Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
@Wiscos
I think you have a serious comprehension problem - do you not understand what in addition to means?
You do realise there are other debts except for the existing loan facility - like the leasing liability.
Did you not bother reading the half year report? Give it a read first before telling others they lack basic knowledge and ignoring valid points because it might not be want you want to hear.
If you bothered reading it - you'd know that they even highlighted the possibility of an equity raise if leverage reached over 3x. If you read the net & debt leverage section - at half year end it was 2.3x and expected to be 6.3x according to Card Factory in 2021.
But please do ignore me since I lack basic knowledge. What a twat.
@danl90
https://www.retailgazette.co.uk/blog/2021/03/card-factory-scrambles-for-rescue-funds-to-see-it-through-the-pandemic/
According to that they are looking for another 100m in finance - half of which will be used to pay existing debts - I'd imagine the rest would be for liquidity.
The turnover comparison is not silly. If you've ever taken out a business loan you'd know that they often use revenue as a gauge of how much you can effectively borrow and pay back. I've had to do it for my own business. Of course it's not the only variable at play - but it's an important one.
In regards to paying back the finance - it's not the 100m that is of concern. It's the 100m in addition to what has already been borrowed that is an issue. Take into account the fact that prior to the pandemic - Card Factory has also had very lacklustre growth - not a great sign if you are a lender and you want assurances that a company that is already quite indebted has the ability to repay with an increased debt pile.
I don't think you've given the Card Factory situation a lot of thought. It's not a walk in the park as you might like to think and why Card Factory are still in negotiations with lenders.
I'm not Card Factory management and I can't tell you how much they might want to raise in a rights issue. Management would probably have a much better idea of how much is needed. If I took an educated guess I'd reckon it would be around the amount they are looking to borrow. How much dilution this would involve - depends on what price they will place shares.
It's hard to make a Cineworld to Card Factory comparison - they operate in different industries and have very different outlooks.
The bank cares about a business's ability to repay its finance - that is the bottom line. If they have doubts about that they will be hesitant to lend. You ignored the importance of the size of the loan in respect to the size of the company and track records of both companies - as well as their respective market shares.
The issue with Card Factory is that they want to borrow just under a quarter of what they turnover in a year - on top of the large existing debt pile they already have (if you add it up they'll have a debt size around their turnover if they get the 100m they are looking for). The fact that they have had lacklustre growth for many years with an increasing debt pile - is probably the reason why lenders are wary of financing them..
Sure Card Factory has the potential to turn this around and really grow if they focus on the online sales channel as well as their physical stores. But these are big IF's for lenders. There is no certainty things will be back to normal and no guarantee that Card Factory will do what is necessary going forward. It's all a big IF.
Add to this - lenders will be thinking - why should we provide more finance and increase our position/debt stake in this company - when they could just do a rights issue, let shareholders get diluted and have the liquidity they need to ride through this pandemic - at no additional cost or risk to the lender.
This is why I think card factory has struggled to get finance so far and why I think the probability of a rights issue is probably higher than many on here would like to believe.
It's a basic cost benefit analysis - if you were the lender what would you prefer to do? Take on more potential bad debt or let shareholders get diluted so you don't have to increase your risk/position in a company where there are a lot of if's at play.
I know what most of us would do if we were the lenders.
Yes the shorter's are driving this lower. At the moment Morrisons is one of the most shorted stocks on the ftse - it's in the top 10. The short position is around 5% but its most likely higher than that - as short positions only have to be declared if they are more than 0.5%.
This is why this stock has been yoyo-ing. Morrisons imo is in a strong financial position compared to years ago when the short position on it was way larger. I think Morrisons does a better job than Sainsburys, Tescos etc when it comes to generating profit on the amount of capital they employ.
