Lombard Shallow Skim A Breakdown13 Jan 2021 11:47
Points from SCs post:
"Some on this BB believe the Lombard deal is very risky in the event of a Percy-1 duster."
That would be because it is extremely risky in the event of a duster.
"The fear being, Lombard are guaranteed 2.3p on c560m shares with the belief BPC has given an unconditional guarantee."
The actual fear is that they have guaranteed 2.3p, on potentially 750,000,000 with warrants that have been issued under the same terms that could take the total to 937,000,000 if the warrants are exercised in the next 12 months. Those warrants actually at higher prices 3p and 4p respectively.
"I do not believe it is unconditional because:
1. The most important: it would have been one of the greatest investment/lending opportunities of 2020 with queues of investors lining up outside BPC’s HQ salivating at the idea of being part of the action. Think about this: 15% ROI plus a lot more if Percy-1 and the whole B structure un-risked resulting is a surge to the SP. Or 15% return plus a guarantee to own a large chunk of the company (including its ex-CERP assets potentially worth 7p per share) in the event of a duster. Anything that sounds too good to be true, is usually….too good to be true."
Too much talk of 15%, when all the RNS's released regarding the Funding agreement and Funding option agreement expressly state 115%, and ex cerp assets worth potentially 7p per share with over 5 billion shares in circulation is extremely rampy even for the most devout holder. MC of over £350,000,000 for ex cerp assets ? unrealistic in my honest opinion.
"2. The 2nd most important: why hasn’t Lombard dumped the whole lot already, come back for more, and before dumping, shorted the share to make even more profit? Because they can’t."
Making the call gives them until the 16th April to dump a potential 750,000,000 shares with a guarantee of getting 2.3p per share regardless of the sale price. So no need to dump and come back for more, they are guaranteed 115% so sell at 2.299p or 0.01p they get 115%
Direct quotes from RNSs relating to both Funding agreement and Funding option agreement:
"BPC may be required to make a cash payment to the Investor to the extent that the Investor's aggregate return from a sale, if any, of those new ordinary shares has been less than 115% of the subscription price. BPC is only required to make a payment in the event the Investor sells shares for, in aggregate, an average price of less than 2.3 pence per share (being 115% of the subscription price)"
" the Investor has the option to double that amount"
"As part of the initial Funding Agreement, the Investor will also be issued with warrants, valid for one year, to subscribe for a further 93,750,000 shares at a price of 3.0p per share and a further 93,750,000 shares at a price of 4.0p per share."
"The same terms will apply for any funds that may subsequently be made available to BPC under the Funding Option Agreement."
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