Member Info for observer842

Very interesting long read!

"Court of Justice of São Paulo TJ-SP - Instrument of Appeal: AI 22143094720198260000 SP 2214309-47.2019.8.26.0000 - Full Content" (June 17 - added today)
https://tj-sp.jusbrasil.com.br/jurisprudencia/864018696/agravo-de-instrumento-ai-22143094720198260000-sp-2214309-4720198260000/inteiro-teor-864018829

Looking good!

The schedule is fixed. See 4.5.1

I'll blame Obs too: It would help if when describing someone else's debt as being on your books (DEV owed to PBA in this instance) you clarified that it was credit from your (PBA in this instance) point of view!

As for @Bannor: "ultimately we won't get too much in the way of revenue/income until the costs to get the mine up & running are sorted & required historic debts are settled." - you might want to take a look at those tables in the JRP for the repayment schedules for DIP A, B & C and unsecured debt... Although they don't say much about what would happen if, say, the EBITDA was double that used in them: is the agreement such that the repayment schedules are fixed, or would the repayments be increased to shorten the number of years the debt would be repaid over?

Do you think we'll ever get to see the fine print? Perhaps once (if!) we get to 20%? 27%? 49%? I do hope so!

Ob.

YES! :-))) LoL.

"Zamin Mineração to resume mine operation in 2021" (Sep 03 2019)
http://www.valor.com.br/international/news/6418273/zamin-mineracao-resume-mine-operation-2021
===[
Zamin Mineração, which operates a mine in Pedra Branca do Amapari, in Amapá state, is expected to be back to business in the first half of 2021. The company, which halted iron ore production in 2014 following an accident at the Santana port terminal, had a judicial recovery plan approved in the last week of August. The creditors’ green light came after British company Cadence Minerals was presented as an investor of the project, which includes, besides the mine, a railway and the port. Cadence put up $2.5 million to pay labor debts and creditors with liabilities of up to R$150,000. Eduardo de Abreu Sodré, a partner at law firm Donelli, Abreu Sodré e Martins Advogados, which helped draft Zamin's recovery plan, explains that the company's original debt was R$1.5 billion, but creditors reached an agreement to cut approximately 30% of that amount to R$900 million.
]===

Except R$1,500m to R$900m is a 40% hair cut, not 30%... Perhaps the original R$1.5B was heavily rounded?

(except the $49m will have had a ~30% hair cut)

@Bannor. I believe $49m is paid by DEV to PBA in years 5 to 17.

By the way, none of this is easy: I'm prepared (once again!) to be spectacularly wrong. LoL. As to your most recent theory about the $135m @tomcat - quite possibly!

@Bannor thanks for chipping in. I think you are right that my terminology is sometimes out of wack with what I mean reading back through my posts! One person's debt is another person's credit, and I appear to confuse the two. Apologies.

I suspect I'll make the same mistake again so I'll try to explain what I think the current situation is without using either term :-) In fact I think quoting your message and commenting on each paragraph might be safer!

===[
My understanding is:
The $49M debt is assigned by Indo to PBA & will be repaid eventually by PBA to Indo out of profits/excesses in due course..... once all the funding/rehabilitation/settlement of small/employee & other secured creditors is addressed in line with & as per the JRP.
]===

My current understanding is that DEV owes Indo Sino $49m. When all prerequisites have been met the situation will be that DEV owes PBA $49m and Indo Sino will own 51% of PBA. PBA does not owe Indo Sino anything.

===[
We are 'buying' as currently formalised 27% of PBA for $6M & potentially more up to 49% .... that money will be used to settle creditors of Dev, fund research, rehabilitation so won't sit on PBA's books as a debt in our books it's an asset ..... if the monies are 'lent' to DEV they will sit on Devs books as a debit & on PBA's as a credit making PBA a creditor of DEV in the same way as the historic employees & secured creditors, banks etc are a creditor of DEV today until the debts are settled.
]===

I agree.

===[
Which is why I don't understand why you are adding/totalling the $49m of assigned debt to PBA to any amounts that are being paid by us (or a n other) to take a percentage ownership of PBA and calling it all debt for PBA?
]===

DEV will owe PBA the $49m from above (payable years 5-17). DEV will also owe PBA $2.5m (DIP A), and $24m + $3.5m (DIP B). For a total of $79m - payable at different times.

===[
We will initially own 27% of PBA for $6M & at the same time assume responsibility/ownership of $27% of the $49M assigned debt to PBA or whatever it reduces to over time or increases by in respect to our increased ownership...
]===

Since I don't believe that PBA will owe Indo Sino anything I don't agree with this.

I suspect that other than my unfortunate confusion over the terminology I think we might still disagree over what happens to the $49m. My understanding is that Indo Sino's $49m buys 51% of PBA. Leaving 22% up for grabs for ~$24m.

Hopefully clearer!

Ob.

Indeed @tomcat. Suspicious/coincidental. Thinking about the bigger picture for a moment. We must be in quite a unique situation for an AIM company in the sense that I'd say the majority of the market are unlikely to know the details behind this potentially company making deal anywhere close to what we do - and we certainly don't know it all (And by we, I mean those contributing on here, not just @tomcat and me!). Or if they do, they are too shy to join in the debate, or are happy to take advantage of the market's ignorance... ;-) As @Barksy pointed out earlier, I'd say this is by far harder to unpick that any of our previous investments I've explored in depth: EMH, BCN, HAS.

