RE: more CB's ?24 Oct 2018 09:04
As far as I read it they had, at the time of writing, commitment for $1.5bn on the table already, but that’s as far as it went at that time, obviously based on everything else falling into place.
Who knows how complex these transactions are?
Perhaps each bank was looking at say $300m non-guaranteed and $300m guaranteed.
To me it’s why they are seeking only $1.5bn for the guarantee.
It’s pretty inconceivable to me that the banks would only lend $1.5bn if it’s possible to seek up to a $2bn guarantee.... (ok maybe it wasn’t possible to get a $2bn guarantee!)
But why would they say they would not lend $500m of government backed guaranteed debt?! Seems a bit weird to me.
They would get slaughtered (certainly the UK based involved)
So it’s most likely (to me) each participating bank will take (and commit) effectively a non guaranteed portion and then the remaining guaranteed portion?
To me it reads the banks are still committed, but clearly want:
The guarantee forthcoming for $1.5bn (obviously!)
Possibly further TorP (especially with the overspend)
Extra risk pushed onto contractors. (Mostly done now)
The final (please don’t go up!) budget.
More confidence in the opex costs ( to ensure payback )
And of course The Elephant itself - The shortfall, once the whole package is looked at) and the extra contingency sorted.
I’m hoping a Euro TorP, followed by a gov guarantee for $1.5bn is forthcoming, at which point I’m hoping that “subject to finding the $400-600m” we will be good to crack on.
As per the presentation, the banks and the consulants are reviewing the contracts to ensure they are happy with the risk, so they aren’t there yet, and with final project costs and contracts still to be done, clearly can’t commit to more than X or Y.
They won’t know precisely what they will commit to until everything contractually is put before them (guarantee included) and then the commitment letters will come.
All then subject to X ( with X now known £307-£461m Ie $400-600m) minus whatever completion finance, strategic partner, or whatever comes up with.
I personally expect hello hi to strategic partner number 2, after all they get the royalty money off the top regardless of shares in issue. So diluted but there not at SXX share level.
With that comes less income to SXX and as such banks will need to factor that in to their cash flow models and decide on the debt package.
So yes less for the mine revenue, but not less for all of SXX’s future income as shares would be if we branch further out (Ie the distribution chain income is SXX’s no royalties on that) Its where I see SXX growing later (obviously much later) but then as an overall % of income these Royalty deals will take a % of mine income, but not overall SXX income.
There are many possibilities of course. Just my two cents.
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