Member Info for extrader

Presentation more than makes up for this morning's weak RNS, IMO.

The RNS is poorly written.

It talks about a relatively modest NPV of $152-177m for the 11 year project. All a bit underwhelming, maybe, despite the 'sexiness' of Rare Earths.

But - lost in the detail is - this is for module 1....of a multi module (no mention of how many) project....

HOC should get Carlsberg to write their PR.

AIUI/IMO !

Well, Nguesso ailing and Guinea in turmoil might both fairly be said to be 'changing the dynamics' (AT's game-plan)......whether positively or not remains to be seen !

There's an RNS NON that lse aren't showing. Just a confirmation .

I've never referred to SYME's net income being affected by the bonds, only that TAG's resources might be better deployed by a shareholder loan to SYME that would mean it didn't have to resort to loan sharks.

My comment re (possible) restriction on ability to issue shares referenced CLN as this is an option under the new facility...and an option in the TJ and JC payout arrangements.

.."Now let’s extrapolate. Using your own figures
€49mill against €61 mill bond security doesn’t work [glad you can see that]
How about a doubling of the sp
€98 million [shares] against €61mill shares [you mean bonds, never mind], getting better I would say not ideal though.."

Well, the 3 x lenders of 1AF2's previous pledged shares deal had shrinkage margins of 30-50% on their websites, IIRC, so other things being equal, I agree that a doubling of SYME's s/p would just about cover the existing Euro 61m .

You obviously would like to believe that a variant of 'equity release' will kick in here : as the s/p rises, 1AF2 /TAG/AZ can generate liquidity by issuing more bonds. Well, maybe....or as you might say 'could'.

Let's get to 0.6p first and see what happens.

The Pledge agreement seems silent about what happens if Security rises - or falls - I note however that there's a negative pledge (so shares can't be pledged elsewhere), interestingly also a proscription on share consolidation (bad luck re Nasdaq aspirations) and - even more interestingly - appears (maybe I'm misreading) to say in 7.9.3 that the Chargor (1AF2) agrees that it will not allow any alteration to its rights over the Shares ...and that no further Shares may be issued unless they're allotted to the Chargor.

An obvious protection to make sure your Security interest isn't diluted away, but I'm not sure how that will square with any shares that need to be issued for a CLN...or to pay the 'earnout' balance of TF acquisition.

Time will tell.

Well, if you believe the source, that puts another canard to rest :

.."Supply @ Me's free float is currently around 60% .".."

ECP holds Euro 40m (not 41m) of bonds issued by 1AF2, g'teed by TAG and supported by a first charge over substantially all of AZ's SYME shares, AFAICS.

Apunter2 himself seems to think that total bonds issued and to be issued are Euro 61m, see
.."https://dealflower-it.translate.goog/1af2-limited-the-avantgarde-group-emette-bond-da-61-milioni/?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=ajax,nv,elem

So what are 1AF2 going to do with the €21mill..."

So : total bonds Euro 61m, TAG/1AF2's 39% shareholding (currently worth abt Euro 49m) as support/security.

Capisce ?

On your interpretation, TAG/1AF2/AZ has 'resources'/financial credibility sufficient to provide security to support the issuance of 41+61m = 102m worth of bonds.
Why doesn't it use a small part of these resources to lend SYME £5-10million, improving SYME's liquidity and business prospects, saving it payday loan charges and avoiding shareholder dilution (including its own) ?

Amidst all the bluster and verbiage, apunter2 is basically saying that the ECP - 1AF2/TAG bond issue 'proves' the feasibility of the structure.

He omits the small matter of the Vendor Loan, where the purchaser of the bonds (ECP) has been given 100% finance AND a 1% net income on the interest differential (Bond vs loan) AND a substantial, albeit unquantified Exit Fee when the Bonds are redeemed.

1AF2/TAG have pledged SYME shares as security for a deal that has tangible costs and no obvious net cash/liquidity benefits.

On planet earth, that isn't a repeatable or scalable business model. Perhaps that's why apunter2 hasn't been able to explain how a bond issue could be used to fund IM; repay the earlier loan for pledged shares; or provide a capital contribution for the Captive Bank.

And although the security is largely academic in this structure (given normal rights of set-off), having been given to support this deal, it's not available to 'double dip' for other, larger issues : the extra Euro 21m mentioned, taking the Bond Issue total to Euro 61m is supported by 1AF2/TAG/AZ's 39% shareholding, worth approx Euro 49m at the moment.

Suggesting other resources (Ceresio/Eurofinleading 'could' be involved...) begs the question : if 1AF2/TAG/AZ has these resources available, why is SYME having to take out expensive loans that damage its commercial viability and impairs 1AF2/TAG/AZ's investment ? And that's before taking account of any CLN-related or other dilution.

Ho hum

Do you think any TAG/1AF2 bonds will be issued in the UK ?

Prospectuses :

.."These have to be lawful and with financial statements. These will be based on SYME as the bonds are secured by Syme shares..."

No, they won't.

