Member Info for casapinos

Philb, Milo
I agree guys, and that's why After sitting on the sidelines for almost a year I am reinvesting.SOME of the fog is lifting and I know there will be issues in the future but , for the time being , I see a clear strategy to fund the mine build and perhaps to manage down the total cost (of money), not necessarily of project engineering!, depending of course on interest rates , fx rates, successful poly sales from Boulby......As in the past I will accumulate and hold, unless/until more clouds loom on the horizon!

Milo I am glad you have pre-empted my intention to respond to this query, it seems a messy arrangement but I think you have got the principle right.

It looks to me as though SXX are on the hook to offset any risk the RCF providers have by progressively issuing SECURED bonds against the RCF debt.
That has two implications , first that at the time of issue the assets (ie the half-built mine) are deemed to be worth more than the cost of the secured debt , as that's the only security SXX has to offer(and I am not going to mention companies taken over by their creditors!!) and second that the true cost of debt may be higher than at first glance.
I have been working on how to establish the "new " debt cost using the Feb presentation as a base case, but in truth there just isn't enough data to arrive at a conclusion.We will have to wait until the company offers some revised figures and a new graphic a la P14 of the feb presentation.

One other clarification to my 11.36 post . Although the equity portion is $1.04 bill a mere $800 mill is "new" equity , the rest is of course, that committed but not yet issued in the previous CB offer.

LITC true!!

HI Aubery the simple answer is "I don't know!"
BUT, If you look back at a five year chart on this site you can easily see several "spikes" or sharp falls accompanied by unusually large volumes. My guess is that most of the volume lately and previously has been down to the 85k of PI's who (if some of the posts here are representative) have staked far more than is comfortable with this company. There is plenty of evidence that SXX is still not typical with a share register comprising of three quarters PI, one quarter II , the other way round is the time at which this SP will stop acting like an AIM Minnow.
I would like to think that the placing shares have gone to Ii's who intend to hold , I don't see that turning a few pence profit on recycling them into the market in the near term is an effective or probable strategy, after all, they are wise enough to know that flooding the market will drive the SP down, hence eliminating profits.
My hope is that like myself , others with II funds to manage now see that with funding virtually assured, this could be a steady , near - secure and profitable investment, though not a "Ten -bagger "

HI wwguk
A bit of general background first and then i'll address some of your specific questions.
The funding package outlined this week differs markedly from the company's previous proposals.
In simple terms the debt element is not $3bill but $2.5 bill, the equity element is $1.04 billion.That latter figure is the one which has done the damage to the SP in recent days
The placing and open offer became inevitable when CF repeatedly said " we believe $3 bill debt to be a maximum " and the capital requirement became $3.4-$3.6, that in large part, caused the previous SP fall(last autumn - last week)

In all cases funding decisions are a compromise between security, duration and cost, long-term funding is (normally) more expensive than short,companies with no revenue pay more than those with...... ,.etc etc

Now to specifics:
The "new" CB offering is intended to do two things, first, appeal sufficiently to all existing CB holders that they will sell up and replace old with new. To do that the new terms have to be measurably better.This has been achieved by markedly lowering the conversion price which makes the likelihood of short(ish)term capital gain more likely so NEW CB holders can look forward to a significant capital gain to offset the lower coupon(and for some, to offset the likelihood of "shorting returns)and it is no surprise given that existing CB holders were unlikely to see an attractive conversion opportunity for some while, as it was clear to all(wasn't it?) that the SP would fall over recent times(ie while this stuff was in discussion).
I believe that SXX are correct in their implicit assumption that (almost )all existing CB's will be cashed in.
The second purpose of the NEW CB offering was to raise revenue by issuing yet more equity but on a delayed basis , ie not until the NEW CB's convert.They had no choice , we must presume that JPM offered a maximum of $2.5 RCF and the rest had to be found from somewhere, the falling SP is "collateral damage"offset somewhat by the likely rise in market cap. at the end of the exercise and when the dust settles , which will make an further(or alternative) fund raising easier.
As a last note I suspect that SXX hope down the line to be in a position to replace some funding at lower rates as the build progresses.
hope that's all clear but fire way with more questions if you have any and i'll do my best!

I have had my differences with Myo but if he is reading or anyone can contact him please tell him that his forensic analysis is a valued contribution to this board.I sometimes wish he would put down his microscope and pick up a telescope but ALL data input is valuable.
Myo if you are around and feeling somewhat bruised by recent events , pause, ponder and return.Your willingness to scour the internet for actual data far outweighs your stubbornness in refusing to accept the bad news I sometimes offer!!!

