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This is how these guys operate highland. Every corporate / operational RNS is completely bamboozling.
Wow. Another interpretation of the deal. That's 3? Does the BOD not understand the deal, or is rubbish at communicating it?
Not quite my reading of the deal.
"the Facility is repayable by Scirocco upon Completion by way of a corresponding reduction to the consideration payable under the Asset Purchase"
So that would mean, that the loan does not get repaid by SCIR if the project gets scrapped after 3D seismic or drilling. The total cost for WEN would be 9.26 MUSD and SCIR would get 3 MUSD in such a scenario.
Next step (2) is FID SCIR would get additional 3 MUSD, in total 6 MUSD
Step 3, SCIR gets up to 8 MUSD (25% of WEN's share of gas revenue or profit). However, this payment will be reduced by paying back the loan of 6.25 MUSD. Net 7.75 MUSD (3+3+(8-6.25))
Step 4. Additional 2 MUSD if total productio reaches 50 Bscf. Total net for SCIR 9.25 MUSD.
This is just my understanding of the deal. No guarantee that I am correct in my assumptions. I am also a WEN holder and from previous discussions especially on the AEX board. WEN shareholders can't be trusted.
Highland - you need to subtract at least 10% for Gneiss in my opinion. And be more realistic about the timescales. And apply discounts to the future jam for risk and inflation. It all amounts to G&A costs.
I don’t see deal completing in 2022 or FID in 2023. First gas probably closer to 2026?
Thanks Truffler. 10 minutes in. https://www.youtube.com/watch?v=_MHsmym59ME
So, where does this leave us? Rough workings:-
1. 2022 - 3D seismic and CH1 drill -$6m cost, funded by loan and cancelled. $3m consideration received. Net - plus $3m.
2. 2023 - $3m on FID.
3. 2024 - start receiving 25%, up to $8m.
So, in the success case, SCIR gets $3m in 2023 and $8m in 2024. If no success, SCIR gets $3m.
This looks a lot better. But why oh why was this not made clear in the circular?
Thanks Truffler. Yes, the RNS could have been clearer on this matter; the wording is pretty ambiguous. Shame it had to be confirmed verbally via the LSE interview, but it's comforting to know that SCIR will be reimbursed for seismic costs incurred from Jan 2022 onwards (assuming the deal goes through smoothly).
I still don't think its a good deal though.
$6.5m facility agreement - loan gets 'cancelled' on completion of the APA but must be repaid if deal doesn't complete. Tom Reynolds explained in his 16 June LSE interview that the consideration under the APA will be increased by the costs funded by SCIR in the period to completion. On completion those costs are 'repaid to us by cancelling the loan'. The RNS/circular could have been a lot clearer.
Very disappointed in the result today. It is like being the victim of a fraud to suffer the loss here. We have to look for the heads of the board now before they cause any more damage. Next will be the sale of the remaining stake of HE1 and they may choose not to even tell us about it until year end account. They have been smeared and discredited here as their conduct is plain to see. That is a legacy that this board will carry around with them all their lifes. Nobody will trust them anymore as we don't. They are rotten to the core. The market doesn't believe them and shareholders don't.
Thank you to BD and all those who assisted him for all your work here. I look forward to the EGM which I have no doubt will lead to the resignation of the board. I can see those with great and specific knowledge are already forensically picking through the details of their previous actions. The truth shall prevail in the end. I am sickened by the disposal of this asset for their own reward in this underhand way.
Looking forward to ye being held to task in the EGM. I believe 2 weeks notice are needed.
The idea of the EAG deal was that the EAG guys do the work.
Nothing the Board does makes any sense. Shareholders are just getting screwed left, right and centre. It’s unbelievable that 66% of voters sided with them. Unless of course the people with their snouts in the trough bought heavily this week to covers their own arses
I get the feeling that the deal is structured so that SCIR has to pay for the 3D. One final kick in the spheres by Katherine Roe!
Very happy to be proven wrong of course.
Wa kers
I thought lenigas was bad and vowed never to go near one of his companies again but these muppets top his legacy !
They have ****ed shareholders over that's for sure.
I must admit I'm not 100 % sure either!
On another point what's the reckoning that Fitzpatrick is Prolific Basins too ???
Each time I read that highland matt it sounds to me like SCIR has to bear the costs of the cash calls until Completion (i.e. SCIR has to repay the loan). The wording is ambiguous.
Does anyone have a definitive answer on this?
"Subject to Completion occurring, the Facility is repayable by Scirocco upon Completion by way of a corresponding reduction to the consideration payable under the Asset Purchase Agreement. " This is in both the RNS and the Circular. This seems clear to me, but have I missed something elsewhere?
Thanks Aimster. I'll reread that section again tonight.
HighlandMatt
If the deal goes through the loan is to pay for Ruvuma development costs. It Does NOT have to be paid back.
It's having to pay the costs after the effective date which is the kicker.
So, where does this leave us? Rough workings:-
1. 2022 - 3D seismic and CH1 drill -$6m cost, funded by loan. $3m consideration received. Net - minus $3m.
2. 2023 - $3m on FID. Net zero.
3. 2024 - start receiving 25%, up to $8m.
So, in the success case, SCIR gets $8m in 2024. If no success, SCIR is $3m in hock to WEN. I hope the loan has a really long repayment profile.