Stories like this make me rage.
- Perpetual Energy sells a bunch of crap wells to a new company (Sequoia) for $1.
Quote:
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The case has its origins in the reorganization of Perpetual Energy in 2016. That Calgary-based company transferred many of its money-losing properties to an associated company. Then Sequoia, which was founded by a pair of Chinese investors that same year, acquired those assets in a deal for $1.
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- Not to the company mind you, to its directors, thereby bypassing AER review of its obligations.
- Perpetual Energy then splits into two companies (Rubellite), run by the same team, with the majority of assets going to the new company, thereby limiting liabilities
Quote:
In 2021, while the bankruptcy battle was ongoing, Perpetual stored the majority of its assets into a new company called Rubellite Energy, which would have the same employees and office space as Perpetual.
The OWA and PWC opposed the move in court, arguing it would diminish how much money could be recovered if Perpetual lost the bankruptcy case.
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Quote:
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Perpetual chief executive Sue Riddell Rose described the move differently, calling it a way for "Perpetual shareholders to benefit through Rubellite to unlock the value of these high-quality assets while at the same time providing a full capital solution, reducing Perpetual's leverage and improving its liquidity to surface value from Perpetual's remaining asset base."
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Gag!!
- Sure enough Sequoia goes belly up, leaving ups to $200M of cleanup liabilities
Quote:
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With Sequoia, the OWA is expecting to inherit 1,800 to 2,000 more wells, in addition to the company's other infrastructure, such as pipelines. The estimated clean-up cost of the Sequoia properties is about $200 million.
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- Perpetual is sued by the trustee, but the potential length of the trial coupled with the limited amount of recoverable assets left in Perpetual results in a settlement, with no admission of fault
Quote:
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"The settlement offer is approximately equal to the current market capitalization of Perpetual," he said. "Even if the trustee is successful ultimately, the Perpetual defendants are unlikely to be able to pay any significant monetary judgment."
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- With that settled, the management recognized amazing synergy to merge Perpetual and Rubellite back together, free of liability
Quote:
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When the merger was announced, Riddell Rose described the deal as providing shareholders with "valuable synergies, both quantitative and qualitative."
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Gag!!!
https://www.cbc.ca/news/canada/calga...ells-1.7336635
This kind of BS makes me loath the entire industry, admittedly unfairly, but loath it I do.