Bicko it's impossible to be certain but my 30 years experience in investing tells me the chances of the SP falling below 15p are negligible (that doesn't mean it won't happen, it means it is VERY unlikely to happen) after all a company offering shares at above the market price are going to have few takers.
If you are trading on margin you will be "stopped out "if it does happen and you have no control over that. I suggest you watch and wait. The options are

You sell now and lose a large part of your investment
you wait and find you are "stopped out " and lose it all
you sit tight and the SP recovers and you are the relieved and happy holder of an asset which will slowly turn a profit

"Prediction is hard, especially of the future"

BUT roulette if you read my posts I explained at length where the problems lay and why the ST2 funding would have a negative effect on the SP, see my posts of 2 July LAST YEAR, 23 July.,7/8 August 2018 and beyond
It was clear to me, and I detailed it for readers here that the ST2 funding was critical issue for SXX and understandably led to the price falls between last autumn and early this year and the outcome has created the further falls of the last few days.
Not always, but often, the evidence on which to base sound judgement about SP movements is there in the public domain. Intelligent , though really not too complex analysis can lead investors in the right direction. When I offered my views I was repeatedly met with sarcasm, insults, doubts as to my integrity even death threats.
There is a problem with the SXX shareholder register which matters to the PI's and to the company . It is that far too many of SXX shares are held by tyro investors with little market experience who don't really understand what they are doing(witness today's plethora of questions about the open offer), they refuse to listen to voices of reason(several others besides myself.) Bridle at any suggestion that SXX is anything other than the greatest company on the planet and investors are sure to make a small fortune. If that were true the SP would have been climbing steadily for years . The SP is a barometer of the shares health when it falls it means that many people have reservations, that is a message to note and possibly to act upon.
My hope is that the recent SP fall will lead to investors taking a more balanced view , doing some of the simple homework needed to improve their understanding and recognising that Equity investment is not a simple mans route to a fortune., it needs patience certainly but it also needs the ability to balance the positive and the negative and to give both due weight.

Roulette if the "hindsight "jibe was directed at me I suggest you read my posting history.

wwguk The bond terms are expensive but both parties know that without the cash SXX was a dead duck.Similarly the RCF terms insulate the lenders against the (unlikely ) prospect of sharp interest rate rise in the future .

You are correct in your assumption that SXX might well be able to negotiate better terms for replacement debt in the future if:

Mine progress is broadly to target or better
The product sales by ICL Boulby go well
Interest rates hold or even fall
"cable" the £:$ rates fall as the product is priced in dollars and I guess that most costs are in pounds

BUT, it is clear that this deal and its various component parts were the best that SXX could achieve. Those grumbling about the SP consequences, CF 's competence,, the market makers abuse of PI's .....the iniquity of banks seeking to make a profit......etc. might have been well advised to recognise the tenuous nature of SXX position and that an outcome such as we have seen was probable , indeed inevitable.

The FT is confirming that the bonds and the RCF are "priced to go"ie they are at a price which (privately) has been agreed with the lenders.
Given that the Yield to maturity(YTM)is 10% then bondholders know that if need be they can sell them on, it is also worth noting that the conversion terms are exceedingly generous (stock at 24 cents)
The likelihood of the bond offer not succeeding is vanishingly small.
Once the bond issue is achieved the RCF , which is priced at Libor +500 basis points(ie 5%)is againa very attractive rate which JPM will have little problem serving.

SXX WILL be funded but at tough rates , as befits a supplicant company.
In the current low interest rate environment the debt elements will be very attractive to all those who need a decent return on their money - investment banks, private equity, pension funds , insurers.......

That's my portfolio objective. To that end i have bought some more SXX today at 15.83p, meaning I need it to be >17.4p in 12 months time . I believe that to be highly likely.

RNS describes the convertible bond offer much as my 13.41 post yesterday set out.
There is however one notable difference and that is that the CB's will be redeemed in May 27 at 160% thus generating a YTM of 10%.
As I said yesterday SXX debt costs will be substantially more than set out in recent presentations. I have no doubt they will be heavily revising their cash flow estimates in their next presentation . My next investment here will probably come after that is public , though I will have ago at some sums before that.

For those of you willing to do the sums which underlie your investment, here is some more detail of the funding framework.

