Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Restructuring in a debt for equity swap is good for shareholders, not bad. OK you get a price wobble now because the market needs details and the dilution is not yet clear. But if it moves all of the debt ratios in the right direction, satisfies lenders for project guarantees, and lets Petrofac convert 8bn of pipeline into say 500-800m of net profits then happy days. Then we can sacrifice some divi for share buy backs in the future - if thats the shareholders issue at that point. Also the bankers will like it because they get paid restructuring fee! Doubles all round.
So i think the interims were OK - sold some rock and the backers are still there - they had an extraordinary weather event - thats a rare issue - and the new seperation equipment is on lin very soon and so th operationcan move towards production - not so bad after all.
Mystic - they also have a debt facility of A$50m and a bank consortium Debt structure of A$200m they can access. I doubt if they will raise now given they are 80% towards the head of the ore body.
Ex Miners - what do you guys think - how much time until they start the extract ore - 6 months ??
Maybe when they list on the ASX they will raise a placing to add some ASX institutions onto their cap table, it does make sense, but not now.
Surely the next raise, if needed, is after the first scoops of ore are extracted.
But you could then ask why then? if they can access debt funding against the ore extraction cash flows.
Thanks Blue
Placing Explained.
A placing is a way to raise working capital in exchange for shares. Thats the function of the stock matrket - providing capital to businesses. A pre revenue bsiness can either borrow or raise capital. To borrow for a start up its about 15% to 25% interest currently - that would fast place the business in the hands of the creditors.
So it has to be a raise. A business that is consuming WC without generating revenue and profit is always going to need to raise WC - so HEMO will burn around £6m this year in WC - so it will have to raise again sometime around July i guess.
The placing provides dilution and then increases the assets of the business. Now the markets change this - so a business at 10 m value x 10M shares - and share price £1 raises 10% at 75p - so the new share price is 10m shares at 100p + 1M new shares at 75p = 750k = 10M + 750K (post money) = £10.75M / 11M shares (new) = 97 pence fully diluted.
But the market is aware there are loads of new shares available at 75p - so why pay 97p ???
So the price is now 74/76 - for a while - until the capital is successfully deployed and then the value of the business increases.
Or they burn the capital and don't add value and then the ext raise is down at 50p or whatever.
There are many factors in a share price.
Thanks Blue
You know this !! so only buy in after a share placing hits the price and sell into good news - then reload. Its easy - just repeat this Sell after good news, buy after placing, sell after good news, buy after placing ...
Thanks Blue
A final word here.
The professional investors knew as soon as a 2p placing is made the SP reverts to around 2p.
Why did they still take all those shares if they knew this?
Wht didnt they tell Vlad and his brokers that overtheir dead body would tey raise at 2p?
If the professionals are happy with a 2p share price - why arent you?
Thanks - Blue
Main Shareholders (Pension / Investment Funds) are always given information ahead of a raise - its standard business - if you don't know how many new shares the current shareholders will take and in what size you cant price and arrange a placing. The market makers are also informed to see if they are running short books and want to square up. As soon as the market makers hear that there is a placing coming they will hit the share price because they know there are cheap shares around the corner. I recall a Fund Manager losing his job because he hit the options market through a broker on my desk ahead of an offer on a UK listed share - he was working for one of the really big pension funds as well - a utility one. So it happens all over the market. See where the price is in a month - the worst event for any business is liquidity - see what happened to Petrofac - HEMO raising now and a decent chunk of WC is probably a good thing, once you remove your eyes from the SP. If they get the business into Phase 2 then the value will emerge - its never going to rise until it looks like they have a product anyway - or something they can sell to a bigger party as a maybe product. The role of shareholders is to provide capital for the company to deploy and create excess returns over bonds - inflation. That's the business you are in when you invest in a small start up company - you are a working capital provider - and whether you take part in a placing or not - your capital value will reflect that. What is rubbish is that the institutions get to buy in anti dilution but the PIs don't get the nod. So only buy after a placing makes the SP weak, because then you more or less get the same treatment. Same rule for all small capital consuming businesses. Thanks Blue
Last placing was at 2.35 - probably this one too.
Same new shares - 22M - makes around £1/2m of working capital.
Thanks Blue
Keep Plugging
Decent tax losses to use up there - so maybe a larger company that needed to bring its corporation taxes back for the next 4 or 5 years. ???
Just an idea.
Thanks Blue
Thanks for the price update.
My high level point is we are there already.
Urgent delivery is already £3 ++ so just cut 2nd post to 2x a week.
I really dont care if i get letters every 3 or 4 days - in fact 2 x a week would be OK - say Tue and Fri.
Anything really urgent could be upgraded to a Special Delivery for say £3.00.
The days of needing constant postcard and letter drops went with the telephone - and letters with email now WhattsApp for general comms.
If the RM / PO doesnt adapt then it will go the way of Britsih Steel and then Deliveroo and Amazon will cover this service.
