documents, the lesser of (a) an aggregate principal amount such that after giving pro forma effect to the incurrence of such indebtedness and the application of proceeds therefrom, the ratio of the Company’s Modified ACNTA to the aggregate principal amount of first priority lien indebtedness and second priority lien indebtedness would not be less than 1.5 to 1.0 and (b) $500.0 million; provided that the aggregate amount of second priority lien indebtedness under clause (i) above that is issued in exchange for existing unsecured notes of the Company and its restricted subsidiaries may not exceed $1.0 billion;
Linn negotiated $3B with the banks but had to limit it to half of that amount when they negotiated this deal.
If considered insolvent, there is no tax. Could be.
In the quarterly report, Linn reveals it has negotiated the right to give Linnco funds to pay its taxes
I own $xxx worth of Linn bonds and am therefore a very interested party regarding the health of the company. I am writing to you seeking clarification over a statement made in the recent announcement of the $2B debt swap. It was stated that the issuance of $1B in junior secured debt left a remaining capacity of $500M. It was also stated previously that the company had bank permission to issue up to $3B in junior secured debt for debt swap purposes. I am wondering how $3B - $1B becomes $500M! Can you please enlighten me as to what happened?
an interesting conundrum ....almost all the upstreams suck ...which means they almost all go under....which means production has to fall....which means prices will rise.....which means they don't go under....
All Linn has to do is take steps to last longer than the other guys
Prices will stay low as long as production keeps going up - which it still is doing. The problem is that each individual company sees the only way out is to sell more to make it up on volume. This makes the low price issue worse until the weakest go under and production is actually forced downward.
If all the companies moved toward letting production slip and buying back debt and shares, the recovery would happen that much sooner. But its a leap of faith to do so....
I sold most of my preferred once the bonds became cheaper. You can get them for 41 cents on the dollar and they are higher priority than either stocks
sold most of my shares today. Main reason I invested was that they had the liquidity to buy back shares if they wanted - no intentions apparently and thus I'm not interested in holding them in this current environment
B. Cancellation of Debt Income (CODI)
1. CODI Rules in General. An is- suer generally recognizes CODI to the extent that (1) a holder of its debt agrees to forgive, or reduces the amount of, the debt for no con- sideration, or (2) the issuer satisfies a debt obligation for an amount less than the adjusted issue price of the obligation.11 However, where the restructuring occurs in a Title 11 bankruptcy proceeding, the issuer may exclude any CODI that other- wise would be recognized as a result of the restructuring.12 Addi- tionally, in the case of a nonbankruptcy restructuring, the issuer also may exclude CODI that otherwise would be recognized as a result of the restructuring, but only to the extent that the corpora- tion is “insolvent” immediately prior to the restructuring.
Not sure that Linn can qualify as insolvent at the moment but maybe. As far as $4 tax on $9 gains, add the top Federal tax bracket to State tax bracket plus the Medicare tax and many would exceed that amount