Not as nice as they look.
Screwing over hedge-fund creditors: It’s the kind of thing you’d expect from an Argentina. A Greece. Maybe a Ukraine or a Puerto Rico. But Canada? Our friendly, solvent, annoyingly-energy-rich neighbor to the north? For shame. The maple leaf flies low over the Albertan oil fields this day.
When Mudrick Capital Management LP’s David Kirsch asked the Alberta oil company he’d lent millions to if it was about to cut a deal with other creditors and leave him out, he says management told him such a thing would be “un-Canadian.”
Calgary-based Lightstream Resources Ltd. did just that, according to the anecdote recounted by Kirsch in a lawsuit his firm filed against the company last month, the second from a U.S. hedge fund since the July 2 debt exchange….
“It’s just a restructuring where you get screwed,” said Mark Wisniewski, a bond manager in Toronto at Sprott Asset Management LP who doesn’t hold Lightstream’s debt, but is following the case. “You got completely subordinated by a deal by a bunch of bondholders.”