Monthly Archives: April 2014


Credit Ratings


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Posted by Parvez Jabri

BEIJING: The man behind Beijing-based credit ratings agency Dagong says Chinese wisdom will help it take on mighty Western names that failed by not predicting the global financial crisis.

I think if you look at the entire picture of the international credit ratings sector, a lot of credit rating agencies have been influenced by the way of thinking of the Western ratings agencies, said the firms chairman Guan Jianzhong.

So this is something that we need to change, he told AFP after making a presentation to Chinese and foreign media outlining the firms Guiding Principles of Credit Rating, in which he said Dagong wants to offer the world Chinese wisdom on ratings.

However, while Guan is quick to promote his agencys superiority, he has had to bat away accusations it is anti-Western while pandering to Beijing and overlooking serious problems in Chinas economy.

Dagong — founded 20 years ago — remains far less prominent than its long-established Western competitors, though it has begun making a splash in international media.

It hit the headlines in August 2011 when it cut its main rating for US sovereign debt from A+ to A, with a negative outlook, after a standoff over Washingtons debt ceiling that led to fears of a potentially globally destabilising US default.

Standard amp; Poors of the US also slapped Washington with a credit downgrade that month, reducing it one notch to AA+ and denying it a coveted AAA rating for the first time.

Dagong — which can be translated as akin to great fairness — struck again in October, whittling the US sovereign credit rating to A- after another debt deadlock saw a two-week government shutdown.

Dagongs downgrades have come under suspicion as reflecting official concerns of Chinas government, the largest foreign holder of US Treasury debt that makes up part of the worlds biggest foreign exchange reserves.

But it has sought to take advantage of global anger with the so-called big three agencies — Samp;P, Moodys and Fitch — which were widely criticised for having given their highest ratings to the debt instruments whose failure helped spark the global financial crisis in 2008.

Guan presses the theme. The Western rating system is a failure, he said in his presentation. If we follow this Western way on credit ratings we will end up nowhere.

Western agencies only focused on the possibility of default, he said. The core theory of the Western ratings system is wrong. It cannot explain reality. In its methodology its chaos.

For our principle we take the probability of wealth creation as the basis for credit ratings. We take into consideration the maximum debt of a debtor and we also consider the outstanding debts of the debtor.

– Extension of the government? –


Nonetheless the reliability of Chinese economic statistics and the true situation of private and state-owned enterprises have been a source of concern for analysts for years.

Investors have questioned Chinese auditing standards, and scandals have erupted over the accounts of some foreign-listed Chinese companies.

Dagong also has to fight suspicions that it has a political agenda.

It has maintained Chinas foreign currency rating at AAA — its highest grade — and local currency at AA+, with a stable outlook, even as a debt audit by Beijing found local government liabilities had ballooned to almost $3 trillion by last June.

Guan acknowledges that he has been a member of Chinas ruling Communist Party since the age of 18, but said he has no links with the countrys top officials.

I can tell you for sure and with responsibility that personally I have no connection with the government and even the senior leadership of the Chinese Communist Party, he told AFP.

But his Guiding Principles of Credit Rating were put out in a booklet by the publishing company of the Peoples Daily newspaper, the party mouthpiece, using the red print and typeface typical of official publications.

Guan added that Dagong was wholly private-owned and that its goal of becoming a globally influential ratings agency means that it must be independent, impartial and objective.

This is very important for a credit rating agency to earn its credibility, he said.

Christopher Balding, who teaches economics at Peking Universitys HSBC Business School in Shenzhen, describes Dagongs ratings methodology as being on very safe ground, although the occasional use of terminology such as dialectical materialism can appear off the rails.

The real perception challenge, he said, was if Dagong was seen as too aggressively anti-Western and anti-Washington, despite the very real problems it and others have pointed out regarding the state of US government finances.

If they continue to play up this anti-Western, anti-US, pounding this into the ground, theyre going to essentially, from a marketing standpoint, be aligning themselves much closer at being seen as an extension of the government, whether they want to or not, Balding said.

