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The problem i have is why a company that is throwing off so much cash is borrowing Usd 500K
I ask because i am interested - can anyone explain this to me
Any help is greatly appreciated
I agree it is your money too - now lets see if the board feels it is their money also - stop this charade and pursue the full debt through asset collections!
Oh come on grow a pair - go for the usd 1.8 billion!
Great - just collect what is owed! We can eait to get Usd 700K more.
Of course they should follow the Usd 1.8 B. Where else will you earn Usd 700 million for such a small investment at a time when there is no time value on money due to zero or negative interest rates.
Of course they should.
Hopefully this crazy deal fails and we go after the full USD 1.7 Bn
If the board are listening the market vote is you guys are have zero credibility
So why not just accept it and fight this out!
What have you got to lose. You already have no credibility.
This is probably the most interesting question of all
The uk sale consideration has been much reduced by interim cash flows
If the Egyptian one has not then that may explain why the market is so negative
If there are grounds for this view then that and the weak approach to the indian award should lead all shareholders voting to get rid of this board!
How can anyone support this board.
The market obviously does not.
If it has all been thougt ot and there is no risk why are we trading at 38% below net book value?
On the arbitration award the Board should at least have the brains and the backbone to demand that the money be in us dollars and available in full outside india before dropping the legal cases. Surely that is no too much to ask!
Bad decision on the arbitration however the share price is 38% shy of the accounting net worth which supports a share price of Stg 270 - all calculations below
The net worth at 30 June is solid with 43% in cash and 36% in net assets already sold. The only number that requires some analysis is the Usd 117 million in exploration assets. This represents 6% of the net worth or 16 pence on the Stg 270 share price detailed below. The reality is there are solid oil plays in that number so probably no need to discount.
Accounts net worth 30/06/21. Usd. 803 m
Arbitration award Usd 1060 m
Total Usd 1863 m
At 1.38 this is Stg 1350 m
Current market cap Stg. 979 m
Undervaluation. 38%
Current share price. Stg. 196
Share price at net worth valuation. Stg. 270
Yeah the market really loved it. Bad decision.
Now is not the time to deal
The other side has all the pressure
The hard work has been done. The pain had been taken. Now is the time to hold the line !
This is merely a response only to a legal calendar requiring submissions to court.
Air India does not have the funds to make a deposit to court. If the court orders such a deposit then the indian government will have to make/facilitate/arrange that deposit. That ends their case that they do not control air india. Interesting problem.
This is the first of many potentially embarrassing situations indias politicians will find themselves in.
Drip. Drip
Reasonable approach
If they settle you get 50% of the upside. If they do not the share price goes down for a while (weak hands and weak stomachs). If you believe cairn has a strong case you buy back then. If you do not you sell the rest.
We each make our own decisions.
Personally if 3 out of 3 judges rule for cairn, the indian government rescinds the law and admits they are wrong, there is a mechanism to collect with 70 billion assets identified outside india and india appears to need huge international funding i would go for it. When politicians panic money ceases to matter.
Money has no time value when banks want interest to hold your deposit so waiting is not an issue. Cairn has the money in the bank to finance the fight. Usd 700 million is a lot of money and that amount of profit is hard to make
I disagree
They are like every other deadbeat who loses in court
Pay up or face the cost, legal and enforcement pain of same
A very reasonable and commercially sensible idea
However i Do not think the indian government have the flexibility of thought to do it
I also think they would find it hard to buy out the smart shareholders if they knew who was buying
I agree and i expect the board to act in cairns interest. With that in mind
1. The indian government have the full funds and/or sufficient assets to collect the full award. Painless really as an example they have a space programme that their citizens really do not need.
2. Doing business in india again after the way cairn has been treated would be madness!
3. No need to worry about indian politicians feelings. They never really worried about cairns feelings and they think in short term political objectives only regardless of what cairn does.
This boils down to
1. How strongly will the indian government seek to avoid paying the full award. How much pain are they willing to take to resist it. How important to them is indias reputation on world markets. What is the political cost of drip drip bad and embarrassing news.
2. The cost and feasibility of collecting the full award from a legal. And enforcement viewpoint.
The facts are easy enough to check
1. They lost the arbitration with 3 judges finding in cairns favour
2, The indian government repealed the law that gave rise to the initial investment
3. The indian supreme court ruled against that initial law
I am asking the cairn board to look at the facts and fight this one. That is the smart thing to do.
Usd 700k is a lot of money and not easy to make elsewhere. Management time and costs to pursue and collect are relatively small when compared to the huge effort put in to date to get this far. Banks are charging interest to hold deposits and the award has an interest clock ticking against the indian government. The indian politicans want to settle this now and changing the law shows some panic.
This is a commercial decision. No need to get excited. Look at the facts and do the smart thing.