Land Ocean announced Chairman’s pledged shares. of a similar amount to initially Core and then Sibo. This is documented.
Pledged shares is a fairly common way of raising funds in China and indeed when the Chinese stock market was suspended recently, share pledge share rules where relaxed to enable funds to be raised without shares being issued at a very low price.
Pledged shares means he will recover the Land Ocean shares when he repays the money that has been raised using the shares as security. It is in his interest to ensure that Land Ocean increases its’ MCap.
He will want RRL to do well, so that he can maximise his Land Ocean shares.
As controller he does it by having control over what happens, maximising LO’s revenue. He will ensure that LO’s credit can always be repaid and seek to take as much revenue as he can for LO, leaving nothing in the company for investors.
As you showed, the monies have been carefully balanced, just enough flow to repay the credit terms and cover overheads.
Sino would be the insurance policy for the money from LO, but by bringing the water flood revenues first and then drilling this insurance will not be needed.
Remember the $450M work forecast for LO ? Remember the $50M PO for undefined work, LO needed tat for governance
If The chairman of LO is an investor in SIBO then it is in his best interest to ensure RRL do well and for them to get credit facilities on good terms. So it is rather something LO shareholders would be interested in rather than RRL shareholders since it could be construed as a conflict of interest.
I'm not saying it's a bad deal, and neither of us know the term of the agreement but imo with LO being the designer, credit provider, and contractor for waterflood they will have the last say on whether it happens. Similarly the current well, their expertise was used to analyse previous well results, design and drill the well and fund it. If they thought it would be a dud they wouldn't have funded it.
They have too much jnvolvement from start to finish to be a simple credit provider.
I am not here to argue with anybody but the following statement you made is neither logical or accurate, hemce my comment.
"All I know is that if LO was my company and I was offering credit on such terms I would want significant input into how and where that money was spent. In fact only a fool would hand over the money for RRL to do as they wish."
"LO will have the right of veto over the whole project as they hold the purse strings."
You obviously have no experience of lending or credit facilities. If you do not trust the company with the money you are lending them you do NOT lend them the money.
In this case it is a moot point since LO's subsidiary is the service company doing the drilling and most of the operational side is being carried out by LO and RRDSL. So it is basically a partnership where Range set out what they want done and LO/RRDSL do it. Whilst LO/RRDSL will be providing Range with expert advice it is RRL's own oil experts who will make the final decision.
Obviously if you contact Investor Relations and they advise us in a Q&A that RRL is being run by LO and not RRL's board of directors then all shareholders will have a major problem with RRL since in the end it is the shareholders of RRL who should have control of RRL.
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