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Hello jurek,
I cut and paste from the 2008 Financials (I recall the same note for 2009...but don't have a pdf file of the 2009 handy), showing the note regarding Convertible Debt. If the debt holder converts to common shares, the established rate is set at $5/share, if the company redeems the debt (2nd paragraph), company pays for 100% of prinicipal amount (not fair value) and the conversion amount of $16M+(20% - which represents the cost to CLL of converting this bond to common shares - this has already been accounted for in the company's equity section). What remains is the 100% principal amount to be converted to common shares.
It's a tricky note that overlaps "fair value" (showing what the bonds were worth as at the FS date of 2008) and "100% of the prinicipal amount" used for conversion purposes. This is IMO my interpretation.
Good luck
Booster
Convertible Debentures
On May 25, 2007 Connacher issued senior unsecured subordinated Convertible Debentures with a face value of $100,050,000. The Convertible Debentures mature June 30, 2012 unless converted prior to that date and bear interest at an annual rate of 4.75 percent payable semiannually on June 30 and December 31. The Convertible Debentures are convertible at any time into common shares at the option of the holder at a conversion price of $5.00 per share. The Convertible Debentures are redeemable or after June 30, 2010 by the company, in whole or in part at a redemption price equal to 100 percent of the principal amount of the Convertible Debentures to be redeemed plus accrued and unpaid interest provided that the market price of the company’s common shares is at least 120 percent of the conversion price of the Convertible Debentures. The conversion feature of the Convertible Debentures has been accounted for as a separate component of equity in the amount of $16,823,000. The remainder of the net proceeds of the Convertible Debentures of $79,187,000 was recorded as long-term debt, which will be accreted up to the face value of $100,050,000 over the five-year term of the Convertible Debentures. Accretion and interest paid are recorded as finance charges on the consolidated statement of operations. If the Convertible Debentures are converted to common shares, the value of the conversion feature will be reclassified to share capital along with the principal amounts converted. At December 31, 2008, the fair value of the Convertible Debentures was $45 million (December 31, 2007 – $96.5 million). This amount was determined by reference to the quoted market price for the Convertible Debenture.
Glad to see this hub is vibrant as ever. After reading the Agoracom settlement message, it would be nice to see the aliases used (along with the PM information obtained), but then again, who cares?
I've followed the CLL board for years, and posting whenever compelled to contribute. And over the years, I can honestly say that it didn't matter whether an alias was used - it didn't sway my own due diligence. Actually I looked forward to the daily lively debates between what the company is doing and where it should be headed. I'm sure that if aliases lurked in this hub, they were instantly challenged by the likes of 2Crude, jurek, spidey, et al. - even the ones that continued to toot the company greatness without any financial or operational supporting backup (who later decided to challenge the messenger, rather than the message).
I have great concern with CLL's Asset Sale.
This action is usually requested by a lender to bring one's debt in line with cash flow. I'm not sure if this is a Gusella pre-emptive strike, in case the request is made in the future, for indeed a fire sale, or if Gusella wants to start showing his goods in a calmer environment. Either way, I get nervous when companies start selling assets to MAYBE pay down debt (from what Scott posted, they may or may not pay down debt…that’s even more concerning).
With respect to the convertible $100M debenture, rest assured, that another 90-100 million+ shares will hit the street….that’s been Gusella’s mantra anytime he’s in trouble over the years – issue shares.
My only question to everybody here is: How much more damage does a CEO need to inflict before being fired?
Good luck all, I’m still holding my remaining shares, although these days, they feel more like Nortel and BreX, than CLL shares.
Booster
Shares held by Gusella are not at market value - don't confuse our purchase costs to the executive team's. Don't forget, Gusella had a margin call and was forced to sell the shares he did buy at market prices (geez, how the heck does a CEO of a company make a bad call on his own company.......)
Stock options are a good thing, IF, and I'll repeat, IF, the stock options are set at market value of time of issuance, AND there's a specific period of performance (say 3 years). Issuing stock options at 10 cents, 50 cents, or no value, is a recipe for abuse (check any company on the major exchanges that have $500k base salary, and then millions in stock options excercised...nice gig).
Instead, if options are provided at current market value, and no increase in value occurs, options expire worthless - truly a bonus based on performance. But don't forget, executive's cost is ZERO, while common shareholders paid full value with real losses. Maybe it's time to change the KPI (Key Performance Indicator) used to measure success by CEOs - share price, hasn't worked well.
In addition, not mentioned thus far, is the age of some of these CEO's (including Gusella). Once CEO's start pushing 60-70 years of age, their objectives are more short term than 50,000 bbl/day. Their talents should be used on a consulting basis, or Board member, but not in a participatory stock option plan.
Warren Buffet has been screaming about this phenomena for years. Check out any company he invests in, he reviews (and often changes) executive compensation packages.
Good luck,
Booster
Dismal volume, charts look like a horizontal death line.
JV rumors from Gusella only had 500k volume yesterday (not sure this was a good thing anyways - share dilution, JV, pick your poison), and today we're stuck with 230k (CLL has averaged over 3M).
If we at least held the average daily volume, I may consider the accumulation theory, but we've disappeared under the radar during this 10 day rally.
Looking at Level II bids and asks, there's close to 1M shares on the ask side between 1.42 and 1.46....with over 450k currently sitting at 1.42, and approx 600K on the bid side between 1.41 and 1.37....and neither side wants to budge.....strange.
Last time we waffled with these volumes was late March, from which we jumped 30 cents from that range.....hope the same occurs now......
Good luck,
Booster
Okay Brian, you're too much of a gentlemen to say it, so I will. The US government has no desire to stop the oil disaster (for now....it's a great opportunity to exploit the situation to their advantage).
Reviewing the US government's action (or lack thereof) these past two months, in addition to this week's state of the union address, and the witch hunt Congressional hearings with BP CEO yesterday, I now firmly believe the US government wants to milk this for all it's worth.
The perfect storm has arrived:
1) government agenda (clean energy/oil bashing) will be the poster child for increased spending towards altenative energy (no matter the cost),
2) increased spending will ultimately lead to increased taxation,
3) oil disaster screams for more government control, providing a great opportunity to charge oil companies additional fees, royalties, bond posting, etc.
4) and lastly, as observed in yesterday's Congressional hearings, the US government now has a patsy in BP to pay for ALL losses (beyond clean up costs).
It's sad that the same government effort in trying to lay blame, can't be used in trying to stop the oil flow. Has politics/government reached a new low? Just disgusting.
If not so serious, it was ridiculous watching CNBC yesterday, a red faced Hayward provided the same answer, to the same Congressional questions, as the video feed from the bottom of the Gulf is raging out of control.......just sickening. They were trying to corner BP as the endless payor, as Rome burns......unbelievable.
There should only be one goal right now: stop the oil flow!!
Take care,
Booster