I've been wondering for the past few weeks whether this lack of clarity might lead to a run on the share price towards the end of the month up to the previous recent highs of 12-13p as the market was clearly prepared to pay that several weeks back despite the news then being some time off - now we've got a date (end of June) upon which it might be resolved and we may (finally!) own our 20% it might even spike higher *before* the news drops?

But is AIM is weird! Quite unpredictably so really. Although I will say that I'm not the only one who has been taking advantage of drops below the placing price of 9p the last few weeks! Whether this was a gift to us, only time will tell. :-) Feeling lucky? For once on here! ;-)

Ob.

I find it unlikely that there are two $135m's. Although the evidence does point that way. The JRP has $135m of LBO (Leveraged Buy Out?) credit, and the article you linked to suggests $135m also owed to Gerald. Since the JRP suggests that the LBO credit is separate to Gerald, if both sources are correct then there are indeed two $135m's.

I wonder if the terminology is getting the better of us, and the $135m's are in fact one and the same?

@Bannor?

I'll try to be clearer: $30m goes into PBA in return for shares in PBA. That $30m is lent to DEV for CapEx requirements (along with at least $85m debt from elsewhere), and they repay it some time later including interest of 18%. It's a bit convoluted of course, as PBA will own 99.9% of DEV at that stage! But it has to be, because of that 0.1% and various other factors.

Regarding book values, quite possibly @tomcat, however, KDNC and Sino may have worked out their percentages and their contributions from the beginning. And perhaps you are right, perhaps their $49m is only ~$10m NPV10 rather than the ~$15m NPV10 I mentioned earlier, which would correspond nicely to their original 51%.

@Bannor. I implore you to read those tables in the JRP! LoL. @tomcat has almost answered your question - though not sure why he says he is agreeing with you...

Anyway, $30m of equity goes into PBA and that is lent to DEV (for CapEx) to be repayable at 18% interest.

@observer842: "I think it's fair to say that in the time we've been following these cases we've not seen a single judgement that hasn't ultimately been in our favour?" I don't think I could have proved myself wrong any quicker! LoL!

Thanks @Cause17. I think I did see it, certainly worth posting anything you might think is of interest though! This is it:

https://www.jusbrasil.com.br/processos/119471792/processo-n-0028518-3520168260100-do-tjsp

It looks more like a clarification to an existing debt rather than anything new. I haven't read it in detail, but it looks like they may have successfully argued that instead of: R$20,608,528.69 owed to them, they should be owed US$6,321,606.66. Which implies an exchange rate of 3.26, rather than the current 5.31. Certainly worth them getting this clarified!

That's only a guess though based on a quick skim! LoL. If you have the time or inclination to discover the truth, please do enlighten us! :-)

Ob.

Thanks @tomcat. I think it's fair to say that in the time we've been following these cases we've not seen a single judgement that hasn't ultimately been in our favour? They keep trying, but the courts keep saying no, and this time, and a few other times if I recall correctly: no + you're fined for time wasting.

On the topic of Indo Sino being included in the list of creditors. I think you know the reason for this, but I thought I'd spell out my understanding for the benefit of everyone - and discussion if I'm wrong! ;-)

Several years ago Indo Sino (our JV partner) provided the Amapa project with $49m to help get the project started again. My understanding is that they were anticipating being off-takers so it was in their interest to do so. As part of this payment they took claim over 1.718Mt of ore, and have argued, successfully, that 1.39Mt of this is located at the port, the remainder is presumably in the ground. Therefore Indo are currently included in the list of creditors.

However, if everything goes according to plan (the judicial recovery plan: JRP), then this claim is released and the $49m of debt is assigned to the books of the JV company Pedra Branca Alliance Pte Ltd. ("PBA"), along with our $2.5m + (eventual) $3.5m + (eventual minimum) $24m equity funding. PBA will have $79m debt on its books, of which $30m ($6m +$24m) is super senior, meaning it is returned before other debt, but perhaps not ahead of the existing secured creditors, as this has yet to be agreed. My understanding is that the $49m will take a haircut (~30%?) and join the general pool of unsecured credit to be paid in years 5 to 17 of operations. Meaning it will have an NPV10 considerably lower than $49m, perhaps ~$15m? Presumably this is included in the "discounted NPV10 debt value of approximately US$106 million."

@tomcat, spelling that out has made me realise something, which we have touched on recently:

Our contribution of $6m gets us 27% of the company which might imply that the remainder is worth $6m * (73%/27%) = $16m, which might be the anticipated NPV10 of the $49m? Of course that's how the books might see this "starting balance". The market on the other hand, once all decks are cleared, will very likely value the JV significantly more than this! :-)))

Ob.

The single line of interest is at the bottom of the next page:

https://dje.tjsp.jus.br/cdje/consultaSimples.do?cdVolume=14&nuDiario=3065&cdCaderno=12&nuSeqpagina=1012
===[
Notary's note: Speak to the Judicial Administrator in accordance. Previous decision, which is now repeated.
]===

1011

Hopefully one that doesn't contain any mistakes or ambiguities!

I love the title of this thread. Seems to be throwing those sentiment bots ;-)