Author Topic: ZAR.DB.A - Zargon Oil & Gas Convertible 8% Dec 2019  (Read 7656 times)

bizaro86

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Re: ZAR.DB.A - Zargon Oil & Gas Convertible 8% Dec 2019
« Reply #30 on: November 23, 2018, 09:14:23 AM »
Not sure why this deal saves 15 months interest if the transaction happens in Jan? Shouldn't accrued (3-4 months) be paid in cash?

But if that's true, converts are giving up 0.10c in interest on a 0.38c bond price. That's pretty material. Rough estimate, creating the company at almost 40% more by giving up that interest. Can they really increase production by enough to offset that higher price? I get that it gives more flexibility and makes a sale easier, but early 2019 prob isn't going to be the best time to sell either.

You're effectively getting 94% of that interest back (as equity) as the converts will own ~94% of the equity. I think there will be a multiplier effect as well, because if they didn't do this the other capital options they have are very expensive right now. They're almost certainly going to need to convert these into equity in 2019, and converting now will prevent them from burning a bunch of money on new expensive debt in the meantime.


Philbert77

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Re: ZAR.DB.A - Zargon Oil & Gas Convertible 8% Dec 2019
« Reply #31 on: November 24, 2018, 08:28:10 AM »
I am a debenture holder. I think the debbie holders need to accept this offer and not try to scramble for pennies. At this stage with the current oil environment we need to keep as much cash in the till as we can. I'd rather see the company survive this downturn and get a quicker return on my investment than drag it out.

Philbert77

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Re: ZAR.DB.A - Zargon Oil & Gas Convertible 8% Dec 2019
« Reply #32 on: January 10, 2019, 07:36:06 PM »
Well it's official now:

"The Exchange Transaction significantly enhances the prospects and flexibility of the Company to pursue strategic, value-enhancing transactions which may include a corporate merger, sale, recapitalization or reorganization. Following Closing, the Company will have reduced its overall debt by $41.94 million and its annual interest burden by $3.36 million, resulting in a simplified capital structure with only US$3.5 million of term debt remaining outstanding (see Nov 2, 2018 press release).

As a result, Zargonís Board of Directors has renewed its strategic alternatives process to seek outcomes that will maximize value for the Company and its stakeholders. Zargonís long-life, low-decline oil exploitation assets have significant upside potential in a period of prolonged higher oil prices. In addition, Zargon brings a TSX listing and more than $155 million of non-capital losses that could have significant value in a more favourable Canadian energy investment climate. Zargon also previously commenced marketing its North Dakota assets in December 2018, assisted by Energy Advisors Group (formerly PLS)."

http://zargon.ca/news/?path=/press-releases/zargon-announces-voting-results-extraordinary-meeting-debentureholders-and-provides

I wonder what the odds are now of them being bought out? Too bad the oil & gas environment is so poor currently in Canada...