Member Info for GT430

But that's the problem

People who use Amigo in the first place are by definition already financially very stretched. After a three month repayment holiday they now may have to start paying back some money. However, a guy in suit comes along and says you were mis-sold this loan by a bunch of crooks, you are the victim, you deserve to have your loan cancelled and even get some compensation..... and it won't cost you a penny!

How many people will sign up? Every one costs AMGO £650 and they are losing 90%+ of the cases. These ambulance chaser firms are getting aggressive and it will have a big impact on AMGO

The issue I have is that the mgmt team should have very clearly analysed how much capital they needed to acquire and operate the assets say for 12 months in a worse case scenario and planned accordingly.

It seems they bought the business by convincing investors the assets were worth £20m+ but made no plan on how to actually finance the ongoing capital needs. Now they have pledged those same assets for only £2m on pretty crazy terms. They have borrowed £2m and over the next 2 years need to pay around £600k on interest alone?!

Am not expecting some miracle funding at Libor + 1% but this is a very negative deal as far as I am concerned and I am very surprised that if the assets are truly worth £20m and there is a strong pipeline of revenue that they did this deal. In that case banks would absolutely provide asset back financing at much better rates.

Effectively 13%+ coupon in year 1 and 17%+ coupon in year 2 with less than 5% LTV and all the assets pledged.

That is simply a desperation deal. Sorry but its true.

I would love to make 17% return on my Infa shares....

I agree

This is a horrific deal.

Even at £6m asset value the LTV is less than 50% and this is priced at 13%+ coupon and a 4% exit fee???? The lender is getting a fully secured equity return for lending less than 50% LTV and Infa have pledged everything they just spent £6m in cash buying for £2m.

Why on earth did they not get a bank loan at sub 5%

This is a desperation deal. Alarm bells for me.

Very surprised by the announcement and clearly does explain why the mgmt team has been somewhat distracted lately.

Not quite sure how I feel about this deal.

Longer term agree that there is huge potential for this yard to fabricate parts for IM etc.

However, the equity/debt funding is not in place and as of today Infa is a tiny company with very little cash. As of tomorrow we have another 100 salaries to pay, pensions, etc etc and a business that has been loss making for years.

Where is that money going to come from? In addition to the £6m purchase they are likely going to have to raise further money to pay for all the new people unless they can immediately turn H&W into a profitable business with third party work

Be an interesting few weeks coming thats for sure!

Thought I would hack a few lines together on what I believe is currently holding back Infa.

I have been clear on my views of the project and JW/Arun – I have zero concerns on Islandmagee as a project and its need to be developed. My average buy-in is around 0.8p and I am holding a fairly large position so am feeling some pain right now but will hold these shares until glory or bust.

I do though think we have a large corporate problem. From their backgrounds JW and Arun are extremely highly qualified to execute Islandmagee but I don’t believe either has previously run a public company and it is showing – e.g. unrealistic messages to shareholders, random RNSs, etc etc

Infa is a tiny AIM company but we need a clear path to secure institutional investors – the like of Prudential, Fidelity etc who will buy large positions and hold for years. This will provide stability, bring other institutions, increase research coverage etc.

Right now no institution will touch Infa which means the shares are in the hands of emotional retail investors and day traders which causes huge volatility, profit taking, irrational trading etc

From a governance perspective we have two great executives but no Chairman – JW is holding both hats which breaks corporate governance 101. Malcolm is clearly a professional NED that probably puts his name to anything that pays a few quid and he seems to be there simply to make up the numbers without any actual gas storage experience.

We need a high quality Chairman with real public company experience who can take the burden off JW and Arun and deal with all the public market issues. We also need a couple of real NEDs with credible gas storage backgrounds to provide additional support and again improve governance. We also need a new PR firm or hire a dedicated PR/IR person. This will let JW and Arun get on with the business of taking Islandmagee forwards and leave the RNS, regulatory, shareholder, governance etc issues to others. This is also how we start to attract smaller institutions who then bring in the bigger ones.

Potential Chairman/NED candidates can sign NDAs and really get up to speed as to what is going on with the company so I don’t see any reason why they can’t be brought on now.

JW – you have my full support but let’s please get the corporate governance sorted so you can build the project and not spend your time dealing with corporate nonsense!

Things seem to be quiet here so I thought I would stir things up with my calculation – this is not meant to ‘educate’ anyone but just for illustrative purposes. It is though loosely how I look at Infa and its potential.