The problem with Morrisons is that it has a lower market cap - this is why it attracts the shorts. Shares with lower market caps are more prone to movements (up or down) than shares with larger caps (generally speaking - of course there are exceptions like tech stocks) hence why the shorters flock to Sainsburys and Morrisons & not tescos. Of course this is one of many reasons why its being shorted - other reasons could be that some of these short funds are hedging - they might have positions in competitors and so take out a short positions on Morrisons - sneaky but it happens (looking at you Ocado). That combined with the fact that its growth has been relatively slow (for a smaller supermarket chain with a lot of potential for growth imo) - plus the squeezing of the grocery market by very competitive discount grocers like Aldi & Lidl (Morrisons being a mid tier fish in a very large pond) - makes the ideal environment for shorts.
I do think that Morrisons are in a great financial position and the opportunity for growth is there. It's definitely below what I think it should be worth. I think Morrisons would do really well if it was taken over - at this price I'd be surprised if amazon or others aren't eyeing this up.
Your not the only one mate.
I'm way to cautious to risk it lol.
Was lucky enough to buy in at 33p - seeing how undervalued these shares are.I sold for double the amount and I'm out for now.I think at the moment these shares have been overbought - given that refinancing isn't 100% confirmed makes me more the uneasy (it's coming up to 2 months and still no 100% confirmation - makes me think either the deal given will be ****e or it won't be given). Too many factors to consider - even when shops open in April - there is no guarantee business will pick like it did pre-pandemic plus with social distancing and hoping there are no serious future mutations of Covid that negate vaccine effectiveness. I don't think it will be business as usual - especially with online card retailers that have more of an online presence.I hope no one gets stung and good luck to all!
I'm not sure if the rights issue would be the way to go with the SP so low.
If I was on the board at Sirius Minerals - my number one concern would be a recovery of the SP - so if there is a rights issue or dilution down the line - they can leverage a higher sum from any potential rights issue. If this means dropping some good news or securing some sort of funding (outside of a rights issue) - this should be the immediate goal. Even if this means one of the current major shareholders buying up more shares - at nearly 3p (they're a bargain if this funding gets completed) - take away the excess supply of shares and you'd probably see the demand for these shares rise, as well as the SP. It might also recover the confidence in the share somewhat. Just a few options to consider.
It would give more time to negotiate a potential rights issue and get on a major strategic investor on more agreeable terms.
At the price it is at right now - it looks more ripe for a takeover than anything else. I think though this would be the last option as most of the shareholders like Citigroup, Qatar & Gina would lose out in such a scenario. as well as CF and PI's.
There is also another general election on the way as well. If Labour somehow get into government - I could see the possibility of government guarantee being much more likely.
I don't think this share is even remotely dead in the water yet tbh. Although I wouldn't tell someone who isn't already invested to invest as it's a huge risk to take with your hard earned money.
There are a quite a few options still available and anything can happen.
I agree JPM are not interested in Sirius failing or being a success. They are though interested in profit. The revolving credit facility is potential profit for them. They will be malleable to negotiating with Sirius because there is potential profit for them in doing so. This is probably why we have heard nothing from them since Sirius made it's half year report announcement earlier this week. There is definitely a chance it is dead in the water but the fact we haven't heard anything from them is telling - probably because they're still a lot of talking going on behind the scenes.
The RCF agreement failed due to risk. No disagreement there or with bond buyers wanting warrants. But Fraser did say that the initial agreements included all the riskiest parts of construction and that is why bond buyers wanted warrants. I got the impression from him that one of several options he might explore is going back to the bond market without the riskier parts attached (and get the funds for these in another way) or more favorably get a major strategic partner on board.
A lot can happen in six months. I wouldn't be so sure that any potential deal with JPM is completely off the table - not when there is profit to be made from all parties.
Anyone who's self employed knows at the bottom line - all parties are purely motivated by profit. There is a significant amount to be made if this project is funded to completion. Hence why I think this won't go to the dumps.
Just my opinion.
Still holding.