But Guan suggested that Chinas economic rise and growing influence meant it should have a commensurate voice in ratings.

China is a big country sending out lots of capital, he said.

We should depend on our own credit rating institutions that are capable to do the work. We cannot simply think that Western credit rating institutions are always the best.

Copyright AFP (Agence France-Presse), 2014




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BlackBerry revenue plunges 64 percent

BlackBerry continued to struggle during the companys fiscal fourth quarter, experiencing a huge drop in revenue and a $423 million net loss.

Revenue for the fourth quarter of BlackBerrys fiscal 2014, which ended March 1, was approximately $976 million, down 64 percent from $2.7 billion in the same quarter in 2013.

[ Find out what topics and issues affect techs biggest names and news makers in the IDGE Insider CEO interview series. | Read Bill Snyders Techs Bottom Line blog for what the key business trends mean to you. ]

The companys $423 million net loss for the period compares to a $98 million profit for the year-earlier period. The loss, however, was smaller than analysts expected, and BlackBerrys shares were trading higher at the beginning of the trading day.

BlackBerry had $2.7 billion in cash, cash equivalents, and short- and long-term investments at the end of its fourth quarter, compared to $3.2 billion at the end of the previous three month period, it said.

BlackBerrys main problem continues to be that it doesnt sell enough phones. The company sold approximately 3.4 million BlackBerry smartphones to end users last quarter, including about 1.1 million phones running the BlackBerry 10 OS. A year earlier, the company said it sold 6 million smartphones.

While launching products that run BlackBerry 10, the company will continue to manufacture BlackBerry 7 OS devices and support the OS as long as there is demand, it said.

We are starting a new production run with Wistron on a BB OS device for worldwide distribution, and I think most of you know its the Bold, CEO John Chen said during a conference call regarding the results. Wistron is a company that designs and manufactures products such as phones and laptops.

BlackBerrys revenue breakdown for the quarter was approximately 37 percent for hardware, 56 percent for services and 7 percent for software and other revenue.

Chen said he is pleased with the progress the company made during the quarter against the strategy laid out three months ago. BlackBerry has reached a cost reduction target one quarter ahead of schedule, Chen said in a statement issued before the conference call.

During the conference call, Chen — who took over as BlackBerrys CEO in November — also repeated a turn-around plan he presented at Mobile World Congress last month. The companys fortunes will to a large extent depend on the success of the upcoming low-cost Z3 smartphone, the Classic QWERTY smartphone as well as management platform BES (BlackBerry Enterprise Service) 12 and the eBBM Suite. BBM Protected, the first product in the suite, will offer enterprise messaging with end-to-end encryption.

There are a lot of things to do, but BlackBerry has a strong long-term strategic plan in place to help with growth and profitability, Chen said.

The companys financial goals are to reach cash-flow break even at the end of the current fiscal year, and to reach profitability in fiscal 2016. Until that time the companys results will fluctuate, according to Chen.

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Credit Ratings


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The Derating Continues In Brazil As S&P Sours On Credit Outlook

Low growth prospects reflect both cyclical and structural factors, including investment as a share of GDP of only 18% in 2013 and a slowdown in growth in the labor force, the credit ratings agency said today. These factors underscore the

government’s diminished room to maneuver in the face of external shocks.

Nearly every known bank in Brazil was either put on credit watch negative or fell a notch on the Standard amp; Poor’s credit scale, including BTG Pactual, one of Brazil’s largest investment banks, and government behemoth Banco do Brasil Banco do Brasil.


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Swings in Credit Ratings Hint of Challenges Ahead for Colleges

March 4, 2014

Swings in Credit Ratings Hint of Challenges Ahead for Colleges

By Goldie Blumenstyk

From 2009 through 2013, the number of downgrades of colleges
credit ratings by Moodys Investors Service outpaced upgrades by
nearly five to one.

