Member Info for DanTheMan105

My sympathies to all who have lost money, but I don't agree that there was a 'CF ramping circus'. I think just about all now agree that the project is a good one, Polyhalite is a good product, and is likely to be mined very profitably at Woodsmith for a very long time. The only problem is that the money was not forthcoming for SXX to complete the job as an independent. I leave people to form their own theories about why that might have been, considering the merits of the project. My own thoughts: It's a lot easier to knock a man down if his feet are tied together. For what it's worth, I've just sold 2/3rds of mine at 5.5p, and the other 1/3rd can take it's chances, for the moment at least.

I think that if you engage an outfit like JPM for a fund raise, to be your 'sole global coordinator', sole bookbuilder etc., it is reasonable to trust them to get the job done. And they failed to come up with the goods. So I don't consider the BOD responsible for any morally questionable dealings. All the risks were in the Prospectus.

So AAL may only make a less favourable offer under the three particular circumstances in the RNS. This seems to me to mean that the 5.5p is pretty solid, and more likely to rise than fall. I'm holding for now.

I'm thinking that there may be some connection between the attractiveness of this project as a going concern and the inability of our bankers to provide the funding to enable SXX to survive as an independent company.

Well, that looks like that's about it then. Very disappointing compared to the huge potential of the project, but without the £2.5Bn to complete the mine, that's a different valuation. On a lighter note, AAL are currently paying a dividend of about 4%; who knows, once Woodsmith is up and running a shareholder could still in some (smaller) way enjoy the fruits of all this effort. And there might still be other offers, who knows?

Looking at the technical definition of "Best Efforts":
https://www.investopedia.com/terms/b/bestefforts.asp
I wonder whether this is banker's terminology for 'Norfolk 'n Chance', in which case we were always likely to be up against it: maybe the time comes when it's muck or nettles and you have to give it a go. Hopefully the board can come up with something less ambitious but safer this time round.

I think the real rogues are the gnomes of J.P Morgan and Affiliates, who were appointed as:

"sole global coordinator and joint bookrunner in connection with the Firm Placing and Placing and Open Offer" and

"(i) will be the sole bookrunner of the New Convertible Bonds, (ii) is expected to be engaged to act as the initial
purchaser of senior secured guaranteed bonds in a gross amount of US$500 million (£384 million)
(the Initial Bonds) on a best efforts basis and (iii) has committed to providing the RCF (which is
expected to be syndicated to other lenders with an affiliate of J.P. Morgan Cazenove acting as sole
lead arranger)."
Did JPM advise the company that the Initial Bonds were going to be risky to shift? In which case, was it really worth going through all the preceding palaver, New Convertible Bonds etc., knowing that there was a good chance of falling at the last fence?
Or did they assure the company that all would be well, considering their international expertise and best efforts? I am sceptical that the 'Best Efforts' of JPMorgan would be insufficient to move $500M worth of bonds if they put their backs into it.

2019-12-16 16:45:21 0.35 1,300,000 0.33 0.35 Buy 4,563 UT

If I, or anyone else, offers to buy a parcel of shares at (any price) above the offer, I daresay the market would accommodate us, and this means that, for however brief a period, the share price was 5.00p. Which may have a significance we can only guess at?? (or of course none at all)
GLA

Myosotis, thanks for the links; I really should have been able to find the prospectus, but not the rpa report, so thanks especially for that.

I can't find the prospectus on the website now, but from my own copy, and for general info, here is the paragraph on the sharing of shaft sinking and tunnelling risks:

