From the report - Debt:
Work continues on the proposed refinancing of the Accugas US$ debt facility (as was detailed in the 2022 Annual Report). A detailed term sheet has been executed with a consortium of lenders for the provision of a Naira-denominated Transitional Facility and it is anticipated this will be finalised in Q4 2023.
Appreciate your comments Ed, objectively, it is a good insight and a good developing story. Reading between the lines can possibly give some context as to how SS operate as you allude to.
I think its quite clear we are seeing the major flaw in the plan here.
it is a plainly obvious strategy - ie take on divested assets from the majors and revamp the fields, bring in the revenues to everyone involved etc.
it is also quite obvious, and lets be honest, the MO for most of the African countries where these assets exist, that there has never really been a political will to do right by the people. Its quite clear that these assets come into existence by the majors when the countries are in very different situations. Discovering and bringing onstream these projects transform the financial potential of the countries, and the controlling governments it has been documented (in some cases, especially Nigeria) the payments through shady middlemen that were made for majors to get licenses and access to oil rights. this is not really acceptable these days and not really possible to get away with it internationally. i believe part of the divestment of the majors is to distance themselves from jurisdictions where this has happened alongside their ESG requirements for their debt holders and investors.
On that basis i suspect we will not see this deal cross the line, we will not see approval from the government. a deal which simply pays Petronas, and takes over the asset i suspect will not be enough for the people in power as long as they are able to prevent the transfer of the asset, and somehow bring some benefit from it either personally for nefarious reasons, or to squeeze some additional benefit from the country as a whole for altruistic reasons.
SAVE may well be checking the status with the authorities, but you can bet they will not be getting a straight answer, and the timeline here does not belong to them.
No smoke without fire. i would say worst case this 'news' has been placed to get Savannah to put some news out there, although i expect we are just starting to see the cracks. You have to say though, with Savannah, they have a bit of a knack of getting into scrapes like this.
the problem is, the minute they announce deals like this are in progress, Its almost a green flag for negotiations to start with officials in positions of power in the country by other parties, especially if they need to raise money. They are weaker the minute they announce these deals. Other parties can get support of governments if they make concessions to them first in these jurisdictions, if they do that before even engaging with the seller then they have a strong hand. Petronas just want to exit.
Why are you talking about equity raise so much? The company have previously stated this is not the intention.
Not having a dig, just wondering why this keeps coming up.
An equity raise would be a bit of a failure at the moment to my way of thinking. They have previously demonstrated they can get support from the sellers essentially, securing their divestment goals and clearly this is of benefit to SAVE. I would have thought that would be more likely, no?
Hi TrustLie
Is your source reliable on that front? it would seem to suggest there is a dialogue between Savannah and Chad on this - i had assumed there was no dialogue and it was simply(!) in the process of the arbitration. Are you able to add anything further on that based on you information?
Thanks
Thanks for the tip on the books. Might add them to the ever growing pile that only seem to help me fall asleep these days.
It’s not £5 a point! It’s not a rush job, I’m quite relaxed on the timeframes here. Got to consider a bit of a sharp shock for some reason which pulls everything down obviously but on balance it seemed like an obvious trade.
Well, not one to get too involved with these boards anymore, but broadly i see the market following the media (people believe anything these days..!) about a looming recession. We can predict the future now dont you know.
i see the price action here as linked to that.
FWIW, i dont see a recession on the cards. I have just signed a contract for services that is roughly double what i was getting in 2017 when we had a bit of a rough patch in the "energy sector" as its now called (oilfield)!. in property, i am still seeing a squeeze for trades and materials, and good investment appetite in new developments. lenders want to lend.
I also dont believe in the pending property crash that seems to be expected by the masses. a sentiment led lull perhaps.
I think the current action is fear and sentiment led, and this is a buying opportunity accross the market.
for SAVE, it always gives the niggle that there is bad news looming because of the stage it is at in regards to the pending deal completion, but on balance i did not have those concerns before the wider sell off, so i do not have them now. all thats happened is the price has changed.
all this is clearly my opinion, just thought i would put it out there.
Might be a bit reckless, but ive put my money where my mouth is and opened a 5k per point long position this morning here. Lets see where that goes.
OaW.
Fantastic advice. People used to say things like this to me, and I shrugged it off, but it really is a great way to manage yourself.
It’s easy to get caught up emotionally and feel like it’s a lot of effort somehow, but of course there is nothing to do! Let the share price move, it does not matter. If your happy with your analysis, and you buy, then you should relax! And go for a walk!
