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Gold/Mining/Energy : Royal Oak-RYO

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To: JCgold3 who wrote (860)	3/29/1998 10:03:00 AM
From: JCgold3	Read Replies (1) of 1706

I just read on the Yahoo Board that there is a Tuesday meeting in Chicago with the unsecured subordinated debt holders. This may be Peggy's opportunity to present them with a proposal to: - reject the Trilon proposal which will only put their original bond in more jeopardy than its ever been - replace Trilon with a consolidated debt package which covers their original notes which totaled US$239 million at year end 1996, the $120 million that they would need to cover Kemess implementation, early start-up, and accounts payable, plus any other debt they might have including the $44 million which would have been covered by the $120 million note from Trilon. I would think that this would be very attractive to the writers of the subordinated senior notes as they are still facing the prospect of clients losing their whole investment if the POG doesn't increase in the short to intermediate term. They would jump to the front of the line in terms of having their investment secured by Kemess, maybe Peggy throws in a little equity that dilutes the stock 10%, and they are only dependent upon Kemess numbers coming within reasonable proximity of their estimates to guarantee a reasonable ROI. The Senior Subordinated Notes were 10 year notes at 11%. A similar arrangement with new notes that are secured by Kemess with a little equity on the side would appear to be a great deal all the way around including us shareholders. All of this is speculative on my part but IMHO Peggy has something like this in mind. To really go out on a limb, if she does complete some type of transaction that consolidates and spreads out RYO debt over a 10 year period, she'll probably go after a major acquisition of her own within a year once Kemess is in full production, providing cash flow, and the stock price has recovered enough to make a stock purchase feasible. Comments?

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