The Company has aimed to award construction contracts on a basis that transfers to contractors the
risks that they are willing and able to accept and has included incentive mechanisms in certain of its
contracts to reward delivery by contractors that is on, or ahead of, cost and schedule. However, the
objective of transferring risk to contractors has been balanced with the need to reflect what is
commercially acceptable and achievable within the respective contracting market. As a result, under
many of its agreements with contractors, which are subject to complex and bespoke pricing
mechanisms that include target cost contracts (as opposed to fixed price contracts), the Company
bears some risk of cost overruns and delays due to a lack of a fixed date for completion as well as
wide force majeure relief, which will not be compensated for by contractors if they occur.
Additionally, because the Project is technically complex and there are limited precedents for two deep
mine shafts of the type being used for the Project, and limited providers with relevant shaft-sinking
and tunnelling expertise, there is no certainty that actual costs will be achieved in line with the target
costs contemplated by such contracts, as a result of which the Company bears the majority of the
33
cost overrun risk. In particular, the Company bears the risk of cost overruns under its shaft
contracts, despite certain incentives for the contractor, DMC Mining Services (UK) Limited and
DMC Mining Services Ltd (together, DMC), to deliver on, or ahead, of schedule and within budget.
For the Mineral Transport System (MTS) tunnel, the contractor has taken on more risk as the
contract price is fixed within a set of certain parameters and any price variation is borne by the
contractor. However, to the extent certain aspects of the contract fall outside the pre-set parameters,
e.g., if ground conditions are found to be outside the agreed geotechnical baseline report parameters,
then the Company will bear the risk of cost overruns. Moreover, certain limited elements of the
Project, including ventilation infrastructure and the 3.5 kilometre overland elevated conveyor (OLC),
are not yet the subject of agreed procurement contracts, giving rise to some uncertainty with respect
to additional costs. Furthermore, some key construction contracts contain certain risk allocations in
relation to customs, duties or tariffs arising from, and increased administrative burden relating to, the
United Kingdom’s June 2016 referendum vote to leave the European Union (Brexit).

P.S. Isn't there some old saw about repeating the same actions and expecting a different result? All fingers and toes crossed!

Sheps, I agree that the risks involved in the shafts and the MTS are already significantly shared with the contractors, and Strabag and DMC are world leaders in their areas. That's why I find it so hard to believe (accept?) that the failure of the bond issue was down to perceived technical risk. I (prefer to?) believe instead that we were treated shabbily by the bankers. I think that CF, as a banker himself, must have known that there was such a risk, but that at some stage you have to put your head in the lion's mouth and hope. And we are soon going to be in that position again, fingers crossed for a better outcome.

Just for the record:

The Stage 2 Financing consists of a combination of:
(i) an underwritten Firm Placing and Placing and Open Offer to raise gross proceeds of approximately US$400 million (£310 million)1 at a price between 15 and 18 pence per New Ordinary Share (the “Issue Price”) launching immediately following the release of this announcement;
(ii) an offering of guaranteed convertible bonds with an aggregate principal amount of approximately US$644 million (the “New Convertible Bond Offering”) launching in conjunction with the Firm Placing and Placing and Open Offer, of which up to US$244 million is expected to be applied by the Company entirely in purchasing an equivalent amount of the Company's existing 8.5 per cent. guaranteed convertible bonds due 2023 (the "Existing Convertible Bonds") through the Existing Convertible Bonds Buy-back (as defined below), (the detailed terms of which will be announced separately on the date of this announcement) such that approximately US$400 million of the New Convertible Bond Offering is fully underwritten at launch;
(iii) senior secured guaranteed bonds in a gross amount of US$500 million (the “Initial Bonds”); and
1 The GBP/USD exchange used is £1/US$1.2924, being the closing exchange rate at 16.30 (BST) on 29 April 2019.

(iv) a committed and secured revolving credit facility with a maximum commitment of US$2.5 billion, which will reduce as further senior secured guaranteed bonds are issued after the Initial Bonds (the “RCF”, and together with the Initial Bonds the “Stage 2 Debt”),
(together, the “Stage 2 Financing”)

Topp0, in the interests of better understanding, is there any chance that you (and certain others) could try to write in English?

Could I suggest readers have a look at the collected posts of Durban Dan https://www.lse.co.uk/profiles/durbandan/ to find out what a good chap he must be. Anyone remember the old Spitting Image song 'You never met a nice South African'?

I think it's extraordinary, and very disappointing, that we find ourselves in a position normally associated with a long-awaited oil drill coming up dry, or a project coming up against insurmountable technical difficulties. As far as I know, malicious speculation aside, there are no such circumstances. It's my belief that potential investors were 'warned off', possibly by our own bankers, with the ulterior motive of putting the company in a precarious financial position. When the current shenanigans shakes out, we should look carefully to see 'who benefits'. I am still hopeful that the board can secure some form of financing which leaves shareholders with some reasonable equity for the future. I still have my shares, for what it's worth.

I think that Fraser's gesture of buying a few bobs' worth of shares has the effect of telling us that there will be no major breakthrough for a 'decent period' (30 days, anybody?) after an insider purchase, according to market rules.

There is an old saying - 'Sell in May and go away, and come back on St. Leger day', suggesting that the summer is an unproductive time for investors..... well, St. Leger day is tomorrow, so maybe next week.

May not be necessary. A nice little rise this morning. Maybe the market has detected a glint in Fraser's eye at brekkie in the Sirius canteen, or a certain enigmatic smile?