bizaro86

An appeal is an interesting one here. My understanding (and I haven't acquired a law degree since my first post in the thread) is that WIN would have to post security for the judgement for them to appeal. They maybe could do so with the proceeds from the asset sales, but it would definitely add balance sheet stress and uncertainty. Unfortunately (and this is where Aurelius is probably not acting with totally clean hands) I doubt Aurelius will be inclined to settle. Based on my recollection of the Pennzoil debacle, if WIN files for Chp 11 they can appeal without putting up collateral. That is obviously attractive for them, and they could probably do a debt to equity swap for more flexibility, get a bit of a discount on the Uniti lease and give management huge equity incentives. That outcome doesn't seem better from a bondholders perspective, but if Aurelius has a big huge CDS position that changes the incentives on their side of the table as well. Aurelius released a letter today basically daring them to appeal. It isn't the sort of thing you would do if you were planning on having constructive settlement discussions. I think the Uniti debt is potentially attractive. I took a tracker position to keep following it. The incentives for the parties involved seem to point to a WIN Chp 11 filing at the same time they appeal. At that point I would expect Uniti to suspend their dividend and for their bond prices to tumble dramatically. If that happens I think they'll be a buy, as WIN needs the lease and the debt would still be money good even if the lease payments get negotiated down somewhat.

If I held WIN notes in 2015, I would have been annoyed and sold at a loss. But I'm just a small fish. If I had a few hundred million in WIN notes I definitely would have looked at suing to enforce the indenture. That's the biggest reason I personally like this decision. I think WIN was playing fast and loose with investor protections. Nobody called them on it, because most credit investors aren't activist. But I think it's good for the markets if public companies have to respect their contracts and obligations. My two cents obviously, and different points of view are likely just as valid. I have no position here and am unlikely to start one. (Unless maybe Uniti has some beaten down debt issues or something, I might try and look into that if I get some time)

A striking feature in this case is that a majority of bond investors followed through with Windstream. Majority votes and related "strategies" are not ideal but may be the best of bad options to align incentives, on a net basis, for all participants. I think its relevant (and so did the judge, who mentioned it) that of the original owners of the bonds in question, less than a majority voted to waive the default. Windstream got a large majority of the bonds that the exchanged into that indenture, but without that (pretty dodgy, imo) exchange, they wouldn't have had the majority and wouldn't have a waiver of the default. The transaction being a sale-leaseback seems pretty straightforward to me, so I doubt that's very likely to change on appeal. Maybe they can get the waiver of the default to stand somehow, that seemed less obvious to me.

