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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (125231)	10/26/2009 8:47:56 PM
From: Ed Ajootian	1 Recommendation Respond to of 206175

Dale, MHR -- I assumed that they would have had to use most of the availability on the new facility to pay off their existing one (which has $23.5 M drawn I believe), since its not possible to have 2 "senior secured facilities" at once (i.e. one would have to be subordinated to the other). Also, I know Evans is a superstar but MHR doesn't have near enough cash flow to support $50 M of debt at this point, and if he didn't pay off the existing line that is how much debt he would have. But I just re-read the PR and it mentions nothing about paying off the existing facility, weird stuff. I guess we'll find out more facts either when the 8K comes out or when the 3Q 10Q comes out at the latest.

To: Dale Baker who wrote (125231)	10/27/2009 8:50:26 AM
From: Ed Ajootian	Read Replies (1) \| Respond to of 206175

Dale, followup on MHR -- I didn't mean to downplay them getting that new facility. $150M is a big step up from where the old one was with CIT, $65 M (see PR that announced the old one at petroresourcescorp.com , issued 9/9/08). Also, given the problems that CIT is having, its not at all certain that CIT would have been in a position to increase the availability on that line in any event. The days of 4:1 or 5:1 leverage on new acquisitions are over unfortunately. I'm not sure what the banks will lend these days. A wild hunch would be, say, 2:1. So if MHR can do a quick equity raise of $10 M that would mean they could then go out and do a $30 M acquisition, with the balance of the funds coming from this new line. But the ball doesn't really start to roll until they raise some more equity, the way I see it.