Member Info for Arbitrator

A settlement wouldn't surprise me at all. Tunisia are incentivised to pay a haircut claim rather than the full thing. Looking at Energy cases in the past it owuld be about 30% of the total claim, which is still $166mn, or 453% upside.

The odds of a settlement are considerable, but it will mean a significant haircut. Either way multiplayer at least. Especially with the operating business.

Very well put - the proceedings will continue separately, and by procedure they have to. The only situation where they merge will be in our-of-forum settlement talks.

Evidence?

I don't think so, and the LCM facility will likely be extended. It is 63% drawn, with $5mn left. I'm releasing a piece on it tomorrow

Hi Gareth,

In the court documents there's no evidence to support that. AC has also said in the christmas letter that they're seperate. The appeal confirms that - the tribunal can't give the same award twice.

A surprisingly good info for Google, but there are a few tweaks:

1) the hearing is in April, which means the decision is likely max 240 days later per procedure

3) yes ICSID is a branch of the world bank, but they will not seize any assets unless they are required as a last resort - the more likely outcome in a desperate situation is settlement negotiations

5) they have the reserves, but you'd suspect Tunisia have a pre-set budget, and so it can't be a quick decision to approve the settlement, which makes it hard to predict how varied the schedule will actually be.

6) they may want ICC-2 to be settled, but Andrea Cattaneo has specified it's a wholly unrelated case, so who knows

Excellent insight. I was thinking recently about this and came to the conclusion that Tunisia are extremely boxed in, however, they will go to every effort to reduce the claim via lengthened requests (and so proceedings) so they can boost their credit rating while bearing less of a bill

This is excellent, and ACs concern with non-dilutive financing with the spinoffs is equally helpful. It will get more complex with consolidated valuations, but it's going to be interesting

The odds of an successful annulment are probably around 50%, probably on the positive side, but the impact will be negligible against market cap - the claim will likely be greatly haircut

Uisng historical averages 50% is generous for an ICSID case. The average award, let alone a settlement is about 18% of the claim accounting for losses, or 48% solely for hte successful ones. While I agree that the case is exceptional, 50% is optimistic. even 10% would be a satisfactory return, and 20-30% is more likely. Then the majority of our returns rests on the ROIC of the solar / uranium projects

There's a ton of potential, but the market remains either pessimistic or ignorant or both. The main catalyst here is case progression making the case win odds look more favorable. Then there's the operating business development too.

Yes that's the tricky bit. I will be looking at the operating business value shortly. You would imagine they give away under 50% for the sake of maintaining control, assuming there's only common stock (but who knows), so there's significant upside. There's also the added benefit of the legal case, which has 10-20x upside barring any anomalies.

How did you come to that figure?

It's probably pre-written, and while he's a good CEO, he lacks depth when talking about the ICSID case - see one interview you've seen them all

68% is optimistic by historical averages, which is probably why people are pessimistic. Over the years the average ICSID takeaway, accounting for losses, is about 50%. We predicted the ICSID case win to be about 80% but used more conservative assumptions, so we came to a similar number.

The in-situ figures we wrote off for conservatism, but we still see about 2000% probability weighted average. The operating business effectively acts on leverage on that, and then there's the added leverage of petroleum prices for the ICSID claim. It could be we end up back where we are now looking at general market conditions, but bottom line is that it's hard to lose much money here.

Thanks for making others aware of the report

Good work - we wrote off the operating business entirely and still saw a 20 bagger, but the operating business provides excellent downside protection. As does the ICC1 decision.

Sure, but logic is what drives how you come to your assumptions. Different logic = end up at different assumptions, which is incredibly important considering it's not certain.

Potentially

Have you checked their logic?