Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I came across an article published this week in the Indonesian press about avanti’s lawsuit againt the Indonesian government. No clear verdict but suggests a settlement is likely to be reached soon. Search for avanti communications on twitter- should come on top of latest results. Google translate will come handy!
Kpatel- i think you are missing the importance of “the right order of execution” 1- bondholders agreement to D4E (92.5%)- DONE 2- shareholders agreement to the D4E and restructuring - DONE 3- avanti raising the necessary funds to keep light on- PENDING Your expectations that 2&3 should’ve happened simultaneously is unreasonable. Institutional investors will not provide avanti any funding before the first 2 steps are completed. Now that they are, the directors have exactly 2 months to get the third sorted! Patience!
Cassius, I wasn’t suggesting the OO was a result of management’s goodwill towards shareholders. All I said is cannot be a vehicle to raise the much needed cash give 100% subscribe would only generate sub £5m. The OO could be there to comply with a requirement by The takeover panel or mitigate legal risk arising from the D4E transaction. If you are an institutional investor who want to minimise dilution, absence of the OO the only other way to do so would be via the open market which could swing the SP due to the stock illiquidity. The OO theoretically would provide some protection in that regard...
I think the OO was offered to give existing shareholders opportunity to reduce dilution. Management may have not anticipated the SP tanking on the RNS so may have planned for a much higher level of subscription. This could also be a formality too. Either way, the money raised is byproduct of the OO rather than reason behind it given max subscription wouldve only generated sub £5m which is nowhere near what they need. This brings me to the more important point-If the share prices remains at current levels after the new shares post D4E are issued, Avanti’s new market cap would circa £150m- merely a third of the $550m of dept wiped by the restructuring (post GBP-USD FX). Bondholder would still be starring at a massive loss vs book value (they’d be down circa 65%) - pretty BAD deal (close to bond prices pre D4E - as some traded at low 26% of book value in recent weeks). Even worse, bondholders now lost some of the protection/privileges of debt in the event of default (The equity they just got ranks lower than their delisted bonds ). Looks like a pretty bad deal to Bondholders UNLESS they truly believe the company is now investible and financially viable post restructuring. The 40m cash injection (via another bond) looks inevitable to me as bond holders couldn’t triggered default way earlier and chose not to on several occasions. I topped up last week and I believe the market is starting to support this thesis given the upward momentum. Wont be long before we find out! :) good luck all
PI’s expectation that Solus will subscribe to the open offer is absolutely ludicrous. The £170k raised from the OO is from a combination of misinformed PIs and the directors who madeprior committment to subscribe fully or partly BEFORE the SP toppled to circa 5p. They couldn’t escape it after the committment David Bestwick’s shy committment to part subscribe is a testament of the precarious situation we are in- he has the lions’s share amog his peers and chose to steer away from full subscription. The full committment from the rest of the directors doesn’t tell us much- few £k from Paul Walsh is pocket change... Solus, unlike most of us on this board, are professional investors and certainly wont subscribe unless they genuinely believe the are getting a bargain that cannot be purchased in the open market. If Solus were to chip in and extend a lifeline to avanti - the are better off going via another junk bond or rights issue given. There is no chance of them subscribing to the OO IMHO. The statement in the RNS depicts a what IF scenario to show the max extent of share ownership and nothing more. Some are over interpreting what it says....
Ive been watching this quietly for the past year (as my previous convictions were wrong but i kept the shares as there wasnt much value left in selling). I decided to top up yesterday at circa 6p for the following reasons: 1- D4E swap has been approved by the bond holders so I assume there is no way back for them to revoke this approval (unless shareholders vote against he resolution). Appreciate if others have a different view on this point 2- New CEO, CCO throwing the garbage out in a classic clean up act and snapping this opportunity to increase the companies liquidity- they may be making a gamble but if it works it gives them the oxygen to grow the busines. If it doesn’t, their names wont be pegged to the failure! 3- bondholders acceptance of a huge haircut in the D4E means they see higher value vs the option of putting Avanti into administration or even liquidation. I am not convinced an additional $50m of funding will tip the balance for them especially if first point holds true My worry is whether this was all a show put by bondholders to ensure Hylas 4 gets into Orbit before they trigger admin proceedings... Huge gamble but i think we have more than 50% probably of getting D4E completed and raising the $50m. So worth it for me considering the short term upside. In any case we’ll find out in a few weeks :)