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Asimpleinvestor: re Mercuria having already agreed repayment terms, are you referring to the $50,000 from each sale of Baita Plai concentrate? If so, it’s going to take a very long time. The two lenders shared a very generous fee for agreeing the extension, as outlined in the 6 November RNS. I dare say the lenders would be prepared to accept similar fees every quarter, it’s a very lucrative form of lending when added to the loan interest, but how are Vast going to be able to afford it? The parcel of diamonds, the only potential source of money sufficient to repay the loans, appears as elusive as ever. Vast can’t raise equity capital with its share price where it is. Sooner or later, probably sooner, Vast’s position will meet the insolvency criteria.
SillyButtons: yes, the hedges seem to be one of the items still under discussion. The Global Re-financing is not, as they claimed earlier, in the documentation stage, it’s at probably the most difficult stage of detailed negotiation. The original Senior Loan took from November 2020 to May 2021 to negotiate. This may be harder, since there are hard nosed entities on opposite sides of the table vs. just the one in 2020/21. Though there’s still only the the one entity bending forward over the end of the table.
Mercuria will be weighing the risk in keeping the loan in place for another year or two, plus the risk of the spot price for gas falling below the forward contract prices, plus the early gains to be had from the royalty against what? Another year of decent interest on their loan and the chance that gas prices will take off again. If they can exact a good price for settling the forward contracts early, I should think they’ll be happy. I suppose it will depend on their view of gas prices and therefore what they expect from the hedges, against early royalty payments while production remains at reasonable levels. There’s scope for quite a lot of negotiating in all this.
SillyButtons: I think we’ll have to await the finalised agreement. It’s not at all clear currently, is it? It’s odd that they’re still negotiating the terms, when just a day or two they were finalising the documentation. It seems there’s still some way to go before there’s a completed loan agreement. Mercuria will want their pound of flesh. There’s been no discussion of their royalty either, has there?
Oh dear. They’re on the website page now.
Brockam! A new compressor, and a new well next year. But look at the comments on the hedges! Investors will be forgiven for wondering where is the upside in this. But it appears that Angus have no choice, they have to arrange the re-financing. Anything could happen here in the next four weeks.
Oktane: I think it’s quite likely that that’s the intention. With a huge rescue placing at a much lower price, someone may be able to acquire this very cheaply in the near future. Getting Mercuria out of the equation will be expensive, and Angus won’t be able to get a massive placing away at the current price. Low priced shares may be placed with existing large shareholders, requiring a bid. I hope this isn’t the case, long term investors here don’t deserve another, final, kick in the teeth. It’s a possibility though, isn’t it?
PompeyMagnus: if this is true, it must have been someone very close to Mr. Mugabe. You can’t just walk into the Reserve Bank and pinch something from the vault. In any case, the RBZ is probably immune to prosecution in such a case. If they’re not there, it’s hard to see what Vast can do. If they are there, it’s hard to see how Vast can get them out. They’ve got four weeks.
,..and I’m not sure of the relevance of tomorrow’s opening. They’re answering the questions tomorrow and posting them on Monday.
Ocelot: so basically you’re saying that, in common with a late President of the USA, the CEO can’t walk and chew gum at the same time. Or delegate a simple job to an underling.
So the £12mm loan taken in September 2020 that they didn’t need is to be paid down by the £20mm loan that will make them debt-free?
If they’ve got as far as documentation, this implies that terms have been agreed and are now merely being written up. In which case, why not just answer the investor question (there must be one) on progress in the loan negotiations? For anyone who’s got a grip on this business, the answers to investor questions shouldn’t take more than fifteen minutes to dictate. But maybe the use of the term “documenting” is a verbal infelicity. The new CEO hasn’t got a Cambridge MA in English, as his predecessor did.
Asimpleinvestor: doesn’t the Companies Act preclude new issues of shares at a price below the nominal price?
Whoever’s in charge at Angus needs to get a grip. As a schoolboy, if I couldn’t finish my work by the time I left in the afternoon, I was required to take it home and bring it in, finished, the next day. If they really haven’t got time to answer investor questions, these debt negotiations must be going right down to the wire. That doesn’t presage an advantageous deal for Angus, does it?
If Vast do succeed in getting the parcel out of the RBZ (a big if), I doubt it will contain the diamonds that Vast deposited all those years ago.
Oh well, that’s all right then.they should be able to get cheap bank finance for that. Odd that they haven’t thought of it.
Ralladw2: attempting to profit from trading shares in an AIM-listed company which is unable to raise more equity capital and whose debt is due to be repaid in full within 4 weeks from the proceeds of probably non-existent diamonds is not a very sensible strategy, whatever profits the practitioner may have made in the past.
It’s not just the debt, is it? It’s the liability and the potential further liability to Romanian taxation. Even if the diamonds were to materialise, their value would struggle to meet a combination of the repayment of outstanding debt and these sums. Without the diamonds, investors here are going to have a very nervous February. With the share price at the nominal price, placings are out of the question, unless p&ds can be managed. The company’s brokers may jib at that. Vast are in a deep hole and, from these figures, carrying on digging is making things worse.
Ocelot: “meandering in these low zones” is one way of putting it. Falling consistently day after day, month after month, is another, more accurate, way. As to all the possible bad news being discounted in the current share price, that remains to be seen, doesn’t it? If Angus fail to get the re-financing completed, all bets are off and the spectre of a very low priced bid may become reality. If the terms of a re-financing are as onerous, or more so, as the current loan terms, the share price still has scope to fall a lot further. This is a heavily depleted field, the costs of getting the gas out go up marginally every day while the gas remaining and its pressure decline. A huge rise in the gas price would help but it’s not doing much currently, is it, and investors will soon be looking towards gas prices in the Spring and Summer? The management are keeping their collective heads down. Mr. Herbert’s physical resemblance to a Trappist monk is being borne out in his verbal reticence.
There’s always the possibility that the existing bridging loan may be converted to shares but that will require a bid - in which event the price won’t be generous. Between Trafigura and Mercuria, Angus appears to be between a rock and a hard place. These are not charities.
He probably thinks if it goes up 94% from here he’s in profit.
Bubblepoint: yes, and as the CPRs tell us, gas flow is expected to decline by 10% p.a from 18 months in. And the 8% royalty will absorb some of the income from the depleting flow.