November 13, 2009
David Feldman will be a panelist at the Financial Executive Institute seminar entitled, "Where’s the Money? Finding Public vs. Private Capital Today."
David Feldman's book, Reverse Mergers: Taking a Company
Public Without an IPO, now in its third printing, was published in 2006
by Bloomberg Press (available on http://www.amazon.com).
View David Feldman's reverse merger blog at www.reversemergerblog.com.
David Feldman is a contributor to PIPES: Revised and Updated Edition - A Guide to Private Investments in Public Equity (Bloomberg Press, 2005) available on
http://www.amazon.com.
Dov Scherzer is the U.S. contributor to the British
treatise, Internet Law and Regulation (Sweet & Maxwell, 2d Ed. 1997;
3d Ed. 2002; 4th ed. 2007),
Available Here.
Dov Scherzer is the U.S. contributor to the British
treatise, Electronic Signatures Law and Regulation (Sweet & Maxwell,
1st Ed. 2004),
Available Here.
In the News
David Feldman quoted in McGraw-Hill's Platts.com in an article on SPACs in November 2008
NTR ACQUISITION FACES TIGHTENING DEADLINE
In hard times, all bets appear to be off for refinery deal
by Leslie Moore
November,
2008
New York--Time is slipping away for NTR Acquisition, the blank check US company overseen by CEO Mario Rodriguez established to buy a small heavy crude refinery that has until early 2009 to make a deal.
"The market has been undeniably challenging," Rodriguez said November 17. While refinery industry balance sheets are in relatively decent shape on a historic basis, "investing in refineries is more challenging because of a lack of access to debt." Rodriguez said. "Banks are not lending to other banks, much less to a refiner."
According to NTR Acquisition's most recent securities filing, the company has until January 30, 2009, to make an acquisition or else it may dissolve. The company was first incorporated by initial investors in June 2006, then went public in January 2007, raising about $230 million from new unitholders.
But almost two years after it went public, there "is no assurance that the company will be able to successfully complete an Initial Business Combination within the time frame discussed...That factor and the company's declining cash available outside of the Trust Account raise doubts about the company's ability to continue as a going concern," said NTR's most recent 10-Q, filed November 11.
The investment vehicle holds $246.5 million. It must spend at least 80% of the balance of the trust on an acquisition. Rodriguez said NTR has "been able to get people to commit to lend," but at higher terms. "The business has to be able to back up" the higher lending rates to be economic, he said.
A SPAC, as blank check or special acquisition companies are also called, can revise the business plan as long as investors support the change in strategy, said corporate finance lawyer David Feldman of Feldman Weinstein & Smith (ON 8/18). They can also try to cajole investors to grant them a deadline extension, he said.
Asked whether the board planned to revise its strategic focus, Rodriguez said: "We have not had discussions with the board" about a revised outlook. He said he did not know the date of the next board meeting, and declined to say what specific opportunities NTR has recently considered.
But "our charter talks about energy in general...we would not do something outside of what we feel confident executing," he said. And NTR's comfort level continues to be buying a modest-sized refinery, emulating the business model of niche refiners Frontier Oil and Holly Corporation, positioning it to play up a heavy/light crude differential, said Rodriguez.
NTR in April dropped its $321.5 million bid for Kern Oil & Refining's 27,000 b/d refinery in Bakersfield, California, after investors rejected the deal as the "golden" sector morphed into a margin loser on strong crude price gains and California's weak gasoline demand. NTR had pressed for a price lower than the one first made in 2007, but Kern was unwilling, Rodriguez said (ON 4/7). The deal would have included a $35 million investment from Occidental Petroleum in the form of a convertible bond. Occidental did not respond to queries on November 17 as to whether the company was still interested in supporting a deal with NTR.
NTR had recently considered a corn-based ethanol investment, said Rodriguez, without giving more detail. But given current gasoline spreads, "renewables are going to be very challenging," he said. Even with its government subsidy, ethanol has been a chronic uneconomic loser in the past few months amid deflating gasoline prices. Rodriguez said "significant shrinkage" in demand is expected in ethanol. "It's hard to make a business case to investors," Rodriguez said.
Rodriguez would not say where an ideal target price for crude oil stands. "This is a margin business," Rodriguez said. "I don't care about the commodity price; I care about the stability of them (the prices) and if you can make the returns work," he said, declining to say what margins are necessary to make a deal economic.--Leslie Moore Mira