Everyone patiently watching placing shares wash out before the fun starts..???
Zengas,
Your posts are great.
On the direction the board are taking the company, ie the reason they are growing a company like this, is for high growth revenue. Not capital appreciation - by this I mean the intention is not to grow the company to grow the SP.
To me this has been clear for a long time, and I am comfortable with that. The SP will grow over time, but it does bear into decision making when funds need to be found in an environment where deals are being put together. I am familiar in this environment.
So I invest for the day when the dividends start to pay my investment every year. From that respect, this is a very unique opportunity.
Extract below:
The Directors view Savannah as a high cashflow growth company and expect to re-invest the majority of internally generated post-debt service cashflows in organic and in-organic growth projects consistent with the Company's corporate strategy. However, the Directors also recognise the importance of paying a regular and growing dividend to Shareholders. Over the course of the next 12 months, the Company expects to formalise and announce a dividend policy centred around its underlying free cashflow generation, with the anticipation being that a minimum dividend of US$10 million would be paid in H1 2023 in respect of full year 2022.
Hi,
This is a growth company. It exists currently to grow a revenue paying company and acquire assets. That’s is it. Anything is therefore on the table.
It is not a being built for capital appreciation (ie buying a house and waiting for the value to increase before selling it. This is buying a house and making money on the rental).
Whilst the SP will naturally appreciate over time, it is not the intention to protect this at all costs. The revenue is the most important factor in the view of the BOD.
So, they will do anything to pick up assets in their focus area with the right metrics for them. This latest funding amd fundraise is far better that the 7e difficult raise. It looks like they are being taken quite seriously now, and they have demonstrated the capability to service debt.
If you invest, you are investing in what I have mentioned above. It’s worth being comfortable with that.
I expected the raise at this price, it made sense to me that it would happen this way. I think it was realistic.
I think traders will be nervous here. The risk of another suspension is still there - which is a risk for a day trader.
There is a lot of catalysts coming here, but I suppose the interesting one is another acquisition following on pretty quickly. The minimal dilution is key to this - as is the low valuation attributed to the company currently vs what it will be in 12-24 months. Still leaves attractive entry for further fundraising for further acquisitions.
Very interesting. I’m a buyer at anywhere near placing price. Picked up more today based on the possibility of further news in the coming week or two. Still digesting all the information.
Will probably disappear off for another few months. Good luck all
This sounds like it will be painful for some on relist. I would be surprised at any sp weakness based on what we currently know.
Hopefully everyone gets what they want and can either exit with their shirt or sit tight and get on with your day without worrying too much. A longer view on this one is much more comfortable right now for me on this one.
I’ve lost big time in situations like this before when short. It’s not nice.
At least we get a little bit of excitement now
Hi noix,
That didn’t paste too well…
The figures look good, assets give out a lot of cash. Payback in under 3 years….
I personally really like what’s going on here. This company has real power to transform the wealth and pension funds over the next few years. I have not seen many like this.
Agree with you. It looks really good.
Seeing how well the placing goes will be a good indication, but a massive difference this time round, very small placing considering. Pretty good achievement from the team tbh
Careful with the posts in here impartial readers, there are a few clear agendas.
Earnings per share of some 38pence (post dilution). 200m gross profit after deductions as indicated in the RNS (post deal completion).
Only 65m being raised, so small dilution.
Remember (I’ve said this a lot but I don’t think many here want to hear it), this is a income growth company - it is their strategy, not capital appreciation (ie share price increase), they have said this in the RNS.
All in all, looks good. Get your calculators out and have a bash at the valuation yourself.
All this for less than 260m Macp post deal? Give it a little time, pretty sure a bag incoming quite quickly here at least
Just did some sums, takes too long to type but accugas is currently adding around $50m annually free cash (before any refinancing)
New assets (midstream) seems to pay out around 45m in dividends.
Not sure what the upstream assets contribute in terms of fc, but would be something I would expect.
So it might be easier to value based on dividend payments, plus a bit for the low debt and potential (Niger etc)
So a dividend of 100m pa at 1.5b shares is around 6p per share (I think). 5p per share at 2b shares.
I suspect for those looking at the SP re rating in a sustainable trend over a long time, this is the sort of thing we should be looking out for.
I would also think if anything like these numbers come up, then you would seriously want some long term exposure to SAVE, because 5-10 years here could be quite powerful for the pension pot
Plus fcf from the existing business of course