More evidence of colleges weakening financial picture? Yes, but
that picture is not as clear-cut as it might seem.

The period examined by The Chronicle covered the worst
financial crisis since the Great Depression, so those 141
downgrades versus 33 upgrades are not so surprising.


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RadioShack Shares Plunge On Fourth Quarter Results And Store Closing Plans

( RadioShack Corporation (NYSE: RSH) reported a bigger than expected loss for its fourth quarter, which included the vital holiday shopping period, and announced that it was closing up to 1,100 stores.

Shares of RSH have plunged over 20 percent in pre-market trading.

The company incurred a net loss for the quarter ended December 31, 2013 of $191.4 million, or negative $1.90 per diluted share, compared to a loss of $63.3 million, or negative $0.63 per diluted share, in the fourth quarter of 2012.

Net sales and operating revenues for the quarter of $935.4 million were down 20 percent from last year’s $1.17 billion. Comparable store sales were down 19 percent, which the company attributed to traffic declines and soft performance in the mobility business.

The net loss for the full year was $400.2 million, or negative $3.97 per diluted share, compared to a loss of $139.4 million, or negative $1.39 per diluted share, in 2012.

Net sales and operating revenues for the year of $3.43 billion were down 10 percent from last year’s $3.83 billion. Comparable store sales were down 8.8 percent for the year.

RadioShack says that it expects to close up to 1,100 stores under a proposed store closure program which is subject to the consent of lenders of the new financing described below. The company says that the stores “have been selected based on location, area demographics, lease life and financial performance.”

The closings will still leave the company with over 4,000 outlets.

The company completed new secured financing totaling $835 million in December. The new debt was provided byGE Capital, Corporate Retail Finance and Salus Capital Partners, LLC. RadioShack says that the new debt was used to refinance existing debt and other corporate purposes.

Chief executive officer Joseph C. Magnacca said of the results: Our fourth quarter financial results were driven by a holiday season characterized by lower store traffic, intense promotional activity particularly in consumer electronics, a very soft mobility marketplace and a few operational issues.”

He added: Our brand equity remains strong, reflected in the sales growth were seeing in our new Concept Stores which redefine the RadioShack store experience. We have also been encouraged by the positive response to our new brand positioning around Do It Together, which we kicked off with our award winning Super Bowl commercial.”


Credit Ratings


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Brickwork Ratings assigns credit ratings to Nectar Lifesciences Ltd

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Brickwork Ratings assigns credit ratings to Nectar Lifesciences Ltd –


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Silverman Rebound: The Developer Who Lost his Wife to Simon Cowell is …

It’s never easy to be the odd man out in a love triangle, but Mr. Silverman’s position was of an unusually public variety, each unfolding tabloid item ratcheting up the ridicule. The affair was rumored to have started when Mr. Silverman and Lauren, his wife of a decade, were vacationing with Mr. Cowell, a family friend they met while vacationing in Barbados. (Befriending Mr. Cowell in the first place was an act of unusual flash for the decidedly under-the-radar Mr. Silverman.)

Then it became clear that Ms. Silverman was not only sleeping with Mr. Cowell, but in love with him, and not only in love with him, but having his baby. Once the news broke of the divorce, the radiant couple graced the pages of the Post and the Daily Mail on almost daily basis–holding hands on the street, vacationing together on a yacht–the tabloids breathlessly documenting Ms. Silverman’s growing baby bump. In a soap operatic flourish, the baby was born on Valentine’s Day.

Mr. Silverman remained, for the most part, a third-paragraph player, relegated to the supporting role in the glare of ensuing press coverage. He was described as a “real estate mogul,” though none of the stories bothered to explain what he or his company did. Nor did Mr. Silverman, who appeared taken off-guard by his sudden fame, elucidate. His reticence was the polar opposite of Mr. Cowell and Ms. Silverman’s approach, who even now continue to provide a nonstop stream of quotes and photo-ops to the press.