Thats my opinion - take the haircut, survive and go on to compete with the modern world.
Thanks Blue
Paul.
It's definitely likely the FD and Corporate Broker went to the largest holders and asked if they had appetite for a placing, or even a rights, or more junk debt. That round can very easily leak out. They have to look at all options on the table. It wouldn't surprise me if that was the snowball that led the fall. Conversely a share placing possibly gets more likely with a stronger price. Less diluted.
I have no real information I can share.
Thanks Blue
No - because an open long written by a CFD / City Index type business - looks like an open short when reported to the market - if it stock covered. So its not that simple.
If you bet me Petrofac will go to £1.00 and i take that bet - but decide to lay off 50% by selling an open short into the market - the market sees an open short - it doesnt see an open long via the bet.
See - its not that simple
Broken - if you like smaller caps etc and like to take part in smaller placings etc then Peel Hunt are a good start.
But if you want to get share tips and swim around in the murkier depths of the market then go for one of the smaller independent brokers - they will manage private client stuff - do little institutional - and they know that you need to make money for them to make money - be clear about risk and size and whats interesting to you - you could have 2 brokers of course - Good Broker and Share Tip Broker. They both have benefits. 80% 20% would work.
Sharefall - the shorters get to know because they pay commission to a person called a broker - he charges them say 1/2 > 1% to give advantage - platform autotrades are cheap - yes - but you will never get the information you receive from a broker - its literally their job to do that.
FInd a broker and test them for few months - see what better information you receive.
Its why you pay them commissions.
Thanks Blue
RedHead - its not how it works.
MM dont buy all of anyones stock - thats not their business, they provide order flow / liquidity - they would get fired buying any massive position - they all have book limits they cant exceed and a risk manager watching positions.
They are given trades buy / sell by dealers - they place the trades in the market and manage the way a block is either bought or sold. Im not talking small auto trades here - i mean in size.
But the broker originates the trade - they have a client Schroders ?? who during a daily chat ring theor broker and say whats going on with Petrofac - chances are the broker opened the position with them - then they get some opinion from the analyst - its probably just public - but may be considered special information - the bonds guys say Petrofac is banging against its banking limits - that hits the equity team - the fund manager looks at his perfomance and thinks crap i dont want these to drag my alpha down - so says to the broker - im interested in bids on 25bars - (millions) to you) - then the broker's dealer rings Schroders dealer and says OK i have a buyer for 4 bars - they haggle the price a bit but broker dealer knows he is a seller so its a bit pointless - then he also says when this hits the price will fall a bit so i will also offload 2 bars into the market - dealer waits for a tick up and then rings the MM - hey make me a price in size please - OK 72 / 76 for 1/4 bar - "go on" 71 / 77 for a bar - "go on" 70 / 78 for 2 bars 68 / 80 for 5 bars - wait a minute - "Schreoders - mate i can get rid of 5 bars for 68 - price is now" "Schroders shouts to fund manager - Rupert - you want to sell 10 bars at 68p ?? - er ?!?!? OK "Schroders - yes sold to you" - "thanks" "I buy 10 bars at 68p in Petrofac" "MM - price any good?" "nearly - i can trade 5 bars at 68.5 / 79.5 if you want the business" "OK" "I sell 5 bars of Petrofac at 68.5p" "MM confirmed - i buy 5 bars at 68.5p"
The MM now probably has a long book - unlesss he was quite short and needed cover - 5M are booked to a client on a put through via the broker and never see the market - broker makes commission + say 10p on 5m shares - nice - probably a bit wide that spread - and then the trade with the MM makes commission and Schroders like the extra 0.5p - makes the broker/dealer look good.
The MM now goes into the screen - adjusts the price down and announces via screen that he is seller.
Dont forget though the market is wise - they see this coming because chances are the dealer has asked a couple of MM for price in size - plus any MM who needs to grab a few will ring the MM and say "i need 1/2 bar at 69.5 p please mate to square up" - the MM are in battle but they also help each other.
Thanks Blue
I worked as a dealer and a broker in the City and you will never beat the information flow between broker > dealer > market maker - its impossible.
The only way to do well out of that loop is to find value and hold it - trading for 1-5 days is for processionals.
Higher Low formed last 10 days - at around 25p - if the next leg up can hit say 45p - 50p before falling back to say 35p - then this is confirmed i suggest. Time to buy and hold for 90p target?
Thanks - Blue
For a pump and dump - someone needs to be there to accept the dump - who would buy heavily at 5p then ?? into a one way door of a tiny £10m business - I wont say it cant happen - i used to work for TC Coombes - if there is anyone out there who knows what that means !?!?!? - so i know how P&D gold plays work.
Thanks Blue
Yes i invested too - but at 15p !!
My opinion -
banks get paid for rolling credit - that's a fact - so the credit will be paid - and then a new credit line made available via a new bond issue - thats how non equity financing works.
Thanks Blue