TPI Event13 Feb 2019 10:33
Morning all,
Just to follow up on some details from Monday night.
It was my first chance to actually meet James Menzies, was a pleasure to meet him finally.
I gathered the funding was on the expensive side, however for the size of the Indonesian Acquisition: Duyung PSC, the team were faced with a delay of almost 2/3 months for this to come through. The delaimler was a poosible reverse takeover for the Acquisition or ask for shareholders to fund. The team came out fighting and resorted to a share/cash/Eurobond solution. In Andy's view this was the approach to this deal.
Speaking to Ben Turner (one of the bosses at TPI) and his comment was the deal annouced was excellent given the size of the company and expects big things from James Menzies.
I did question Andy on the financial side of the deal and to my surprise he did email me as promised to say the following:
"Hi Deepi,
Good to see you last night and thanks for your time, questions and feedback.
As we discussed, the Eurobond will have a simple blended annual costs of capital of ~13% if held and redeemed through to maturity.
This is calculated by adding the issue price discount (15%) plus the fee (7%) plus the all coupons paid (5% x 3years = 15%) - all then divided by 3 years.
We are funding a high quality development stage asset whilst also exposing shareholders to some near term drilling activity with prospects that have a high geological chance of success and the ability to double the size of the existing resource.
These types of transactions are generally not debt fundable leaving the only alternative to be new equity which would have been very dilutive to our shareholders given price performance versus the April admission price and in the context of us raising an equivalent amount of money to how the market values the Company. I think its testament to the quality of the asset and the support of our institutional investors for them to extend funding to us on the basis we have announced allowing the Company grow and execute on its strategy.
Any further questions, please do not hesitate to contact me.
Best
Andy"
The team doing a live web Q&A today. 41 minutes countdown.
Please visit : https://yourcoroenergy.com/
Deepi
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