“Being in the public spotlight is not something I envy. It’s never been my way,” Mr. Silverman said when he sat down for an interview with the Observer last week. “Privacy has tremendous value. I’ve tried to be as quiet as possible even though everyone wants to hear about this hoopla.”

Mr. Silverman received us in the conference room of his offices on the fifth floor of a Park Avenue building–a modest space with a set of keys on the reception desk for the locked bathrooms in the hall and tchotckes from the casino the Silvermans own in Panama piled in a corner of the conference room. He was clearly eager to redirect the spotlight that has been trained on him this past year to his business.

“I just wanted to refocus on what I do,” he said. “I am a regular person, not a tabloid thing. It was a fascinating experience, unexpected and shocking.”

In February, Mr. Silverman secured financing to build a 222-unit luxury rental building in Stamford, Conn., a project Andalex is partnering with local developer FD Rich Company to build. The Silvermans have long owned a waterfront home in Stamford, where a teenage Andrew and neighborhood teens would cruise around the coastline in their Boston Whalers.

“It’s unusual at 13 or 14 that you’re given the freedom to explore waterways by yourself, and it’s a lot of responsibility to take care of the boat,” his brother, Alex, recalled. “But he’s always kind of been a leader in his own mind and ahead of the ball game.”

Mr. Silverman is also hoping to close a deal on a Miami jai alai casino and sports venue owned by Florida Gaming Centers, which a branch of his company, Silvermark, had been poised to purchase for $115 million and $14 million in liabilities before Florida Gaming declared bankruptcy in August. Silvermark is the stalking horse bidder on the property, which is scheduled for an open bid at the end of this month.

He said gaming is an area that his company plans to focus on increasingly in the coming years, having been pleased with how the Panama casino has performed. (He declined to disclose revenues of either the Panama casino or the larger company.)

“We’re constantly looking at new opportunities–dog tracks, horse tracks, pari-mutuels, hippodromes,” he said.

They are focusing on places like Florida, rather than markets like Las Vegas, Colorado or New York, that have higher tax rates and “are a lot more competitive.”

In New York City, Mr. Silverman said, “there’s too much money chasing too few good deals. We’ve really been looking to secondary markets–North and South Carolina; our focus has basically been on markets where there is job growth in fracking or the oil industry. We’re a very yield-driven family.”

“Commercial is very difficult in New York,” he continued. “But I like Englewood Cliffs; it’s a very constrained market, and the rents keep going up.”

The Silverman brothers–groomed from a young age to take over the company that their father had named for them–are primarily responsible for Andalex now, with their 84-year-old father semi-retired.

Mr. Silverman recalled being allowed to sit in on his father’s business meetings as a child and working summers at the office as a teenager. “Ever since he was young, he has worked summers in the office. He knew that’s what his father wanted,” said Christophe DiFalco, a childhood friend who now does legal work for the company.

Mr. Silverman is now introducing his own son, Adam, who is 8, to the business in small doses, letting him listen in on business meetings at home as his father did with him, bringing together the two things he credits with keeping him sane during the Cowell debacle.

“It was a very difficult time in my life. I learned a lot, moved forward. My core business has continued to move forward. I learned a lot about myself as an individual, the importance of family. My focus has been on my son throughout the whole ordeal.”

Like Andrew before him, Adam attends the Riverdale School, and the two live in an Upper East Side co-op, just as Andrew did growing up.

“I think for both of us,” Mr. Silverman said, referencing for the first time the former Mrs. Silverman, “making sure our son has a normal environment is the primary focus.”

Friends and family also credit work with helping Mr. Silverman through a hellish time, saying that throughout it he didn’t lose his sense of humor.

“I give him a lot of credit for everything he went through and that he was able to keep his mind focused despite what was going on,” said Alex.

He described his sister-in-law’s scandal as “never something we would have expected”–their own parents have been married for 39 years–and he has known his own wife since they were in kindergarten together.

