Member Info for parkside13

Rocket if it was true that was the 14th may and I think it is meaningless frankly. If it were RNS'd I'd give it more credibility.

I would place absurdly no store in those recommendations at all. All utterly meaningless until we hear about the GEF solution.

Rocket I'm not sure what research you've done but this thing is rather dependent on how it deal with its two loans. The business case is somewhat irrelevant right now. However, having looked at GEF in particular they don't seem the sort of chaps that want to end up owning a small Indian wind company!! Let's hope this so far poor management team can cut a decent deal.

I've contacted IR and the chairman. The lack of any update is unacceptable. I suggest you do so too.

I agree and I hope we are right!! Its a bit painful right now for sure. Good luck, fingers crossed and all that.

Frisby I'm afraid you are wrong, that is in theory. The GEF loan (assuming no cash repayment ability) has no backstop and therefore they could end up owning the whole Company. The other loan has a 29.9% ownership limit and therefore has got a backstop. So it is the GEF loan that is the real issue and, I say again in theory, quite evidently they could end up owning 100% of GKO. Whether they want to be that rapacious I doubt and that is the basis of my ownership. So in that regard agree with you that they will likely do a deal. The real leverage GKO would have and indeed it would obviate any dilution impact altogether, is whether there is already a cash option in the documentation. But the length of time it is taking them would indicate perhaps not although not having that option is plainly idiotic. But your comments re GEF wanting to maximise value well in that regard they are totally unconcerned about the share price now! Why should they be other than the lower it goes the greater % of the company they can own. That has no impact on their subsequent value as conceptually they will own all of the business!!

Frisby do I take it you are not aware of their capital structure? You seem to dwell on PEG ratios ad PER, the latter being utterly irrelevant for a wind company where projects generate little profit in the early years but lots of geared ROE (hopefully), a result of depreciation and financing costs. Mind you even I would admit that, absent their stupid loans, the PER looks interesting. But that counts for nowt if the equity is diluted to zero!!

Not at all. It is self evident and is the basis of the punt I have taken. If the loan has to be shares then we could get diluted to effectively zero. But if there is a cash repayment option or if not if they can introduce a cash payment option then our equity should have value, that depending on the dilution, if any. So the performance of the business is all fascinating I'm sure but I don't much care about that right now. It's the status of the two loans that interests me.

That's all well and good. The business may be ok but the structure could (could) dilute existing holders to nothing. If they can do a deal or cash settle it then it could be very cheap. If not the ords are screwed.

17% loss already!! These jokers had better deliver!!

Then the other way to avoid dilution is to sell some assets to repay the loan(s). I'd rather this than equity issuance which would be stupid because, as you say, it dilutes as it would to repay the loan in shares. I believe the GEF loan has no dilution backstop and so is the more problematic. They said it would take two weeks so we are due something soon but I figure it'll take longer. But a mess.

Nope but I credit the management with having an option to repay in cash in the docs. To not have that is just preposterous beyond belief. Assuming it is in there then there is the small matter of $106m but that is certainly doable, likely not from immediate cash but certainly from some balance sheet cash then either a loan/bonds or selling assets. So my buy is based on an ability to cash settle. After all GIC/GEF probably don't want shares now.

Doubled up yesterday and today. Think they can sort the loans for cash and thus asset value is materially higher than here.

The non recourse project financing if structured properly should be ok. I don't believe that wind (decent) is valued at $600k per MW. Turbines plus BOP and grid in even the cheapest jurisdictions will be £800k/MW ie $1.2m/MW and so unless there is a large impairment going on here (which may be possible I suppose) then I doubt whether wind is generally valued at that level. If they are still using project finance then operating projects can't possibly be valued at $600k EV as that doesn't work if installed costs are $1.2m/MW!! So I think the issue is a poor management team with a poor capital structure floundering! At least I hope so.

You are theoretically right; trouble is the Board says nothing which heightens uncertainty. They are good engineers and an FD who can count but they need corp finance advice and the Chairman hasn't got good form here nor has the CEO. So worrying times for the ords.

Well you aren't losing yet as you haven't sold!! Look the reason the shares are falling is because of two effective loans GKO has which are reputable in shares. So the amount, the capital repayment is fixed so as the shares fall they will have to issue more shares to repay the loans and thus we (ords) get diluted. So the lower it goes the lower it goes!! Way out? Do a deal to cash settle either using cash on the BS or sell assets. They are a naive, uncommunicative and far too positive a management team and need some help I suspect. Let's hope it is the right help. They should never have done this stupid structure in the first place. Quasi equity always goes wrong.

This Co has a very valuable operating portfolio. It's the financing structure that is screwed.

That's all well and good but right now all that benefit is being lost to the Ords. They need to stop the cycle of death either through a cash settlement else assets sales to raise cash. NOT A DAMN RIGHTS ISSUE!!

Classic case of Indian optimism. The loans are fixed and thus are dilutive but they may have enough cash to buy out GEF which having no limit on the dilution is probably the bigger problem. But a management mess!

No they have two tranches of funding satisfied by the repayment of a fixed amount of capital paid in shares. The numb nuts management team didn't ever consider their shares would crater and now the lower the shares go the more dilutive the eventual repayment to existing shareholders, its a terrible structure. So they need to repay in cash probably be selling assets else out of existing liquidity. That's the source of the potential dilution. All in all its a mess.