Shareholders - winners
As it becomes increasingly likely that Dana Gas will restructure its debt, shareholders will be breathing a sigh of relief. Had the company defaulted on the debt, it would have risked losing the assets that were held as a collateral against the bond. Losing substance at a time when the company is trying to diversify out of its core markets and retain its asset base until its gas production is matched by receivables from host countries Egypt and Iraq would have dealt a potentially fatal blow to an entity that is vulnerable but has significant growth potential. Removing the threat of default and buying time to accumulate enough cash to repay its creditors should lead to a significant rebound in Dana’s stock. Some experts predict that the more adventurous among equity investors are already building a position to profit from a rebound.
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