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A financing structure predicated on Government support is what scuppered the whole plan in the first place. They are useless. Time to move on without any hope or expectation of their involvement IMO
The Times have historically had a pretty good handle on what’s going on, from what I can tell- seems promising.
https://www.withings.com/us/en/move-ecg
So now a medical grade ECG smartwatch hits the market...I maintained that I liked the CTAG product which is why I held on to some shares, but now there is stuff hitting the market that can do the same thing.
Personally I have completely given up now on ever seeing anything back from this, a huge mistake but a lesson learned. The time for legal action is probably long gone but if anyone (Forthewin?) is still exploring that avenue I’d be willing to lend a hand
Hi GK,
A little unsure how the equity swap mechanic works if the shares are settled ‘on market’- as far as I know an equity swap is a contract between 2 parties (Sirius and Citi) and thus Citi obtaining shares on the market means the money goes to....errr, whoever sold them, not Sirius? Hence it wouldn’t be an equity swap.
Good analysis GK- thanks. A couple of further thoughts from myself:
Given the timings of these equity swaps (monthly for the next 6 months or so) it could be a tactic to bring in some cashflow- though with the lower volumes in later months that doesn’t really stack up.
Secondly, could these equity swaps be attached to the bond raise as a sweetener? My interpretation is that it’s a cash settlement between Citi and SXX, so not to be settled on market (so yes, new issuance) which essentially gives Citi as a bond purchaser exposure to equity too. It’s been touted around before that there could be some equity sweeteners involved and it would seem to fit to me.
Where are they?
Hopefully busy raising $500m. They need not concern themselves with countering every negative article put out there by people who clearly have an agenda. Fund managers are not going to be dissuaded by articles like this, they will do their due diligence and look at the fundamentals and business case, and PIs should do similar...if anyone makes an investment decision on the back of an article in a newspaper without thorough, objective research of their own then they shouldn’t be anywhere near the stock market
The final attempt to stop this highly disruptive company finally getting over the line perhaps? :)
The forces against this are still at work, but they’re running out of time. Expect to see more until the bonds are resolved one way or the other
Minesinthemine, best of luck with your investment decision but I do feel that you are making a mistake. I still believe the bonds will go.
From before the process really kicked off the rhetoric from Sirius was that they wanted to get it done ‘before the summer holidays’- I.e, there was always a period of time they wanted to avoid. The delay in the sale is consistent with that, as, with the turmoil the markets underwent at the back end of last week, we have now been pushed into that ‘no go’ period. In this respect, it’s my view that Sirius have been consistent in their approach from the word go, and that this is simply a delay.
I’m given further confidence by the players that have come on board during this ST2 fundraising, as I’m pretty sure Norges, the Qataris, Capital, Pelham and Jupiter will not want to see their huge stakes in this wiped out- they do after all rank at the same level as us PIs if this all goes wrong. I would only get seriously worried myself if, in the wake of the volumes we have seen since the RNS, we get new holdings RNS that show any of these players reducing. Until that time, I am backing our BOD to pull this off, and see no real reason to believe anything other than what we have been told. Fingers crossed...
The current financing plan only works if the $500m is raised by debt. It’s as simple as that. If there is another equity raise, it’ll be because this financing plan has failed in its entirety. All in the prospectus...!
100notout, if you want to run for PM you will get my vote! :)
It’s a crying shame that the gov did not have the gumption to back this. They could have milked the PR from such a move (and would have deserved some acclaim) but such is their incompetence it now leaves us staring down the barrel.
I am still backing Sirius to get this done but am thoroughly unimpressed with the way the last year and a half has been handled
JPM are under no obligation to underwrite anything. It’s all in the Prospectus!
They are really making a pig’s ear of this now
I would imagine the syndicate of banks from the initial ST2 plan will play a heavy part in this issuance- perhaps a roadshow more to finalise the coupon rather than to actually find buyers? Can’t help but feel it’s likely to be easy money for JPM...again!
No questions taken after the call. Very little to add from it!
Errrr.....have you missed something Jonesy? :)
Using the prospectus (really do recommend everyone reads this!) you can garner a certain amount of info as to who took what in the open offer:
Jupiter took ~200 million shares
Capital took ~250 million shares
Clearly this leaves a huge amount of slack in terms of total issuance so looks likely we will see some hefty involvement from a number of funds/banks. Looks like Staley may just yet get his bonus...