“I think a lot of people tried to paint a poor picture of my brother,” Alex said, going on to take the media to task for its positive portrayal of Andrew’s ex-wife. “You can’t take someone who has very poor roots and turn them into a golden child, but that’s what the media tried to do–to turn his ex-wife into a great person to benefit a celebrity.”

He said that the focus should be on Mr. Silverman, “a really great person who has moved on with his life.”

Friends and family were eager, indeed, to talk about what a caring and generous person Mr. Silverman was, calling all participants after a deal to thank them, inviting business partners and friends to a gun club he belongs to downtown. Mr. DiFalco said that when he got divorced several years ago, Mr. Silverman went out of his way to invite him to the Hamptons and ski vacations.

“He made sure that I felt like I always had someplace to go, so that I never felt alone,” Mr. DiFalco said.

Mr. Smith also praised Mr. Silverman’s hospitality, which his friends say numbers among his best qualities.

“He’s very good at setting the stage for a relatively nice time, letting people partake of one another,” said Mr. Smith. “He lets other people talk. It’s not that he’s a shrinking violet, but I don’t get the sense that he needs to monopolize to show his worth.”

In other words, he’s no celebrity.


Credit Ratings


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Fitch Ratings Provides Bloomberg Users Access to Credit Research

(The following statement was released by the rating agency)
LONDON, March 25 (Fitch) Fitch Ratings is pleased to announce
that its full
suite of credit ratings, research and commentary is now
available to Bloomberg
Professional service subscribers, which include 319,000
financial professionals
Fitchs contribution of our full credit research suite to the
Professional service underlines our commitment to providing
timely and objective
credit views to the market in real time.
The way in which subscribers use our content continues to
evolve, so the
opportunity to embed Fitch research into the users daily
workflow enables us to
maximize the application of Fitchs research using the Bloomberg
terminal, says
Ian Linnell, Global Analytical Head, Fitch Ratings.
Fitch Ratings publish independent and prospective credit
ratings, commentary and
research based on global expertise drawn from local market
knowledge, which
spans the fixed-income universe.
Fitch research covers a broad range of industry sectors, issuers
and securities
in more than 100 countries.
Ian Linnell
Global Analytical Head
Fitch Ratings
Tel: +44 20 3530 1093
30 North Colonnade
London E14 5GN
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549,
Email:; Peter Fitzpatrick, London, Tel:
+44 20 3530
1103, Email:
Additional information is available on


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NGP v. ATP: Should Overriding Royalty Interest Owners Be Concerned?

A recent bankruptcy court decision denying a royalty owner#39;s
motion for summary judgment is highly relevant to any investor that
currently owns a term royalty interest or is considering such an
investment. The United States Bankruptcy Court for the Southern
District of Texas found in NGP Capital Resources Co. v. ATP Oil
Gas Corp. (In re ATP Oil Gas Corp.), No. 12-3443,
2014 Bankr. LEXIS 33 (Bankr. SD Tex. Jan. 6, 2014) that issues of
material fact existed regarding whether certain prepetition term
overriding royalty transactions were properly characterized as debt
financings or real property transactions. While the court#39;s
conclusions in ATP were made in connection with a summary
judgment decision, the issues raised in the case are of
significance to parties currently involved in or considering
overriding royalty transactions because the court#39;s opinion
opens the door to the possibility that a bankruptcy trustee or
chapter 11 debtor-in-possession (DIP) may be able to
recharacterize such transactions as loans to the severe detriment
of the royalty owners.

Term Overriding Royalty Interests in Bankruptcy

Term overriding royalty interests are oil and gas interests in
which the owner receives a share of oil and gas produced at the
surface, free of the costs of production. Term overriding royalty
interests are limited interests in that they terminate upon the
occurrence of specified conditions, such as the achievement of a
particular volume of production or the realization of a specified
sum from the sale of oil or gas. Term overriding royalty interests
are often described in the industry as being similar to a
loan that is repaid through the production or
monetization of oil and gas. Even so, while term overriding royalty
interests may appear to have many characteristics of a loan, they
are generally characterized by state law as transfers of interests
in real property that have a limited duration or amount.

