Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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New Research note published today, anyone got access who can share the highlights?
It’s a strange reaction but not unexpected in AIM. If it was really that bad the price would have moved further down double digits.
Yes there is some Dilution but if you are looking at this long term the synergies are smart and this makes TXP the go to in the region and all the equipment is in close proximity for operations.
Anyone expecting a short term kick will be disappointed but long term very good for TXP.
If they can get the “wall of cash” delivering then multiples will have been increased.
U discuse pros and cons and i added more. If deal wont be accepted i get disconted shares if not value of other company added on to txp with 25% dillusion. Both companies took a hit this year.
At this level i keep buying.
Sturm, if you research Trinity you might change your mind about the acquisition. It is an opportunistic bid that will literally pay for itself in less than two years. Its a complete no brainer for TXP, but as a Trin shareholder I am not sure I am really keen on it. Its very interesting that both parties think they are getting shafted when in fact, with the synergy of less overheads and the release of tax losses, value will be unlocked for both...but I feel Trin should command more than 60p and expect there may be other bidders coming out of the woodwork now.
Who is to say that the TRIN SP wouldn't be twice what is now in 6 months time, and require just as much dilution at that point?
If this was just as good for TXP as for TRIN both shares would react the same way. Or Trin would be up 40% and TXP up 10%, reflecting the relative size. Honestly, 25% dilution on a low and undervalued SP isn't something you can "wash" into something brilliant. Timing is wrong. Management focus is wrong. TXP have plenty on the plate and not delivering on anything. They've not even an overview of the assets they'll be developing the next 5-10 years. This is buying a cat in a sack. If TXP were trading @ 1£ and had Cascadura in the bag it would be fine. The assets TRIN brings to the table is a passive tax loss; I doubt we'll see much growth from their assets the next decade. There's a reason TRIN SP is low. And another reason why TXP is trading at this level AND THIS EXACT acquisition just proves what issues PB has with keeping focus and delivering on promises.
Why do you think the Majority of Trinity's S/H are unhappy.
The Market is yet to Comprehend how good this Aquistion will be be for TXP .
Massive cost savings alone.
If they are getting shares it depends when they sell what the price they are getting . we are so under valued it's a joke all they need to do is hold for a bit and they might get more than their market value. But going on the managements attitude to share holder returns they might of got a bad deal. I'm bullish on the oil and gas prices but we don't get to benefit much from that because of the deal with the government.
Thunder2040 - TRIN are already recommending this deal. I cant see this not going through. Most PI's will not vote. Go and look at C4X delisting, that could of so easily been stopped if PI's had voted.
Also, I do not see this as dilution, when they are getting TRIN below its fair value.
From the RNS:
Trinity Shareholders (including those Trinity Directors who hold Trinity Shares) representing 38.9 per cent. of Trinity's issued ordinary share capital (excluding Trinity Shares held in treasury) as at 30 April 2024 (being the latest practicable date prior to the date of this announcement) are supportive of the Acquisition
It depends if they want the cash or the oil and gas more. Also depending on the election cycle industry.
I think the government will like this deal: a local champion of the oil and gas industry, ready and able to fund further exploration.
But what if this move aggravates the government maybe they are counting on the tax take.
I wouldn’t say I’m unhappy.
I think Touchstone has got a very good deal, from which all shareholders will benefit.
Trinity’s directors have a lot to answer for (although they probably have voted themselves out of a job).
AB,
But it’s not a trade for 20% growth. You are getting equal if not more growth from TXP assets.
We all need to put the stronger together lens on this deal. The fact that both sides are unhappy seems to indicate it’s a fair deal.
As others have said from Trinity shareholders view this is a dissapointing price...the tax losses and development ops plus the fact we are net cash and profitable make is prime for a takeover...but the risked value from broker Cavendish if the losses can be utilised is over 200p and you have bid about 61p...not sure hoe it gets approved at the low level its at, TRIN are in no. Hurry it's not a forced sale, so I think the price needs to be higher or a rival bidder may enter now
It's ok for the company but rubbish for us. Why didn't they concentrate on getting more cash
I agree the timing could have been better because of the dilution at this undervalued SP in order to pay for the acquisition in shares, but to focus simply on the cost (25% dilution) without thinking about the value that is added with the acquisition is one-sided. The acquisition includes a small amount of cash, potential for significant cost efficiencies running the operations in Trinidad, significant cost efficiencies in corporate overhead costs, significant (relative to current levels) additional production and cashflow, cheap additional reserves, further explo/development opportunities for the expected significant increase in TXP operational cashflow coming in the next 18-24 months, and perhaps most valuable of all in the next few years, large tax losses that can be offset against the expected TXP profits to come with development at Cascadura. I think as the market digests the potential, and assuming the Cascadura production growth is realised to utilise the full tax loss value, the SP will reflect that despite dilution this deal adds significant value to TXP.
Profit tax in Trinidad is 50%. Touchstone are about to get their hands on $225 million of tax losses that have the potential to protect 75% of their profit from that tax for the foreseeable future.
And they get $7 million or so in cash.
And they get cash flow of $1 million per month (more when they start cutting costs).
And they get reserves that Trinity had invested over $250 million over the past 14 years.
I'm super disappointed. TXP has one job really: exploit Cascadura and then grow from there. Meaning we should have plenty cash end 2025. This acquisition is ill timed and moves focus yet again.
25% dilution at a point when they should be creating shareholder value instead of fecking around.
And TXP has so many other targets to explore the next decade, so the timing is really bad. Cashflow alone could pay for Trin in one quarter in 2025. Instead we get 25% diluted.
Agreed, I am sure you know what you're doing. Just thought I'd raise the point for others. Good luck!
Touchstone are getting a bargain.
Trinity doesn’t have cash problems: it’s expected to end the year with over $10 million (it’ll be more once the senior managers are sacked).
Its problem is that it can’t utilise its $225 million of tax losses by expanding its business. If it can, Cavendish value it at 346p per share (as it is, even without being able to fund expansion Cavendish’s current NAV is 76p per share).
Touchstone will do very well out of this (Trinity shareholders less well as we’re being asked to trade potential 280p of share price growth for a 20% share of that growth).
Good luck with your strategy personally I think we've stole Trinity your all end up here ,don't miss the stampede..
I know there is risk Luke but with very close to 40% in agreement already they only need about a 58% acceptance from the rest of the shareholders to achieve the 75% total. And i cannot recall a takeover ever going against the managements recomendation?
It will be interesting to see what Malcy makes of the deal. Malcy has been cool about Trinity for a while. Trinity obviously have money problems re their offshore well and have resorted to endless work overs to slow down the decline in their output on shore. Arguably we have not negotiated very well and ought to have paid a lower price for Trinity. I also worry about the massive diversion of management effort that will be needed to integrate the two businesses, at a time when t he key priority should be to build up output quickly from our existing assets. The deal also puts a spotlight on the absentee senior management running the company primarily from Canada. Arguably Touchstone now need to strengthen their on the spot senior management team in Trinidad.
I guess the discount reflects the risk seen in the deal no being approved by TRIN. In that instance probably going to see at least a 50% loss on the money moved to TRIN. I guess it depends how likely you think this is, but I certainly wouldn't want to be owning anything in TRIN as a single entity. They have around 38%, need 75% in total. I don't know anything about TRIN or its shareholder base and have no view on the likelihood of them reaching the 75%, just thought I'd post this to caution people thinking this is a risk-free strategy.