RE: Take Over V Asset Sale?21 Oct 2018 20:31
Wulbert,
"Would one type of "sell off" produce a higher yield than the other?"
That's an interesting question! But one which I don't think anyone here could answer with any kind of certainty. It's one which has certainly spun through my mind countless times, but the thing is we still don't know how things will pan out.
So all which follows is PERSONAL OPINION ONLY, except for the anecdote, which is factual.
A few years ago I held some shares in an Australian Lithium-mining outfit, and there was a takeover bid. It took a while for this to be sanctioned by the Australian authorities. But just as that happened, the Chinese govt launched a counter-bid (China being the company's main client) and no shareholder could say no. The thing went through, I as a PI made that miraculous 'seven-bagger' thing, and the mining company is no longer publicly traded. Fun.
But I don't see that happening with HUR.
The Spirit deal gives clues. What's been negotiated is a freeride for Hurricane's 'exploration' of Warwick and possible development (tie-in to the FPSO?) of Lincoln, and possible EPS on Warwick, just in exchange for 50% of GWA. Now some people like to think of that as glass half empty, but I prefer half full. HUR stll 'owns' 50%. Which it can still sell off further, in little bits, to other partners prepared to foot the bills. But still retaining a little bit: let's say 10%.
And I believe this is what any asset selloff of GLA will amount to, a freeride, but retaining a non-operating, non-contributing (other than technically) interest, earning money as the explorer / developer. Providing revenue which Hurricane can turn to use in further exploration, maybe.
Either scenario means the SP will be far more than it is now. But I do feel that in terms of 'yield', it rather depends on one's age, and one's ambitions. I'm in my mid-sixties. So am not looking at a 20-year 'yield'. Shite, if I'm still alive in 20 months I'll be amazed. So if anyone comes along with a takeover bid of 2 quid I'll vote for it like a shot.
But maybe not everyone will, and anyway PI's votes don't count for anything.
I'm not even looking 5-year. But then, someone young may be, if they've got the disposable money now and are prepared to go LTH for that length of time. Maybe then, the 'yield' will be better over that length of time. Or instead, let's just look 3 years. That's what the buyers of the bonds are looking at.
It's an impossible question really. I know what my own 'target prices' are, when I'll start selling and turning these will o' the wisp shares into actual money which I can exchange for goods or services. And I'm just hoping they'll occur.
But remaining totally aware that if something catastrophic and dreadful happened, and HUR went to the wall tomorrow, my shares (as a creditor) are worth exactly their nominal issue price. 0.1 penny. That's the name of the game.
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