REMINDER: Our user survey closes on Friday, please submit your responses here.
https://dmpinvestmentfund.blogspot.com/2023/01/opg-power-ventures-uk-microcap.html
By October 2022, M&G committed to not invest in businesses which are unwilling to transition from thermal coal by 2030 in OECD countries. By October 2024, M&G committed to not invest in businesses which are unwilling to transition from thermal coal by 2040 for all countries in the world. OPG would have fallen under 2nd restriction so divestment would always have had to happen for M&G.
https://www.mandg.com/dam/investments/common/gb/en/documents/funds-literature/fund-specific-files/2022/implementing-mandg-thermal-coal-investment-policy.pdf
But M&G had 47,699,617 as at 29 September 2022. If they wanted out so badly doubt they have been buying shares over time. The total shares disposed were 66,749,617. Although the fact that both numbers end in 617 does feel like M&G had a part in this....
I would put my money on sale being within the Gupta Family, maybe moving shares around for tax optimisation purposes.
Not a straightforward answer, would depend on how much % is sold. Any sale of any division equating to less than 50% of the stake in the respective business would result in:
1) THG (the listed company) would get the cash proceeds into the business.
2) THG continues to consolidate 100% of the revenue, costs etc of the division (if divesting less than 50% of it)
3) There is a minority interest adjustment at the Net Income level to account for the % of the segment, THG no longer owns but still consolidates 100%.
The only way this re-rates is if Management and Board do something to show the market the the share price is massively undervalued. The prior CFO said the company was worth 4 or 5x the current market cap, time to put their money where their mouth is and start share buybacks. The Balance Sheet is completely fine, they can pay down their debt with current cash and cash equivalents (investments in Mutual Funds etc).
Could be a good call if at single digit interest (anything up to 10%). Can then use it for a combination of:
- Other Bond Repayments
- Dividends
- Share Buybacks
- Investment in New Projects
https://news.sky.com/story/chief-of-reborn-sensyne-health-secures-funding-for-growth-plan-12767384
Book value is a flawed metric imo, distorted by accounting policies especially around PPE. The original cost of the coal plant was capitalised and there's no guarantee that a sale would be at current book value (not unusual for these to trade below book value). Having said auditors should test it for impairment (albeit they rely on Management to provide estimates of future cash flows etc so becomes circular).
A more reliable estimate of value is looking at recent transactions of coal power stations in India and computing an Enterprise Value / Installed MW Capacity metric. Valuations will be driven by factors such as Commissioning Date, PLF, Tariff Regime, potential for enhancement capacity, but ultimately one can get a decent sense of value.
There have been various transactions recently in this space and all at EV/MW multiples of £0.4m-£0.6m. Its a narrow range and gives confidence on its accuracy. OPG has installed capacity of 414MW so easy maths to show that a hypothetical sale would yield multiples of the current market capitalisation.
Yeah seems like a no-brainer if they had the know-how to implement a strategy of re-positioning the business to renewables. The market is not valuing the coal plants appropriately so need to create value in another way.
Loss making, not overly surprising. 10% Down. Would have been useful to get a Q&A session....
How much value do we think the Mutual Funds Investments have lost since the last report? Not sure I understand what type of Mutual Funds they would have invested in or how investment value might have moved but has crossed my mind as a bit of an unforeseen risk.
No point in running the plant when coal price is higher than revenue its getting from selling the power
How many shares are people holding?
What are people expecting for revenue, plant load factor and EBITDA for the first 6 months when results are out later this month?
They only need 75% of the shareholders who elect to vote. Which they will get 100% certain.
Gatemore, Sand Grove, Drayson and Lansdowne have 44%. The NHS Trusts + Oxford Uni have 13%. These are all in on the restructuring per the RNS. So that's 57% of all the shareholders already. A lot of retail investors don't exercise their right to vote so 57% of shareholding will be more than enough to get 75% shareholders votes on the AGM.
This not to say I don't believe the share price is undervalued, I personally think it is. Just don't think the catalyst is that these shareholders would buy additional stakes to get to the 75% shareholding pre-vote.
So Jefferies (~1% Shareholding) basically bought and sold similar amount of shares on Friday so they haven't liquidated position.
Will be interesting to see who's offloaded on Monday morning. Total shares outstanding are 170m....A lot of the 95m will be the same shares going around but I suspect we'll be seeing a few Institutionals exiting (the ones that don't have a remit to hold investment in unlisted equities)
New RNS. AIM delisting coming up, Drayson steps down, further loan notes to be issued, new CEO. A lot to take in there
This needs to hold 10p, the warrant price for the rescue package