The judge specifically addressed the argument of a delay barring the claim: Second, Services contends that the Trustee’s and Aurelius’s arguments are barred by the doctrine of laches. See Services PFFCL ¶ 265. In a similar vein, Services suggests that Aurelius’s request for relief should be rejected because Aurelius failed to seek emergency relief to prevent the Third Supplemental Indenture from taking effect. Id. ¶¶ 263-64. That is, Services argues that Aurelius undermined its means to cure any alleged default relating to the 2015 Transaction by waiting an excessive length of time before seeking to declare a default and that its failure to seek injunctive relief in the first instance defeats Aurelius and Trustee’s claims. See Tr. 742-43; see also Services Am. Countercls. ¶ 105. Translated into more colorful terms, Services contends that “the proverbial egg has not only been scrambled, but eaten and digested by marketplace investors long ago,” and, on that basis alone, the Court should deny the Trustee and Aurelius equitable relief. Docket No. 178 (“Services Opp’n”), at 43. There is some irony to these arguments insofar as Services, in the same breath, faults Aurelius for violating the Indenture’s no action clause by acting too hastily. Services PFFCL ¶¶ 258-62. But, regardless, Services’ argument is without merit for several reasons. First, “[t]he equitable doctrine of laches . . . does not apply to the delayed exercise of a contractual right.” DiStefano v. Maclay, 102 F. App’x 188, 190 (2d Cir. 2004). Second, Aurelius did promptly seek relief, raising the propriety of the 2017 Transactions in real time and filing its counterclaims only fifteen days after the Third Supplemental Indenture was signed. See Docket No. 72. Services cites — and the Court has found — no authority for the proposition that, in such circumstances, the failure to seek emergency injunctive relief is a bar on obtaining relief altogether. Third, and in any event, Services’ own counterclaims would defeat its argument, as Services puts at issue the very questions it asks the Court to ignore on the basis of Aurelius’s and Trustee’s supposed delay. And finally, in this respect, what is good for the goose is good for the gander: Services was well aware of Aurelius’s view that the 2017 Transaction was invalid when it directed the Trustee to sign the Third Supplemental Indenture. See, e.g., DX-155; DX-156; DX-157. To the extent that Services desired peace of mind — for either its own sake or the sake of investors in the New Notes — it presumably could have sought immediate judicial relief itself. Having failed to do so, it cannot now be heard to complain that it was prejudiced by the other parties’ delay. These compelling reasons aside, “[t]he determination of whether laches bars a [party] from equitable relief is entirely within the discretion of the trial court,” Tri-Star Pictures, Inc. v. Leisure Time Productions, B.V., 17 F.3d 38, 44 (2d Cir. 1994), and the Court concludes that there is no good reason to impose such a bar here. To be sure, granting relief to the Trustee and Aurelius at this juncture would undoubtedly have a significant (albeit hard to assess) impact on Services, investors, and the market generally. But that goes with the territory — and,presumably, investors took the risk of such relief into account, as the parties’ dispute was well known. The fact is that this case was litigated in real time and, given the stakes, proceeded from initial complaint to trial quickly. To accept Services’ argument would, in effect, immunize large public companies from scrutiny for corporate transactions unless emergency relief is sought and obtained. The law does not impose that burden on investors or the courts.

I read the decision. There were two main issues. Was the sale of the network a sale-leaseback? If so, they violated their covenants and had an event of default, which required them to buy back these bonds. I'm not a lawyer, but it seems pretty obviously yes. The second question was did they successfully weasel out of the default by converting other types of bonds into this class and getting them to waive the default. Still not a lawyer, and the judge ruled their machinations didn't count because the new debt wasn't allowed to vote under the indenture.

What's the thesis on PEA? Just that Goldsboro will get built? I had a big short position there during the Ikkuma deal as there was a huge spread. Seems binary to me, but maybe still a good risk-reward.

Your list of crashes depends how far backward you are looking. Calgary is down big earlier than the rest of Canada because of oil prices, but things seem to have startes to stabilize here, and valuations on basically every metric are way more reasonable. Vancouver/TO are much earlier in the bubble deflating process.

Those are registered parties, not all of which are realistic threats (the pro-life party isn't going to split many votes) and not all of which are conservative (the Alberta Party is a liberal rebrand)

I think the AECO issue is more a TCPL competence issue than a government regulation issue... I could be wrong of course, and Peyto might know better than me. I also think it's possible that publicly blaming the AER might get them to speed up which would of course help, whereas publicly blaming TCPL probably just gets you lower quality service. So not a big incentive to do so.

The biggest risk to the United conservative party in AB is the potential that Brian Jean (former leader of the Wild Rose Party) forms a splinter conservative group and splits the right wing vote again. He's talking/exploring the idea with donors/insiders right now. The vote split between wild rose/conservative parties is the biggest reason the NDP won last time. But politicians have big egos, and he very likely expected to win the leadership race after the parties merged. From a Peyto perspective, I don't think it will make much difference. Their biggest problem is the price of natural gas.

I'm not sure how I would offset cold/warm days. I tend to bucket days into two categories - the type where I can go outside and do stuff with my kids (skating, sledding, zoo, etc) and the type where it's too cold. Because we have the wide wariation in temperature, there are lots of days in winter where the highs are 0-10 degrees C, which is great for winter activities. I suspect we have a bigger variation than many places with similar average temperature in winter, which is lots of places. I googled average temperature new Hampshire and got Concord: https://www.usclimatedata.com/climate/new-hampshire/united-states/3199# January High/Low -1/-12 C Feb Hi/Low 2/-10 Calgary January High/Low 0/-13 C Feb Hi/Low 1/-12 I'm not sure how that compares to the rest of NH, but the difference isnt really that significant. I can run my business from anywhere with halfway decent Internet, but I like it here. Different strokes, obviously! I would guess we average ~3-5 days where it gets to -30C per year.