The Convertible bonds are senior unsecured, 5%coupon over 8 years with a conversion premium of 20-25%over the placement price (that probably means 15p x 125% or 18.75p.
That suggests that SXX have agreed a low coupon at the cost of a very fat profit for the CB's if/when the SP rises.
There are issuer call triggers at 150%after 2 yrs and 130%after 4 years.
the high yield bond is senior secured and expected to be at a coupon of ~10%
The RCF (revolving credit facility)will be priced at Libor +500bp(libor is currently 2.75% so thats 7.75% to SXX.) It will be drawn in three tranches of :

$1bill in 2021
$1bill in 2022
$500mill in 2023

SXX will therefore be bearing some pretty steep interest costs as they build . I will post again (in a while!!)when I have worked out some figures based on the above.

I've just bought a few at 17.7p

The primary outcome of today's news is near-certainty that the funding is in place.The details are slightly more onerous than the reports last night from SKY in that :

The placing will almost certainly result in about 2 bill new shares issued at 15p.(ie a 30% discount)
There will also be a new convertible bond offer which is intended to fund the "sweep up" of all outstanding existing bonds and by implication, will have to offer at least as good terms , if not better than those existing bonds.
The bulk of the debt will be a rolling credit facility which will reflect the cost of money at the time of draw down ie if interest rates go up SXX debt service costs will rise.
There will be no opportunity for PI's to partake in the funding.

So SXX Have their funding , at an overall cost which is not yet clear, I suspect the SP will not take off spectacularly (though there is no accounting for the mind of the many over-exuberant PI's invested here!)but I do expect the certainty of funding to more than offset the somewhat more onerous terms with a SP rise in the medium term.

If the Sky reports are correct(and my guess is that they are)then several things emerge

First ,the debt funding is in place, probably a syndicated loan managed by JPM (likely interest rate high single digits)
Second The Pi's will not be asked to take part in an open offer.
Third if the placing is for existing shareholders, described by Sky as "major city institutions as well as Gina Rinehart" (but we have almost no evidence that many ii's hold significant levels of stock on their own account)so my guess is GR is getting the lions share and at a ~20%+ discount to the current price , so maybe 17/18p?
Straight arithmetic would suggest that the SP would therefore fall to around 20p BUT achieving the funding will more than offset that. I wouldn't be surprised to see a surge tomorrow if the RNS confirms the SKY story, and perhaps a gentle decline to follow.
However all you LTH's might find your hopes fulfilled and that the Sp won't see 20p again.......
After evaluating the news , if it lands, I may well join you in investing here.

MYo carefully selected extracts from my posts can be used to paint a picture but not as accurately as my entire posting history.I note that you omitted these:

2 JULY !!!(SP 32p) A post setting out some concerns "my caution has convinced me to SCALE BACK my holdings for a few months....."

7 AUGUST (SP38-36p) I have ......REDUCED my position.......

15 AUGUST I have reduced my position......

16 AUGUST another post titled "its just not that simple..." sets out my views on ST2

26 SEPTEMBER (SP30p) I am , CAUTIOUSLY invested....

2 OCTOBER I cannot see any significant upward SP movement

5 OCTOBER(SP 27p) I am out of this stock at the moment

I think a fuller and fairer analysis of my posts more accurately reflects what I have said and indeed what I have done IRO SXX.
As ever I will not prolong this thread further as most will not be interested . I do however wish to repeat that your forensic analysis of my posting history is only fair if you are willing to highlight ALL of the relevant entries not just those which serve your purpose, which for whatever reason, seems to be to imply dishonesty on my part.

MYo I suggest that as you are so fascinated with the content of my posts you reread my posts of early august last year where I set out my concerns and clearly stated that I was minded to begin selling a portion of my holdings. I began that process on 6 august(SP 38p), sold again in the middle 30's in late august and had a small holding up to late sep at which point I sold out completely and have not re-entered.
Nothing in my posting history is inconsistent(even though you have tracked it back several years,and on various sites!!) , and that is simply because I always offer a fair reflection of my thoughts and actions.
I have, as you have established ,a long-standing and profitable interest in this share and may well invest again as i have frequently said.I recognise that my views don't accord with your perennially optimistic view but believe that in the interests of balance, representing a more cautious view is allowable, even desirable, so despite your forensic search for errors on my part , i shall continue , occasionally to post here, even when i have no current financial commitment.