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Gold/Mining/Energy : Royal Oak-RYO

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To: roger fontaine who wrote (1652)	3/26/1999 2:10:00 PM
From: Daniel Chisholm	Read Replies (2) of 1706

Another update, I got an "indication" for Royal Oak's bonds today, apparently the 12.75% are indicated at 18 bid 25 offer. I'll have to go over the numbers again, I was expecting a lower quote. Does it make sense that you can buy a claim on these assets at 25 cents on the dollar? Let me take a quick whack at it (without the balance sheet in front of me - hopefully I'll remember all the big bits). Trilon's CCAA (court supervised superpriority) financing (call it $10M US) comes first, then Trilon's $120M (US) senior. $175M (US) at 25 cents on the dollar is $43.75M (US). Add these numbers up and I get $174M US. Does this mean that the bonds are priced to indicate an expected liquidation value (or CCAA resolution "expection value") of the company (i.e., principally Kemess) of $174M? Anyone agree with me? Anyone disagree with me? Anyone listening at all? ;-) - Daniel

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