RE: Good Evening22 Dec 2015 11:57
Kamel17 - good to see some seasonal spirit in your recent post. That said, I concur with the general tone of your many posts as this share has proved to be a complete let-down and not all of that is attributable to the Bolivian expropriation and the underwhelming settlement. I would suggest that most of the poor run we have experienced is down to pure mismanagement, incompetence, greed and carrying a high overhead cost base which has under-delivered any meaningful projects for which it purports to have worked on.
Much spurious upside talk from many on this board with little based on hard evidence or fact. Forget about Peru (immaterial in size) and Chile (the likelihood of the projects ever being delivered looks increasingly unlikely - perhaps the turbines have some value but perhaps they are just rusting somewhere and their re-transport value is higher than their value as turbines or scrap metal value). and focus on Argentina.
According to the last interim update, Rurelec owns £38.9m of investments in, and loans, to EdS - EdS is generating annually about $8-10m of EBITDA (I think the revenues are $ denominated but I may be wrong) with little in the way of third-party debt. So you would have thought that there is some value attributable to Rurelec's ownership in EdS The Argentineans have restricted both payments to EdS for the power it is supplying (so receivables have been building up in EdS and restricted the convertibility of Pesos into dollars so that what cash was yielding was trapped so Rurelec has not been receiving the cash it was relying on to fund its own bloated overhead and with no other source of cash, it has been struggling. The news on Argentina is positive in terms of maybe being able to start getting the cash out but no doubt they will try and re-trade the quantum of the receivables owed to the power sector generators.
Also, Rurelec has a 50/50 in EdS so a lot depends on what kind of control and influence the partner is exerting and no doubt they are trying to take advantage of Rurelec's weak position to optimise their own outcome. They way I would do that would be to try and starve Rurelec out until it caves in and accepts a low-ball offer for its investment.
Also, one should never discount the potential for fraud in these situations and maybe Rurelec's assets have been collaterilised without that appearing in the accounts.
For those of you who can, perhaps hold on and see what happens as difficult to believe the administrators of Sterling will allow this to carry on much further and will want / need to realise the monetary value of Sterling's investment in Rurelec. My bet is that they are already discussing low ball offers from Rurelec's EdS partner and one or two other parties who recognise the turn-around value of buying a cash yielding asset in Argentina in a country with a shortage of power supply from a distressed seller. I believe that this share is worth more than 0.85p - how much more we s
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