RE: ONLY EIGHT WEEKS TO26 Oct 2019 13:12
Nice analysis @tomcat! So the way i see it there are at least 4 scenarios and lots of anywhere in between's.
Two of the scenarios are related to a fall back share price of 25p - the price GFL signed at.
1. GFL exercises their right to half of the project meaning BCN only need to raise $31.5m (420/2 - 150 - 28.75). @25p they'd likely get $12m (1.3067 * 7,563,649 * 27.5/22.5) from the sale of the 27.5%. Meaning $19.5m would be left to raise. @25p this is 78m shares. Hanwa has a commitment for an additional $25m of equity finance so this is easily doable. Total dilution to existing holders would be 55% (77.5/50 - 1) at the project level and 41% (78m/192.1m) at the company level for a total of 77.6% (55% * (1 + 41%))
2. GFL doesn't want to exercise so BCN holds onto their 77.5% of the project and issues 442.5m shares to raise the remaining $146.75m of CapEx @25p. A dilution to existing holders of 130% ( 442.5m/192.1m - 1).
The other two scenarios are related to a higher share price. The first considers what price would be required for no equity raise.
3. As in 1. GFL exercises their right to half of the project meaning BCN only need to raise $31.5m (420/2 - 150 - 28.75). The price they'd need the share to be at for the sale of the 27.5% of the project to GFL to cover the remaining CapEx is, from 1 above, 65.6p (31.5m/12m * 25p). Dilution to existing shareholders is simply 55% (77.5/50 - 1)
4. GFL taking their holding from 22.5% to 50% is equivalent of BCN's holding going from 77.5% to 50%. So the question for this scenario is what share price would be the equivalent dilution to 3 above? In terms of dilution the number of shares in issue would rise from 192,065,236 to 297,701,116 (192,065,236 * 77.5/50), a placing of 105.5m shares. In order to raise the $146.75m under this scenario the placing would be required to be at: 106.5p ($146.75m / 105.5m / 1.3067). The dilution to existing holders, by definition in this scenario, is 55%.
It (hopefully!) goes without saying that a higher share price suits existing share holders in all scenarios, but one question that comes out of the above is what share price would result in the same dilution to existing shareholders whether the funds are raised (solely) by the sale of 27.5% of the project or (solely) from an equity raise in BCN? My calculator has run out of batteries. And besides none of the above considers other value attributed to BCN such as Zinnwald, so matters are considerably more complicated in practice! No wonder the market wasn't impressed with the final signing, it's impossible to determine the consequences! I think in writing the above I might have taken one step forward, but I'll need my calculator to be back in action before I can calculate how many steps backwards... :-)
All my own calculations, DYOR, etc.
Ob.
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