The real property transfer character of these transactions has
important implications in bankruptcy. If a prepetition overriding
royalty interest transaction is characterized as a transfer of real
property (ie, a sale), then the interest has effectively been
transferred from the debtor#39;s ownership and is not part of the
bankruptcy estate. See 11 USC. § 541(b)(4). The
trustee or DIP, therefore, has no power to sell, assign, or
transfer the interest. Additionally, if the transaction is
considered a sale that is substantially completed prepetition, the
transaction is not subject to the power of a trustee or DIP to
assume and assign or reject executory contracts. Thus, if an
overriding royalty transaction is considered a prepetition transfer
of real property, the transaction will be immune from many of the
powers of a bankruptcy trustee or DIP. 

Recognizing the real property transfer nature of an overriding
royalty interest, the Bankruptcy Code provides protection to owners
of certain categories of overriding royalty interests. For
instance, section 541(b)(4)(B) specifically excludes from property
of the estate any interest of the debtor in liquid or gaseous
hydrocarbons to the extent that … the debtor has transferred such
interest pursuant to a written conveyance of a production payment
[as defined by section 101(42A)] to an entity that does not
participate in the operation of the property from which such
production payment is transferred…. Because a
production payment is defined by section 101(42A) of
the Bankruptcy Code as a type of term overriding
royalty, this provision specifically excludes certain
overriding royalty interests from property of the estate. However,
the Bankruptcy Code is not the end of the analysis.

Even if an overriding royalty transaction does not fit strictly
within the Bankruptcy Code#39;s provisions related to certain
overriding royalty transactions, the transaction may nevertheless
be excluded from the debtor#39;s estate and therefore protected
based on state law. Conversely, even if a transaction appears to
fit within the Bankruptcy Code#39;s provisions excluding certain
overriding royalty interests from property of the estate, the
transaction may nevertheless fail to qualify as a
transfer of an interest of the debtor if
the court determines, as a threshold matter, that the overriding
royalty transaction is not a transfer, but rather a
disguised financing under applicable state law.

Parties frequently go to great lengths to include express
provisions demonstrating the real property transfer character of
the transaction in the underlying transactional documents (which
are typically styled as conveyances and/or purchase and sale
agreements). However, a recent bankruptcy court decision from the
Southern District of Texas calls into question the long-standing
treatment of these transactions as real property

NGP Capital Resources Co. v. ATP Oil Gas Corp. (In re
ATP Oil Gas Corp.)

In an uncommon move for an operator in chapter 11, ATP Oil
Gas Corporation (ATP) went on the offensive against its
royalty investors soon after the commencement of its bankruptcy
case, and it indicated that it would seek to recharacterize a
number of overriding royalty interest transactions as debt
financings. Before determining whether the overriding royalty
interests were excluded from property of ATP#39;s estate under the
terms of the Bankruptcy Code, the court first sought to determine
whether certain purported overriding royalty transactions were
actually real property conveyances (as the documents themselves
suggested) or whether they were debt instruments (based on the
economic substance of the transactions) under
applicable state law.  

Some of the contested transactions involved NGP Capital Resources
Company (NGP). Prepetition, ATP and NGP entered into a
series of agreements that the parties characterized as overriding
royalty transactions (the ORRI Transactions). Under the
ORRI Transactions, NGP purchased term overriding royalty interests
(Term ORRIs) related to six leases on two properties
for a total purchase price of $65 million. Pursuant to the relevant
documents, the Term ORRIs would remain in effect until the
cumulative royalty payments received by NGP equaled the original
purchase price plus interest at a Notional Rate of 13.2
percent per year. Further, if ATP was late in making payments, NGP
could impose a default rate of 14.5 percent per year. In effect,
these provisions virtually guaranteed NGP a certain rate of return
regardless of the rate of production, oil and gas prices, or
ATP#39;s interest in the leases. In fact, due to the structure of
the interest rate provisions, NGP actually stood to earn more from
the agreement if oil and gas production was low. In other words,
the interest rate provisions effectively shifted the risk of loss
on the investment to ATP. 