I think there are quite a few LTH's that are still in. Makes zero sense to sell holdings at considerable loss when there is always the possibility of funding being secured within 6 months. But I'm also not daft enough to tell anyone to buy in - personally if I wasn't invested I'd be waiting till funding was secure before buying in. That's the sensible thing to do. Just like the sensible thing to do for those LTH's is just to sit and wait.
The only real issue with this share is funding - in particular certain segments of construction. Going by what Fraser said the goal seems to be to separate the high risk parts of construction and from those with minimal risk & to seek separate funding.
Personally I think this share has been grossly oversold - can't blame people for that though. But the news isn't nearly as bad as you would think. There are still funding options on the table albeit with a time constraint.
More importantly why has no-one heard a thing from JPM regarding the credit facility being declined? My guesses are that they are probably still very interested (since there is profit to be made) and negotiations are going on behind the scenes - I wouldn't be surprised if they are willing to extend their credit note beyond the October deadline.
I think administration is very unlikely. Most of the big miners will want to get in on the action rather than allow the project to possibly go into administration - simply because there is no guarantee that they would get it if it did. There is also the fact that they'd probably have to finance the whole thing themselves and bare the risks entirely themselves. Why not get Sirius to do that instead?
It's also no secret that nearly all of the big mining companies are trying to consolidate Potash mines - as it is the next cash boon and they all know it. Potash mines are also not easy to get a hold off - as most do not get the necessary permissions. Just ask BHP with their Canadian Potash problems.
Here in the UK - you have one of the largest potash mines in the world with the all the necessary permissions already in place - that is having problems with funding. Not permissions - funding. It is a problem no doubt - but given how valuable potash will be as future demands for fertilizer increases - my guess is someone will swoop in to provide the funding to completion.
Anyone with any brains is only really worried about the terms of such funding. At least with the bonds we knew what we were possibly getting. Given Sirius is coming to the negotiating table with a poor hand - I'd expect their to be some concessions. Hopefully these concessions won't impact those with holdings too much and if they do I think the growth in SP might make up for it.
I agree with your sentiments too.
I don't think administration is likely. I could be wrong though.
I think it's more likely that Sirius will probably find a major strategic partner to fund the project but at less than favourable terms for us investors. At the worst we're looking at someone taking a bigger piece of the pie - which means there is less for all us with an investment here. But it's the better option.
I do think though that in such a scenario the growth in the SP would more than make up for this - in the above scenario.
There is equal likelihood of a takeover - at a price that I think will be much cheaper than we may perhaps want.
I do feel though that the groundwork sirius has laid with the offtake agreements, as well as knowledge/expertise & know how of the local area (as well as laws/regulations) might actually work in their favour - in that a major strategic partner is more likely to worth with them than take them over - but not at great terms for us.
I feel more sorry for people who got shafted this morning with the early trading and sold way too soon.
Personally I'm holding onto my shares and probably try to lower down the average by buying a few more shares (not a lot).
I would honestly have sold but at this point it makes zero sense to.
I do think that funding will eventually happen during the six month period. The whole project has a lot less risk than people think - the only real issue is the funding (it's a big one granted). Everything else is in place. It's not a question of it's too big to fail - but more about the fact that fertilizer is the next cash boon and Sirius is currently sitting on one of the largest deposits of it and a cost that's cheaper than elsewhere. It's literally liquid cash buried in the ground.
My worry right now is what the terms of any future funding agreement will be. If I was one of the larger mining stocks - I'd be looking at Sirius Minerals with a grin and a large appetite.
I just hope that the funding doesn't go the way of a takeover because I fear it will go for much cheaper than it's worth at our expense. The better outcome would be to get a major strategic partner involved, even if it means giving a significant slice of profits away. The growth of the SP would more than make up for more profits being shared out - at least to me.
I think this would probably be what all stakeholders in the company would prefer. But now it depends on how well the management team can negotiate a reasonable favourable outcome for all.
I do think as well that it won't be the end of an attempt to get the government involved - I think this would only realistically be more possible under a left leaning government (which could very well be a possibility).