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Author eagle51     View Profile     Add to favourites     Ignore
Date posted 2018-04-26 23:18
Subject Re: OGA Letter   View parent message
Votes for this Posting Voted UP 12 times.
GC Trader - I have no axe to grind with you but there were some 'unusual' arrangements put in place that led to XEL being liquidated by a BVI insolvency practitioner after an application was made to the HIgh Court in BVI (XEL - ie the quoted vehicle was registered in the BVI) by the bondholders for it to be wound up.

The Bentley licence was held by Xcite Energy Resources (XER) - a UK registered company - to which the loans secured on the licence were made.

Shareholders were not told the full story about a guarantee given by XEL to the bondholders to pay to the lender the amount of any loans and interest unpaid by its subsidiary when the loans fell due for repayment. It was not possible (I tried) to examine this guarantee agreement because the BVI doesn't appear to have the equivalent of UK Companies House, at which key documents must be filed and available for inspection by interested parties.

The bondholders never served XER with a formal demand for repayment because it was clear they wanted to gain ownership of Bentley in a 'tax wrapper'. Tax losses automatically forfeit on a company's liquidation. IMO there would have been a much better chance of a UK licensed insolvency practitioner, whose conduct would have been subject to scrutiny by all kinds of people, selling Bentley on terms that, after repayment of the outstanding loans, left something to distribute to the parent and thence to shareholders. As it was, the whole liquidation process was notable for its total lack of transparency - no real surprise as the bondholders got to appoint the liquidator and no were accommodating when it came to agreeing fee levels.

In the end, the bondholders agreed to buy XER from the BVI liquidator for $1, in return for the bondholders forgiveness of the debt. Shareholders were told there were no better offers made (ie no-one had bid as much as the loan outstanding). There was no way of confirming this as far as I could tell.

So it isn't as simple as you present, GCT. I asked a senior lawyer who majors in insolvency for his view on the BHs winding up XEL under a residual guarantee, when no demand had been served on the debtor. There were some technical reasons he put forward around Bentley clearly being the only asset owned by the group and whether the legal niceties had been adhered to or not wasn't really the point, the main thing he pointed out was that it would cost a fortune in lawyers and barristers fees to find out a BVI's opinion on the matter (in court) and the results of such an action were totally unpredictable because BVI judges know which side their bread is buttered and always follow the money.

XEL's directors must have given their blessing to all this. They might have said: 'stuff off - we're asking for an administrative receiver to be appointed in the UK and you can trump that by petitioning a UK court for a UK liquidator to be appointed. Pay XEL for the tax losses and give us 10% of the action going forward and you can have XER, along with Bentley and your debt. It (or something like it) would have been worth a try.

But they didn't. A number of XEL's senior people, including that expert fund raiser Andrew Fairclough went with XER (now called Whalsea Energy.

Is all this smelly enough or have I missed something. The OGA were imo unprincipled cowards, who told a version of the truth only people from a different planet would have understood.

Realistically. Rupert Coles' conceit, matched only by his rank incompetence and greed (in the latter he was not alone), combined with a catastrophic and lasting fall in the oil price sunk XEL in the end. That said, the whole company should have been de-risked by a big fund-raise when the price was around £4 on the back of false promises about the next reserves upgrade. But Smith, Cole and Kew were more interested in trousering £4 each from sales of their free shares to see them ok in the event of failure. Shareholders should have run a mile but hindsight is a wonderful thing. Some of course did (all the institutions for a start.

Regardless of all the above it doesn't stop the way it happened in the end making dogshite smell fragrant. I hope Mt C and others catch syphilis (preferably from a toilet seat so they don't get to enjoy the 'catching' experience).

People cope with trauma (in this case huge financial losses and the feeling of being badly screwed over) in different ways. It is not imv appropriate for someone to tell another how s/he should act to deal with what they've lost or otherwise been parted from . Whichever way they want as long as it's not illegal would be my suggestion. Closure will eventually come -it just takes some longer than others - leave them be.

Apologies - I haven't checked for typos and it all happened a long time ago now. Feel free to correct any mistakes - everything is from recall only

Hope whatever those who lost on XEL put any remaining money into has flown and will continue to do so. I still scratch my head at less than 50 cents barrel for 1P NS oil - heavy or not; I actually do believe they knew how to flow it (reasonably) economically.

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