To: thackney
Energy XXI managed to sell $1.25 billion in second-lien notes at 12%. In doing so they subordinated their existing $750 million in senior notes. Those notes were trading at a yield of less than 2% last April; now they yield 26% (according to Finras TRACE site). Juicy, huh? Only if EXXI survives. Its shares are down 85% from last June, when it paid $2.3 billion to acquire rival EPL Oil & Gas at the peak of the market. Without higher oil prices theres little chance the company will be able to generate any profits from its vast collection of mature oil fields in the shallow waters of the Gulf of Mexico.What's interesting about this company is that it chose to borrow more money instead of issuing stock, despite its massive debt load relative to stockholder equity even before the new debt issue. Some of these natural resource CEO's are like degenerate gamblers.
4 posted on
03/27/2015 5:38:52 AM PDT by
Zhang Fei
(Let us pray that peace be now restored to the world and that God will preserve it always.)
To: Zhang Fei
What's interesting about this company is that it chose to borrow more money instead of issuing stock, despite its massive debt load relative to stockholder equity even before the new debt issue. I would expect few wanted to buy more stock in a company so loaded up with debt. Some of these firms have more liabilities than assets at the current oil price.
5 posted on
03/27/2015 5:48:34 AM PDT by
thackney
(life is fragile, handle with prayer)
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