Stark words from PPVN2 May 2019 12:20
Probably the most informed poster after Myo / GK on ADVFN:
ppvn: GM Mr Oz / all, Ok well I've gone through the prospectus and all the other gumph with a bit of a tooth comb, but I have skimmed large sections as it's rather dull and I've focused on what I believe to have been the most important parts. I will say now that with a somewhat heavy heart I have disposed of my shares at a slight loss which is frustrating, so bear this in mind when reading. For me, the risk vs. reward has now been clipped to an extent where I no longer feel comfortable holding, but I sincerely wish all the best to those who do. I have no position long or short so I have tried to keep this balanced. It's a bit of an essay so I'll try and break this into sections as best I can. 1. The convertible loan tranche A) $400mm of CBs make up the "Escrow New CBs". This tranche, whilst cash is given to Sirius, is not actually released to them until September 2019, but this is contingent on them securing $500mm in debt by that time. Assuming the $500mm debt is raised by September, the $2.5bn revolver and CB funds will become available to Sirius. B) $106.6mm of new CBs will be issued to holders of the existing CBs. No cash is raised by Sirius since they got this cash in stage 1; it's an exchange. C) $137.6mm of existing CB holders haven't agreed to exchange their old CBs for new CBs. I assume these will be converted into equity and some short positions will be closed from this amount. Equivalent to 447mm shares. 2. The firm placing and placing A) 2.18bn shares will be issued in this piece at 15p. The issues I had is is that the $2.5bn revolver isn't really a $2.5bn revolver. For each $500mm drawn down, Sirius must issue further debt in order to avoid incurring a penalty interest rate that kicks in 90 days after they breach the $500m limit. Should they fail to issue new bonds and go over $1bn drawn, JPM will conduct liquidity tests to see if further monies can be paid. If they issue the $500mm in increments and repay the revolver, the total reduces by 60% of the amount repaid - so basically after they repay say 500mm of 2.5bn it then goes down to a $2.2bn facility etc. Once they've issued and repaid the full $2.5bn facility they'll have a $1bn facility which kind of makes sense. By that point the mine should be built. The caveat in the prospectus though states that if they can't raise debt to repay, they can issue further CBs, equity, mezzanine debt, preferred equity etc. So to the CBs. Conversion price is $0.2443 or 18.75p. The issue here for me is that 2.18bn shares from the 15p placing have to find homes before that level will be seen. Sirius are able to call the bonds after June 2021 at 150%, or 28.125p. So that is the top share price that can be expected until the CB tranche (2.1bn shares) have found homes. The other issue is that by 20th May 2020, the CBs can be repriced to adjust the conversion price down to $0.1954 - 15p. So if certain conditions aren't met, CB hol
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