So how much will Infa be worth in its first year of operation?

JW said they back testing has provided £50/£60m of revenue so let’s take £60m

Once up and running it won’t cost a huge amount to run the facility so let’s assume an 85% EBITDA margin which gives £51m EBITDA

I looked at some comparable infrastructure/storage companies and they trade around 12x EBITDA which gives an implied enterprise value of £612m

According to Infa’s last presentation the total capex for 7 caverns is £265m and let’s assume 60% debt funding so they will have £159m debt

This implies an equity value of £453m

This part is total guess work but let’s assume Infa is able to keep 25% of the project. They have spent ballpark £15m thus far and JW stated this would be returned and with 40% equity funding this would mean a total equity funding requirement of £26.5m. With some premium and Infa contributing back the £14m as their share of funding then 25% is very realistic – hopefully it will be more

This implies Infa’s 25% share is worth £113.25m

Assume they receive the EU funding and mgmt fees from next year so they don’t have to issue any more shares and stay at 1.4bn shares

This implies 8.5p per share

Clearly a lot of assumptions but I doubt I am totally wrong – I hve an upside case which shows more than 12p per share based on slightly more aggressive assumptions

That’s what I think is realistic and why I continue to hold. This though is an AIM company with no real serious institutional following so it will be volative and open to manipulation until the company gets a proper Chairman, couple more credible NEDs and some binging contracts. From there I would expect to see a gradual but volatile climb to the above figures as each step is achieved.

What do we think – am I totally wrong???

As I posted before I think one of the potential funding partners could be VTTI

If Vitol genuinely believe in the project and have done all their DD then it would seem strange for them not tonwant some equity exposure. VTTI is owned by Vitol but is a separate company so it would still fit with JW’s comments that he sent the Vitol termsheet to them.

Re the funding I dont believe there is any option to 100% equity fund this as it would not really make sense. If you listen to JW’s comment in the interview carefully he clarifies that one party is looking at providing equity and would want external debt whereas the other party would want to fund the entire project by providing both the equoty and debt together. Eg the project would still have debt but simply provided by the same party as provided the equoty

Just seems very strange that the SP hit a 52w high of 1.88 when there was no offtake, more uncertainty, less clarity on social issues, etc etc

Nothing macro has happened to the UK gas sector, etc that should be dragging down the price so now with a major offtake TS in hand, closer to funding, etc etc it seems laughable that the SP is 50% less.

As said I will hold my shares until bust or glory and am used to it with AIM but just doesn't make too much sense at the moment

I could understand if the price went up 50% and people then started to sell to capture that but it didn’t

Not sure what the market needs for the sp to break a penny

Very strange but I guess thats AIM

This is pure speculation on my part but Vitol is not just one of the world’s largest gas traders - it also owns VTTI (www.vtti.com) which is one of the world’s largest energy storage companies. They own a huge amount of oil terminals but also gas storage.

They must have done full technical etc DD in order to commit to the offtake so it would not be a stretch to assume that they would be the incoming equity partner as well - they have a massive balance sheet and why give the equity returns to someone else??

They could then also easily fund the debt via their banking relationships.

Getting carried away I know but I think it could be a serious option.

Wow!

Vitol is one of the world’s largest energy traders and for them to effectively underwrite the commercials is an enormous validation of the project and the management team. Long road ahead with likely many bumps but a huge step forwards.

Well done to all that believed

Hi all

A very long time 'lurker' and happy disclose an Infa shareholder - I never usually post on these types of forums but I have a specific question which I can not find a true answer to and was raised by the discussion over the weekend.

No agenda and I will be holding my shares to either glory or bust so would appreciate genuine answers if anyone has them:

If Infa develop the 7 caverns then based on the discussion at the weekend the gas will be trapped - e.g. it can't flow into RoI and the SNIP pipeline can't transport it back into the UK. The demand in NI is not great enough to digest all the gas. In this case an offtaker will be able to inject gas into the caverns but effectively not transport it back to any other market than NI. Is this actually true??

If so, it is by no means any kind of fatal flaw but I can imagine any offtaker will need some comfort/guarantee that the SNIP pipeline will actually be able to transport the gas back to the UK before any final FID, funding etc. Is this what is delaying the announcements, FID, etc??

Lots of mixed information out there but I am totally wrong here?