ATP argued, among other things, that the interest rate provisions
were inconsistent with the definition of a term overriding royalty
interest under Louisiana law. NGP countered that the text of the
Louisiana Mineral Code was broad enough to encompass a term
override with these types of provisions. The bankruptcy court
ultimately rejected NGP#39;s argument that Louisiana law was as
broad as NGP suggested and went on to examine the transaction#39;s
provisions in detail to determine whether they were consistent with
the transfer of an overriding royalty interest under Louisiana

As an initial matter, the court rejected the proposition that the
ORRI Transactions were secured financing transactions. However, the
court found that at least four aspects of the transactions
resembled an unsecured debt financing transaction. First, the
parties treated the NGP transaction like a loan, and NGP
represented it as one to the public. Second, the transaction had
several characteristics of a loan under accounting standards,
including GAAP. Third, the parties treated the transaction as a
loan for tax purposes. Fourth (and most importantly), because of
the interest rate provisions, income from the Term ORRIs did not
fluctuate based upon the revenues from the properties. Rather,
NGP#39;s rate of return remained relatively constant. Thus,
although the court found that ATP was expressly not obligated to
repay any amount to NGP and its obligation to make payments was, on
the face of the documents, entirely contingent on the production of
oil, it also concluded that the economic substance of the
transaction appeared to make the production condition an
artificial one. As the court noted: An ORRI that is
virtually certain to be satisfied in full from production is the
economic equivalent of an #39;obligation to repay#39; or an
unsecured loan.


While the court#39;s ruling in ATP was a denial of
NGP#39;s summary judgment motion and NGP may ultimately prevail at
trial, the issues raised in the case are of significance to parties
entering into overriding royalty transactions. Specifically, the
ATP decision suggests that despite artful drafting and the
long-standing treatment of such transactions as real property
transfers, a bankruptcy trustee or DIP may be able to
recharacterize a Term ORRI transaction as an unsecured financing,
to the detriment of the royalty owner. Further, given ATP#39;s
success in surviving a motion for summary judgment, there is the
potential that more debtors may take a similar approach,
potentially adding more uncertainty to transactions that were once
thought to be untouchable in the oil and gas industry.

ATP may eventually be regarded as an extraordinary
situation, but time will tell if there is indeed any lasting
precedent generated. Accordingly, parties entering into overriding
royalty transactions should review the court#39;s ruling in
ATP to better understand the risks, and structure their
transactions to minimize those risks.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.


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African ministers to mull AU finance options

African ministers to mull AU finance options

Thursday, March 27, 2014

ADDIS ABABA – African economy and finance officials are set to explore alternative sources of finance for the African Union (AU), according to a Thursday statement by the pan-African body.

A series of meetings – including the 7th meeting of African Ministers of Economy and Finance of the UN Economic Commission for Africa and of the AU, currently underway in Nigerias Abuja – will be held to discuss the issue, the statement said.

AU Commission Chairperson Ncosazana Dlamini-Zuma arrived in Abuja on Thursday to join the talks, the statement added.

African finance ministers will refer their recommendations to African heads of state and government when the latter meet for the next African summit, to be held in June in Malabo, capital of Equatorial Guinea.

Contributions from member states have been one of the ways the AU has traditionally secured financing. Not all members, however, have lived up to their commitments.

As a result, a few countries have had to make up for the shortfall. Egypt, currently suspended from the AU due to last summers military ouster of elected president Mohamed Morsi, has long been among the countries making extra contributions to the pan-African body.

Copyright copy; 2014Anadolu Agency