Here on planet earth, lenders/investors look at the Issuer (first recourse) and only then the security (fallback).

Security is like an atom bomb : you want to have it , but your hesitant about using it : (a) because it might not work ; and (b) because it might, butwith unexpected fallout.

So investors will look at TAG/1AF2 financial credibility first... and only then at the underlying security on offer.

TBH, SYME shares as security have several question-marks.....and 1AF2 /TAG financials are a complete unknown... do you seriously believe TAG financials will be forthcoming ?

Keep on taking the KoolAid.

.."Now the 61m where does it stipulate limitations on the use of money for this bond. Please cut and paste to validate what you say.."

I never stipulated limitations, I questioned apunter2's suggested applications : as cash for IM; as cash for loan repayment; as cash for a bank's capital.....

Try to keep up.

.."Extrader, don’t take the hump because you got the “vendor loan”wrong, which was your ECP reference not mine..."

Hands up !
I got my idiots and bond issuers confused :
It was Gotham / gasman10 who said ECP had paid for Euro 40M worth of TAG bonds, ignoring the matching Vendor Loan.

It was you that pointed to the repayment potential of ECP's Euro/£ 25 million bond facility, overlooking that it had (drum-roll) £ 50,000 of seed money subscription by DW. A bond listed in Vienna , of all places, see today's FT.

And I note you haven't come back on the 'non-cash' nature of the TAG/1AF2 Euro 61m bonds and their unsuitability to (a) fund IM; (b) repay the earlier pledged loan; or (c) capitalize a financial institution .

Ho hum.

.."Extrader… sorry to let you know but that’s Eight Capital Partners..
your digging into the wrong company now...."

I'm 'digging into ' the company YOU referenced, to show the feebleness of your argument.

You've just referenced that old chestnut Eurofinleading, which AFAICS reduced its shareholding to NIL per RNS 24 Jul 2020

And you've no substantive reply as to the evident unsuitability of TAG /IAF2 bonds for any of the 3 purposes you propose.

Back on filter .

The RNS ?

https://www.eight.capital/wp-content/uploads/2021/09/03092021-Launch-of-GBP25million-4-8-Five-Year-Listed-Bonds.pdf

££££ or Euro ?
Does it matter ?

'Now go read ECP RNS about [the Euro 25 million] bonds issue they are taking out at 4.8% ..."

From the RNS you quote :

"To enable the creation of the New Bonds, an initial tranche of €50,000 [ I'm sorry, I'll read that again : Euro fifty thousand] has been subscribed in cash at par value by Trumar Capital LLC ("Trumar"), a substantial shareholder of the Company controlled by ECP's Chairman Dominic White."

That's commitment for you.

I'd like to get hold of whatever apunter2's been smoking.

The bond issuance is reported as now up to Euro 61m, backed by SYME shares.

The bonds are not equivalent to unencumbered cash and are not readily marketable (where are they listed/traded ?)

ECP ( a 'connected' entity , IMO) had to be induced with a Euro 40m Vendor Loan (presumably from TAG /1AF2 itself) to 'purchase' the bonds. Apunter2 has at least acknowledged that that back-to-back transaction was 'window-dressing' and likely non-cash.

'Non-cash' seems a realistic way of describing these bonds. Consider the 3 possible applications for the balance Euro 21m bonds mentioned :

- IM : it seems unlikely that a company using IM to improve its cashflow would take payment in an illiquid instrument;

- repayment of the earlier pledged shares : ditto, the 3 x lenders are unlikely to accept redemption in the form of an illiquid instrument, esp. one backed by shares that they already hold directly - and with voting powers;

- capitalisation of Captive Bank : ditto - this bond issue (again, where is it listed - or even traded, btw ?) doesn't meet any conceivable definition of 'capital' for regulatory purposes.

But there's something more basic : TAG's entire reported holding of 38.9% of SYME @ 35 billion shares = 13.6 billion shares x 0.3p = £ 41m approx @ a generous Euro 1.20 = Euro 49 million.

So the Euro 61m bond issue AFAICS starts life with a negative security margin, only 80% collateralised ..and with security in the form of shares in one company with indifferent financial results and a volatile share-price history.

Really ?

Meanwhile, 2 x FT headlines this afternoon, highlighting our muddled thinking :
- Europe’s power companies still rely on coal despite green plans; followed by
-Labour urges Boris Johnson to tackle rising gas bills
Ed Miliband warns surging cost of gas was ‘deeply concerning’ for consumers and businesses.

While Simon Kuper in the FT Weekend Magazine derides 'nature fetishism' - " a low risk investment in building your personal identity: you could safely oppose nuclear energy, knowing you would still have hot showers; you could refuse measles vaccines, knowing that enough other children were jabbed to keep yours safe; and you could reject GM foods , knowing that you yourself wouldn't starve. "

The high-energy use West needs nuclear to transition; the benighted in the 3rd world need coal to get at least on the first rung of the ladder.

IMO

'Nothing trivial, I hope'.
Maybe Nuesso's demise would qualify as a 'shift in the dynamics' that AT mentioned......