Credit Crunch affects high yield M&A

The guys at Tudor Pickering Holt have this to say:

"E&P M&A stumbling block (S&P1500 E&P $366) – Just another factor we’re thinking about. Standard high yield 101% change of control provisions make takeouts/mergers-of-equals more difficult (not impossible) without credit market availability. If refinancing frozen/difficult, where does acquirer get the bucks to buy in aquiree's debt at 101%? Says M&A game may default to big companies buying small ones or debt holders may face tough negotiations."

I think this is on point. Traditionally, E&P companies tend to have lower credit ratings, all else being equal, than industrial companies. This is due to the double whammy of higher capex requirements for a wasting asset company and commodity price risk.

--Flight to quality - Basis has blown out...compare to small/midcap E&P's
--FAS 157 implications - no goodwill, destruction of Shareholder's Equity as debt is MTM. See Sept 08 "CFO" magazine.
--Deep discounts for debt
--arbitrage..have asset values dropped along with bond prices? What does this say about "Going Concern" value?