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Don't worry avo. price pick up in Autumn
Casa, you don’t seem to realise that - apart from any cash - the bondholders and JPM would have to SELL the assets to recover their money.
So it becomes a matter of judgement as to what price one thinks they could achieve. I think it would be a pretty good one - look at the NPV.
Hi Cranleigh WADR I beg to differ,the potential worth of an unbuilt mine is hard to value , and is probably far less than the majority here believe(bear in mind that as we stand the cost of bringing it to production is still measured in the billions). The current shareholders investment would of course be worth zero, but I suspect Ginas royalty would be harder to shake.
I base my investing decisions on the verifiable rather than the speculative hence my analysis below.I also suspect that the bondholders view will be nearer to mine than yours!!
Casa, I think you are going down the wrong path.
The bondholders’ security is little to do with balance sheet numbers, and everything to do with what they and JPM could sell a part-finished mine with a disruptive product, a 100+ year prospective life and over 10mtpa of TorPs for - most likely to a mining and/or fertiliser company.
My guess is, stripped of the current Shareholders and Gina’s royalty, that would be a very pretty penny indeed.
Hi Milo, maybe I've missed something, but why are you assuming a 15% return? It was my understanding we were expecting a B credit rating, which would carry around a 6% return.. which being Sirius, will probably be 8%..
Hi Milo, as has already been pointed out the bonds to be sold are straight "senior secured guaranteed" bonds with no convertibility.
What your question did remind me, though, was that I had been pondering the question of "what SXX is currently worth?"ie what is the value of the asset against which these bonds will be secured, and its a question the putative bond holders will no doubt be asking, and its a question which fundamentally effects the investment case(both the bondholders and mine!)
So what is SXX worth - well one obvious answer is the market cap , around £1.1 bill at the mo.
BUT if you are to be a holder of secured bonds the market cap is useless,as that will quickly vanish if the company fails and you want your money , in any case you can't just ask the shareholders to give you your money back!, that's why shareholding is called limited liability
So the bonds are to be secured by "real" assets, cash in the bank or owed, plant, property, brand value etc.
In SXX case it looks roughly like this:
At the end of 2018 the accounts showed assets of roughly £1bill, of which £290 mill was cash,£670 mill was PPE (property,plant and equipment)and £25 mill was intangibles(mining rights??)
Against that was nearly £500 mill of liabilities(CB's,trade payables and Gina)
So to an accountant there was around half a billion of value in the company to pay back the bondholders , if all went sour.
Since then SXX have acquired about £300 mill from the placing and open offer and around £320 mill from the ST2 CB's taking the total up to ~£1.1bill, but they have spent a significant sum this year , the amount of which I cannot find any basis to estimate except "finger in the air"so i'll guess, £50 mill per month ie £350 mill .
The prospective holders of the bonds then are looking at a company whose liquid(ish ?)assets are maybe £700-750 mill diminishing by maybe £50 mill per month, but of course that is BEFORE the bond income, which , by definition is added to HUR's assets and when spent should add to the notional value of the company. So I think its reasonable to assume that the chances of the first bond sale succeeding are quite good, what becomes slightly more imponderable is that as real money is turned into a not yet producing mine, the plus side of the balance sheet does not rise in tandem with the minus side, but that's a story for another day and another post!!
the sp was 16.30 at 1630 (430) why can't the market stay open just for us until about 23.45 ????
Equity growth! What equity growth? When are we going to experience some equity growth.
It also means you lose any equity growth in favour of fixed term interest.
The new high yield bonds are not convertible.
That would be good Milothe3rd. I would consider doing the same. More certain. In addition it helps to get a bond away.
Question:
New Bonds, senior secured, 15% interest / year, for 7 years.
I assume that these bonds and the Convertible bonds issued, plus the Overdraft, will form the Senior Security.
Correct?
Then:
If you have x shares today, and now you also buy a bond (I know, $200k is not for every PI), say in the new high yield - you get $30k / year interest for 7 years.
IF things go south, then current SHs get wiped out, and the Bondholders will become the new SH.
As a strategy, double hedge (on one risk asset, true), is this feasible?
Any views?Casa, any thoughts? I am thinking that instead going to add more shares, double back and do it via the new bond.
Thanks
M
We need the rating to come through first, which i imagine would be RNSable
Been published yet? Does anyone know?