BGEO stake & NAV discount21 Mar 2024 11:43
No more than Mr. Market, I'm always very dubious about the claimed NAV per share (£24.23 at Dec '23 and will have increased as the value of BGEO has risen in Q1'24). One way to sort this out would be to sell the BGEO shares which have a current value of approx £433m. At Dec 23 CGEO had debt of £86m. This gives a net surplus of £347m after repaying the debt. CGEO has a current market cap of £562m. Do a tender offer for its shares to the value of £347m. In theory the revised market cap = £215m or £5.00 per share v the current trading value of circa £13 per share.
Per the Co's NAV statement at Q4'23 total portfolio value = GEL3,672. BGEO accounted for GEL1,226 of this leaving the remainder at GEL2,446 = £709m. This is nearly triple the revised market cap which should surely be revised upwards in due course.
All of the above are approximates but you get my drift. I suspect that there are multiple reasons for not doing this such as debt repayment covenants and timetables, restrictions on the ability to do such a a large scale tender, ability to place such a stake in BGEO, etc, etc.
However the status quo is deeply unsatisfactory. We are currently paying the management team in CGEO to mind our investment in BGEO which is possibly the biggest stumbling block to any portfolio reshaping. Only sorry that I ever divested my stake in BGEO into CGEO a number of years ago.