Weather apparently doesn’t count. Now, I'm in a weak position for my argument that it's nice living here (Calgary) because I had to get my furnace serviced today to keep up with the -30 C weather. But, the weather here isn't as bad as people think. We have a significant portion of relatively warm days in the winter because of a weather pattern known as chinooks. Plus, it is one of the sunniest major cities, which I think is relatively more important to people's well-being (and livability) than temperature. But on the other hand its pretty freakin' cold right now. I will still never move. Yep, that's what everyone in Alberta says... Well we have sunny days... or .... But it's a dry cold (yea, right). All you need to know is -30 C. That's COLD! I got a buddy in Edmonton who always fantasizes about moving to Toronto where it's warm lol. He'd do that in a second too if over here we didn't loose our minds with the houses. Those of us in Calgary can always cling to the fact that at least we don't live in Edmonton...

Weather apparently doesn’t count. Now, I'm in a weak position for my argument that it's nice living here (Calgary) because I had to get my furnace serviced today to keep up with the -30 C weather. But, the weather here isn't as bad as people think. We have a significant portion of relatively warm days in the winter because of a weather pattern known as chinooks. Plus, it is one of the sunniest major cities, which I think is relatively more important to people's well-being (and livability) than temperature. But on the other hand its pretty freakin' cold right now. I will still never move.

1. Those links cover it well. Abandonment requires all zones to be isolated from each other, generally with a bridge plug covered with a layer of cement. The lowest area with groundwater is also isolated. To cut and cap, the well is cut off below the surface, and covered with a vented cap, then with dirt. You didn't ask, but after all wells/facilities on a lease are abandoned, the lease is reclaimed. That requires the operator to put the land back to condition comparable to its original condition. For this reason, oilsands projects collect seeds and plant matter when they are building. That way they can plant the exact same species as were there originally. The cost of remediation often exceeds the cost of abandonment (sometimes greatly). 2. Yes. It's long and technical, but basically you have to demonstrate (via pressure data) that each zone is isolated from the others. 3. Yes. There is required data to be submitted to the regulator to get an abandonment complete. Also, the operator remains liable for future issues from the abandonment in perpetuity.

I think the AER will leave the requirement that companies can't make acquisitions unless they have an LMR greater than 2. That would stop the traditional big company plans of dealing with liabilities by selling a package of assets with NPV slightly greater than zero (because environmental liabilities approx equal value) to a junior who milks it along cheaply. That worked fine in a rising price environment, but poorly in an extended downturn. It will also stop the garbage barge issue (ie Lexin) which is a huge part of the current problem.

#eliG I agree this removes the environmental costs from industry. Previously the order was: Individual company equity holders -->industry Now it will be Individual company equity --> individual company debt owners --> industry The big companies (the ones who control CAPP) love this. They pay most of the orphan well levies, which have been rising dramatically. So this will save them money. They also have much better access to both debt and equity capital than juniors. The small companies are less excited. They don't pay much for orphan well levies anyway, so making them smaller doesn't move the needle. But they don't have access to the bond market or earnings-based lending. And now reserve based lenders will tighten their purse strings dramatically as they are effectively subordinated behind environmental liabilities. Given an individual well can range dramatically in liability, that puts them behind an uncertain value. (I once had to hire a scuba certified guy who also had alberta wellhead insurance to suspend a well that was underwater (ducks unlimited created a new wetland...). We could only find one guy who met the criteria to do the work, and from his pricing he realized that he had a 'moat' in the business of underwater well remediation....) I'm in favor of this as an Alberta resident/taxpayer, I think it's the right thing to do. But it will cause a lot of pain in the junior sector, and that's a group that has had a lot of external pain inflicted on them the last few years... The management class of these companies tend to be well off (==overpaid?) and are often politically active/donors. So they have clout here in AB. (Supreme court doesn't care about that, obviously...)

