The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
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I can't see why Glencore or indeed any other of the key shareholders would wish to invest any more than the minimum here.
https://www.reuters.com/markets/commodities/glencore-halt-new-caledonia-nickel-plant-sell-stake-2024-02-12/
Well, I wish they had made the offer back in 2020 (or earlier) to buy the company pre prod at even a modest +% to prevailing SP when the company was £50-100m mcap. You would like to think they could have made a better job of the build and, given that that is typically what happens to juniors with Tier 1 assets (they get bought out for their assets, by a major) we'd all have grumbled a bit then looked for another AIM casino share to squander the gains on.
But, the BOD here wouldn't have got their 'get the finance deal done bonus' and couldn't monumentally screw it up so we ended with 0. It's only the risk that La Mancha or Orion end up with 0, as you say, that still gives any hope to the company because they'll be working hard to try and make that not happen. I don't know anymore but I'm with BuddhaBob on the timescales - April interim finance is crucial, because it makes a deal relatively likely IMO, and then hopefully a deal in Q2. If no April interim finance then the large lady sings I expect.
On that wasa,
I would't offer 300 to take over if i were glen. To me a figure of 50-100m is more realistic because in this scenario you put LM and O at near par, and ask Glen to assume a near 1.2bil liability for 1£.
They might take 50p
They might take 30p if stretched to hard.
I don't see them taking 5p, 1p.
The fact that they sit in the BoD to me serves one good thing.
They are there to resist a free meal for glen:
Safeguard against a scenario of a prepack and allowing glen to get the whole thing without via admin.
You want this safeguard. If you go to admin, you have no mine on licences.
Getting this whilst HZM is in existence (no admin) has to be valuable and the big bargaining chip for the weak cornerstone in a game of weak strong existing cornerstones and any further potential buyers.
If this was not a chip, I think it could have be taken already by the apex.
The other thing about the lowball bid is Orion and La Mancha have to agree it. They're unlikely to agree to a 99% loss of their shares (i.e. the current price) UNLESS the possibility of a finance package and getting the mine up and running are effectively 0 because they can't do it. Then it may be that Glencore step in make the offer at a number they think Orion/La Mancha would accept.
The point is then Glencore or the buyer has to assume: $200m debt already drawn down + $600m to complete the project + $m they had to pay to La Mancha Orion and existing shareholders. Not saying it can't be done but it can only be done if Orion and La Mancha agree, and they will only agree I think if they can't raise the money themselves via the financing package.
If Glencore was already going to offer them all their money back (i.e. $250m) for a full T/O they would have done it already, I expect. So Orion / La Mancha (and other shareholders in at the £1 level) stand to lose if a bid comes, probably. (They probably stand to lose also if it gets financed - no doubt about that).
On that low bid offer - point, a comment.
I've seen Bear Stearns and how in the day it went to JPM for effectively zero.
I was right in the middle of it when it happened as a grad recruit.
Just assumed liabilities.
Same kind of deal more recently with CS and UBS, pennies to the dollar.
Effectively just assumed liabilities again to no premium.
Here all this time, i've been betting against these types of scenarios based on a different idisyncracy:
You have 3 corners.
One being particularly big in assets relative to the mine on the one hand...
And
Putting LM and O people on the driver seats of the new BoD.
Also things here taking longer. Bear was flipped in 2m.
CS about the same.
The Horizonte saga is at least 5m+ old.
It does seem the constituent Corners to control the game of negotiations.
But you have to look at it objectively:
I am not doubting it here that this is a different game to a big bank collapse where total wipe out of the stock can occur.
Yet... to what end.
Fine we gotten April.
Then what?
GLA.
Don't give me or anyine financial advice Publican, if people here want financial advice they should seek it from professionals not some sad annoymous poster who spends large parts of his life being a boring repetitive nuisance on a BB that he has no vested interest in !
I an very happy to lose my remaining 1% and posiibly even gamble some more on the outcome being more positive than 1p so please keep your unwanted finacial advice to yourself in future !
