http://www.gulfkeystone.com/ The firms exploration programme in Algeria is going well and "the shares look good value", say the Investors Chronicle. Your comments please. goal.

Sunday Times : ONE-TIME stock market darling Gulf Keystone Petroleum is close to a deal with creditors that will wipe out its investors but allow the stricken producer to survive.

The company, which pumps oil from a big field in Kurdistan, northern Iraq, was worth £3.6bn in 2012. The plunging price of crude, Kurdistan's inability to pay for oil, the incursion of Isis terrorists into Kurdish territory and Gulf Keystone's huge debts combined to cause its near-collapse. As of Friday, its stock traded at 4.85p, 99% below its high.

The company is this weekend haggling over the final details of a two-part rescue plan. Creditors have agreed to write off most of the $575m (£430m) due next year as part of a debt-for-equity swap that will leave them as majority owners of the shares.

Gulf Keystone is also expected to launch an equity fundraising to bring in about $40m to bolster its balance sheet. It is thought that a core of institutional investors have agreed to back the financing. The final figure is being negotiated this weekend. The investors are betting that Gulf Keystone, shorn of its crippling debt burden, could recover strongly. Its Shaikan field produces 37,000 barrels a day, the Kurdish regional government has begun to make more regular payments and a new management team has banished the boardroom in-fighting that once plagued the producer. Gulf Keystone declined to comment.

shame i banked my profit here

shame i banked my profit here
========
Well done you!

was short at 6.25 but got bored so finally cashed in at 5.00 or perhaps a fraction lower

Worth shorting now???

ask yourself what upside

So you think it is still worth shorting then?

did i say that?

So you answered a question with a question????.....
Thank you.

ok, i'll be more blunt ...... make up your own mind

That's m ore like it....:-)
Thanks.....

chuckle

Most unpleasant.

Balance sheet restructuring
http://www.moneyam.com/action/news/showArticle?id=5379391

Cantor comment:
"Our view: GKP has announced today a significant, and much needed, balance sheet restructuring. Effectively, the company will undertake a debt equitisation of over US$500m of its current indebtedness (including accrued interest) in addition to an equity capital raise of between US$20m and US$25m through an open offer. This would leave GKP with a much reduced debt position of US$100m, and a sufficient capital position to continue to develop its flagship Shaikan field in Kurdistan, Iraq. Whilst there will be significant dilution to existing equity holders, we are encouraged by GKP’s approach to retaining a proportion of value for shareholders, given the extremely challenging sector environment, particularly for operators in Kurdistan. We keep our TP and recommendation Under Review whilst we update our numbers following today’s announcement.

· Significant debt reduction will improve liquidity – GKP has transformed its balance sheet following a significant debt reduction from over US$600m to US$100m through the conversion of over US$500m of existing debt into equity by way of a UK scheme of arrangement among the company, the Guaranteed Noteholders and the Convertible Bondholders. Liquidity will be boosted through an equity raise of US$20-25m, a reduction of financing costs and the removal of the US$32.5m Debt Service Reserve Account covenant. This increase in liquidity will allow GKP to continue trading and developing the Shaikan field. It is expected to allow the implementation of the company’s near-term investment plan to maintain production at 40,000bopd with the potential to increase production to 55,000bopd

· Shareholder dilution and re-investment option – Current shareholders’ ownership of the company will be diluted to 5%; however, shareholders will have the ability to re-invest in GKP by participating in the US$25m Open Offer for 10% of GKP’s equity at closing of the restructuring.

· Pro forma capitalisation post restructuring – Upon completion of the restructuring and assuming the open offer is fully subscribed, Guaranteed Noteholders will retain US$100m of reinstated notes and will receive new common shares representing 65.5% of the equity of GKP post-closing, and convertible bondholders will receive new common shares representing 20% of the equity of GKP post-closing. Assuming the Open Offer is fully subscribed, Shareholders will own up to 14.5% of the equity of GKP post-closing."

great shenanigans going on here this morning
sp up about 38% with 30m traded .... but no news
just a big bear squeeze? ..... who knows

http://www.alignresearch.co.uk/oil/gulf-keystone-petroleum-arbitrage-opportunity/

GULF KEYSTONE PETROLEUM – ARBITRAGE OPPORTUNITY
I last wrote about GKP HERE in which I highlighted that there was “value” potentially to be found in the capital structure of GKP and in particular the Convertible bonds. As it turned out, the proposed restructuring agreement handed the lion’s share of the company value to the Senior note holders with the Cnv bonds holders having a seat at the table and the crumbs being left for the Ord shareholders (and for which they potentially have to stump again per the open offer element of the restructure proposal).

In recent days the stock price has risen from the lows of c.2.5p and set the bulletin boards alight with a multitude of theories. Here are the reasons we see for the rise:

1. As Danny Fortson highlighted in the Sunday Times yesterday, the recapitalised GKP is likely to be a tasty target for a number of potential oil majors as, say what you will, their Shaikan fields DO hold voluminous amounts of the black stuff.

2. “Borrow” on the stock is now being called and it is damn near impossible to short the shares (I know I tried today) – this is causing a scramble for the exit amongst the shorters and is always an ever present danger when shorting a company.

3. More speculative rumours that the company is now a takeover target (I personally do not see this) and,

4. A realisation that the restructured company could be worth anywhere from £500m-£800m with a largely debt free balance sheet and production ramped to 55,000 bopd this equates to around 2.13 – 3.5 pence per share post the issue of a circa 23bn new shares.

To conclude, we personally see the equity as too risky to purchase at this level and indeed open to a sharp downwards de-rating in the event that the restructuring agreement is voted through (and I would be absolutely amazed if it wasn’t). The senior bonds are probably too expensive to purchase due to the minimal nominal amount required ($200,000) for all but the most well heeled of investors (but we do still see value in them even after the rise back to par given the sheer cut of the equity they are taking). So that leaves the convertible bonds…

At a recent price of 24c on the dollar and assuming a purchase of the minimum $200,000 nominal, the holder of these bonds will receive approx 2.8m Ord shares on the restructure. Cost of this at the current FX rate is around £36,000. With the equity current trading at 5.6p then these shares are worth approx £156,000. This is a massive arbitrage opportunity but before you go out and try to put the arb on there is one glaring problem – that is that the underlying stock is currently unborrowable! Should the restructuring agreement not be voted through then you would actually win in this instance however with a 100% hedged arb as you would make £156,000 on the equity short whilst potentially losing £36k on the bonds (should the Senior note holders take all the value and there be nothing left for the convertible holders).

In the alternate, should the equity be bid for as has been speculated, then depending on the bid level your losses are open ended on the short equity side whilst the gain is capped at @ £113,000 on the bonds. In fact any such bid would need only to be north of 10p to incur losses. There is no guarantee the Conv bonds would trade towards par too. However, I reiterate that I personally see a bid for the equity as a real rank outsider.

All the above being said, for the convertible bonds to thus lose a holder money the stock would have to trade below 1.28p on a post restructure basis at the current offer price of 24c on the dollar. With c.23bn shares in issue this equates to an equity value of c.£300m. I personally expect the stock to trade with a cleaned up balance sheet with a value of around 5-6 times cash flow which would be approx £700m depending upon the price of oil assumed.

Looks like another heavy day's trading a head again.

still looks well avoided having read the above
the brave may short

I see a 1p a share bid has been tabled by DNO.....