Hi Myo,
Yes, that’s roughly how I understand it too. So the majority of the RCF will be used hopefully after we have hit the real derisking milestone of first Poly- so I really can’t see any issue with getting most of it away.
So, I’ve had a bit of a read through and here are some thoughts! I know some have described it as ‘grim’ reading over on ADVFN but I’m a little more upbeat. Here are some of my takeaways.
Main risk going forward seems to be the fact that, if we do not raise each tranche of debt, we effectively cannot access the rest. I have no doubts that the initial 500m bond will be raised for a couple of reasons: firstly, we had indicative commitments of 1.5bn in the original ST2 plan, and secondly because JPM have a bit of reputation at stake- I just can’t see this failing. In addition, the coupon on the initial bonds is likely somewhat higher than would have been available under the original plan and so may be more attractive to potential lenders (conjecture on my part). Finally, the RCF doesn’t come into play until June 2021 and first Poly is slated for Q4 2021. Therefore it would seem that the majority of the RCF won’t come into play until after the major derisking event and once we are past the aquifers (IMO the really big risk that remains here). This should allow lenders in the later stages of the RCF to be lending against a massively derisked project and so I can’t see the later tranches being a problem.
Disappointing that CF will not be participating in the open offer- don’t think this is a great example from a CEO who wants shareholders to back it!
TORPs- these were clearly a big area of due diligence that required tweaking as a few of the TORPs were having conditions changed quite late in the day. The ADM one for example has had a condition removed regarding Sirius missing a project milestone and so looks more watertight for us. These are now in a state that clearly satisfies JPM and therefore should stand up to scrutiny with other lenders. The lending commitments will also now be against our 10 MTPA+ agreements and so should give a large degree of confidence to lenders.
Scotman’s ‘Beyond Woodsmith’- seems to be in motion! There is a JV being discussed with a Middle Eastern partner regarding manufacturing and blending; a few more TORPs in the pipeline. Plenty to look forward to here.
In summary, risks remain but despite the SP hammering that’s taken place I am now confident going forward. Once the first bond tranche is in the focus for me will be almost entirely on construction progress. Short term it does look as if the CBs will be a bit of a drag but the first production milestone should still present a point of significant uplift.
I can see it going there. I assume Capital, for one, have taken a heavy part in this placing having managed to sell huge numbers at around 22p for weeks. Ii’s Will buy and then drip them into the market for PIs to pick up. I have lost a staggering amount of confidence in our BOD to show any inclination to look after the humble PIs, without whom there wouldn’t even be a project
Love to say I, disappointed, but that was inevitable. Bonds only at a 20% premium?
If these guys have the tenacity to suggest any sort of bonus this year after how damaging this has been...
So, some musings on what the share price could be based on upcoming events. Below are proper back of a fag packet calcs!
NPV of 11.6 bn USD equates to 8.9 bn GBP
If the worst case happens and the placing goes at 15p and the bonds are convertible at a 20% premium, we would have near 10 bn shares in issue (this is the outcome I’m expecting tomorrow based on how it panned out in ST1- still thoroughly disappointed but there’s room for optimism)
Best case, the placing at 18p with a 25% premium on bond conversion, would give us approx 8.5 bn shares.
Assuming that the main bond issue is successful and therefore that no financing risk remains, it seems reasonable to me to apply a discount of 40-50% to NPV (Shore Cap say 40%, which I think is the right sort of ballpark). Given the state of construction, the recent Euro Torp and all of the other developments, I think they’re doing an outstanding job project wise so a narrower discount doesn’t seem unreasonable.
So the worst case scenario would give a SP of:
8.9 bn/ 10bn / 50%, so a share price around 42p
Best case:
8.9 bn/ 8.5 bn/ 50%, so a share price of around 50p
For me, there remains strong upside potential here once we clear the final hurdle of the bond issue.
Any thoughts on whether a MCAP by year end of 4-4.5 billion GBP seems unreasonable given project progress? Even an MCAP of 3 billion with 10 billion shares in issue would see us at 30p by year end.