A month will be enough for them to decided whether to fund an interim package to keep talks going in the right direction.
Full finance package probably won't be until end Q2.
IMHO of course.
Any cheap low ball bids are perhaps wishful thinking as the 5mln mkt cp is irrelevant. Any buyer needs to pay all the outstanding liabilities as well as the $600mlln to bring it to production.
That means they would need to be paying nearer $1 Billlion for this £5mln valued company !
Yes,the rns didn't say 'wiped out ' it's said any deal is unlikely to lead to a positive outcome for shareholders.......30/20/10/5p wouldn't be a positive outcome for most shareholders so that statement is open to interpretation until the funding price is known.
At what price the outcome is 'positive' is anyone's guess, even the company won't know the price yet as each party fights they're corner to get the best deal possible.
Obviously the market expects the funding to be around 1penny but the market doesn't know anymore than anyone else on the funding price.
Woo thanks folks, especially Buddha for the thorough answer; well now give me the reverse angle:
Is a month now going to be enough to conclude?!
Maybe we just have the hope of a BID.
Current Mkt Cap £5m.. Notwithstanding the Cost to Complete, we gotta be worth more than 5?
Also it's $600m USD. The same amount as the original capex (give or take) which took 2years+ to negotiate and from a less distressed angle.
For clarification the 28th March states:
… conclusion of any such solution is unlikely to lead to a positive outcome for existing shareholders, noteholders and creditors of the Company.
The restructuring will result in each party accepting less than they might be entitled to under their contract. So (for example) the banks will need to accept later payments and not impose penalties for breaching covenants etc. Then under the new deal the various parties might have to extend additional money to the firm.
Its very complicated as there are several parties involved and different claims (e.g. banks have the senior claim, etc.). Each must accept their own terms but also accept that the terms for others are fair.
Even the key shareholders might find it hard to agree as some have equity and unsecured debt (convertibles) others equity and royalties, etc. etc.
Note that the RNS on 28th March warns both existing shareholders AND unsecured debt holders (convertible and trade creditors) that they might be wiped out in the new deal.
Mv01
Been through similar with investors in a private company. This being a public company is a lot more complex due to multiple cornerstones and regulatory requirements.
Bringing in new investors tends to be a very convoluted due diligence process to assess risk from multiple angles. It's tedious and like death by a 1000 papercuts because the lawyers ask so many questions and often ask the same ones from multiple angles, which require hours and hours of admin to provide the responses. Don't forget the lawyers are being paid by the hour, so the clock tends to slow right down!
Existing investors will be going over every single projection figure with an absolute fine tooth comb, as will their lawyers. Again the meter is running for the lawyers! Plus they need to discuss witht their board and fit in with their strategy.
Then try coordinating all of those into fitting into one finance package! it's wheels within wheels and very complex.
Also they've only confirmed the final figures recently, so it's not been that long tbh.
One Time it takes to...
This has been something that I was always curious about:
Why does it take long to negotiate/assess/opine/decide...
It's the naïveté again, but feels things should have been moving faster all this time.
Just a personal feel, don't know if any folks can offer a more professional view in case they found themselves in big corp negotiations.
Some late buys at 3.2p showing up
TSX closed 3.5p
That is TSX.
Stupid phone.
Up over 70percent.
GLA
The RNS is bleak and existing shareholders will be wiped out. Traders will try to pump and dump. Shame because HZM seemed to have all bases covered not long ago.
The publican took his eye off the ball of his hummingbird stock as he spent too much time on here .
The Publican is well & truly back now and lecturing everyone on the risks here after the 99% fall.
This man does not act upon his own word as he bid everyone farewell and yet here he is boring the pants of everyone lecturing them on a future that he does not know.
This Forum is at The heart of the Publicans sad life and he simply cannot live without it.
Who is a poor investor now paul no brains lol?
So we got the RNS formalising interest deferral to April. Good as opposed to something negative published or no word published for that matter at all. Until April end then...