Buy back debt? 40% is chump change. Pffft. Buy back the preferreds! 100% annual savings.
Be the bid on the debt and the preferreds. Buy back $200M worth total using the line and then float a junior placement at 15% to pay it off. The payback on this plan is before the hedges run out
In a SA article, it's stated that Linn receives credit for 65% of their hedge value toward their borrowing base. This would seem to indicate otherwise
IIRC, the company expects to negotiate an entire new line of credit come May. So what the agreement says now means nothing soon. ALSO, the company receives credit towards its borrowing base for hedges held. An increase in hedge value means an increase in conforming borrowing base down the road.
They don't have to suspend for another quarter or two. I think they'll pull a VNR and go small - 3 cents or so per quarter. Still gonna drive the stock down to a buck or so
If oil got to zero would they let them sell and apply the funds to the loc? Of course. $5? $10? There is some point where permission would be granted.
They paid appx $5M for the 2017 puts [$6.50 avg as stated in the most recent presentation] and they are tomorrow worth appx $15M
$10M gain. Thanks Draconian Banks!!!
IF oil gets down to $15 or so, they'd have to be crazy not to monetize them and pay them against the line. I do believe that Linn gets credit for 65% of their hedges - if MCEP gets the same then they could do some real good toward their non conforming line of credit by doing so.
The $50 puts that the banks made mcep buy when oil was around $45. Should test $31 tomorrow. What cost them $7.50 or so now worth $21 and change
If you're gonna have to do it, then go all out. Rather than borrow $25M at 13% to pay down the line, borrow $50M at 13% to buy something juicy