This is interesting indeed. I think in the short run it will all but freeze the lending market for junior oil and gas companies in Canada. Hard to lend with undefined priority claims ahead of you. In the long term I think one of the banks will build in house capacity to evaluate environmental liabilities and use it to take profitable market share. This should have the consequence of pushing the industry toward higher rate individual wells, as the cleanup liability is less per $ of value extracted, and that is so obvious even the banks should realize it soon enough, and preferentially lend on those assets, lowering the cost of capital for those plays.

Oh good. I know when I look at Dundee I always think, man this would be perfect if they just had a bit more of their NAV in illiquid microcap speculations.

I'm probably around 40-50% new users. Interestingly (from a very small sample size) they seem to be increasing their wallet share on individual customers. I've had a few people return for the same events multiple years in a row. I each case the number of feedback (proxy for transactions) those people had between stays had been growing year over year. So as new user growth slows they will need to take wallet share on existing users to maintain growth rate, which I think they can do even without adding experiences, restaurants, etc.

Yes, I find calendar slow to load. That would be something they could improve. On the other hand, there is a 0% change I move away from them over that issue. Also, I think more regulation of the space is likely to increase their moat as the incumbent. They are on the ground floor in every jurisdiction, so get integrated into the process. To create a competitor you need to launch at least nationwide (and probably world wide). When airbnb started they just launched their website everywhere. Now a competitor would need to integrate hundreds of municipal regulatory regimes at launch. Decent moat just from that... I tried to get some shares on a few secondary sites but couldn't find any. I'd definitely pay a $30B value for it, but I bet it comes out higher than that. Revenue/bookings are up huge since they announced that $100 MM EBITDA. I think this business is worth more than Booking.com.

I run rentals on airbnb in a major city catering towards business travel. I've never had anyone try to extend directly. I set up my own site to market independently. I put my prices 33% lower than airbnb prices, even though they only charge low single digit fees.more than 99% of my bookings come through them, even at the higher price point. Also, a significant percentage of my customers are staying for the first time on airbnb. They are growing very quickly, and their operating leverage is likely very high. I've interacted with them only a few times and paid many thousands in fees. Other factors: they are adding more tools for professional hosts. Their previous UI was very cludgy for managing multiple properties. Now it is much better, which should allow them to take market share in independent property managers, which is a big market in vacation areas. I received a survey from them awhile back asking whether I'd be interested in getting an advance on my payments (paid prior to check-in) for a discount. This would essentially be a factoring arrangement. I said no, as their proposed pricing tiers were very, very high (20%+ effective rates). However, running a hosting business eats working capital, and doesn't necessarily attract financially sophisticated people. I think there is a very good chance they will be able to deploy a few billion in float at double digit returns on that.

Oh for sure. Not saying it would be easy or that I could do a better job. It just seems to me that they have become a top-of-mind destination for family business owners looking to sell in the USA, and I think Europe would be a good place to look to expand that. At a certain number of generations on some of these businesses you'd think liquidity might get attractive, but you could still honor the idea of a family business by finding it a permanent home.

I'd love to see them start buying European companies in a bigger way. Lots of quality private businesses there. One from me that fits that theme would be Medela. They make pumps for expressing breast milk for babies. That has become a common requirement, and it isn't something people scrimp on. They make the most common brand used by hospitals, and the pumps are intuitive, high quality, and high priced. The company is private, so would need to be a negotiated transaction.

In a post-WEB world, Howard will carry more than a 1/14th weight on the board. He will be chair, and have the posthumous backing of his legendary father to "protect the culture." That will give him broad leeway to make decisions if that is what he wants. I agree that while I always felt he was unqualified, I thought he'd be essentially harmless. (Sort of like adding a university professor to a board - probably a waste of time but it's doubtful anyone listens to them so maybe no harm/no foul). If it turns out he's actively crazy that changes things. I think more information is likely necessary to determine that.

This is the primary reason why I think commercial airplanes will always have at least one pilot sitting in them during my lifetime.