Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
I think the next quarterly report will be the end of October, covering the quarter to the end of September. But they do often release other news in between the quarterlies anyway
I think the potential's there to double by Feb, providing there are no hiccups, but if the numbers don't then live up to expectations there would be risk to the downside
someone on another board made a valid point that with the retail offer being 40% subscribed, the underwriters will no doubt be trying to offload the remaining 60%, which will take time and keep a lid on the price (in the absence of news and higher volume at least). So it's just a matter of patience now hopefully - should get final environmental approval by the end of the month, which can only help
It would have been nice to see it 100% or oversubscribed, but I imagine that most people wanting in were already in, and there's a whole host of reasons why they may not have been able or may not have wanted to increase their holding (eg not enough cash available, or not wanting to unbalance their portfolio).
So I'm not personally concerned by it. I think it's far more important that new investors were attracted to the institutional element.
I went for my full allocation but don't want to hang on to it for too long as I'm already rather overweight SO4...
That's my interpretation of what he said CommodityScrenr, yes
Like many I wasn't expecting a large equity raise at this point, but apparently the institutional broker notes did all factor something of this quantum in (eg Macquarie, with a target price (for now) of cAUS$1), so it's not news to the City, which is the important thing really.
Re the future, I think there might start to be a SOP price issue if all 9 lakes were developed as quickly as possible (assuming they're all viable of course) - the projects due to come on stream in the next 3 years or so should displace all the secondary SOP production from MOP, and whilst the thesis is that demand has been constrained by lack of supply, it's easy to see how a large amount of extra SOP hitting the market could soften the price, in the short-term at least.
The detail of any condition precedent ("CP") around environmental approval is critical for me, although I doubt we'll ever see it. No reason at all why the debt deal can't be signed without the approval, but there could still then be a CP saying they can't actually draw the money down until they have the final approval. If that's the scenario, it's hard to see how they could continue the current pace of construction without another equity raise / "convertible loan". But it's completely possible that the agreement would allow for some draw down ahead of approval, which is what's been happening under the preliminary facility anyway.
I am a bit concerned about them needing another interim raise, especially with some large items of kit arriving soon, but the fact that Tony and Ian have both bought a lot of shares recently does provide some comfort. I had a look at some other of Ian's purchases in other companies he's on the board of recently and none come close to his recent investment in SO4, for instance.
The timetable for EPA approval is on p2 of this doc
https://www.epa.wa.gov.au/sites/default/files/Environmental_scoping_document/CMS17696%20-%20ESD%20-%20Approved%20-%20140520.pdf
Ecclescake - I wasn't particularly concerned about the terms of the debt to be honest (perhaps incorrectly), but as you've drawn attention to it I did just check the March quarterly report and it clearly states that interest on the Stage 1 facility is 9.75% p.a. and the full PDF is 9%.
I think that's reasonably clear, but maybe I'm missing something?
Thanks Slurms
I think part of the issue is that it's not crystal clear - the first page of SO4's release mentions the 45c and the second page mentions the 10% discount if there's no equity fund raising, but doesn't mention the 45c.
If we just focus on the first page though (repeated below):
"The Convertible Notes have been structured as deferred equity with zero coupon and
mandatory conversion into equity at the lower of 45c/share or a 5% discount to any future
equity raising of at least A$10m."
To me that doesn't say that the 45c would only apply in the event of there being another equity raise, and it may therefore also apply in the case of there not being a raise.
So my interpretation of the release is that the 45c could apply in any event, although I certainly hope that your interpretation is more accurate!
The reality of course is that it should be crystal clear rather than being capable of different interpretation by different people...
Hi All.
First time posting but I've been following this board for a while and have held SO4 for a couple of years or so, increasing my holding significantly in the last few months.
Whilst the convertible note isn't making me question the fundamentals of the business, unfortunately I can't see any positive slant on it, because:
- it's basically just a placing, presumably structured as a convertible loan note for Equatorial's tax purposes, but at a much larger discount than the April one, and to a related party (Middlemas is the Chair of both Salt Lake and Equatorial). The key term is that the conversion price is the lower of the 5% discount and 45c. So all being well they'll convert at 45c, compared to a price of 53c at the time. Worst case is 30c, but hopefully that won't come in to play.
- that suggests they needed the cash really quickly, and whilst the debt process is clearly dragging out, if it was purely a timing issue then a normal convertible loan (rather than the heavily discounted placing this is) would have been fine, with the loan simply being repaid by the final debt package, with a commercial coupon
- the fact they haven't done that suggests (to me) that is's either just a cosy deal to the detriment of most shareholders, or that they're not going to raise as much debt as they initially thought, so there's a genuine funding gap rather than just a timing problem
Either way it's not positive, but it's a small amount in the scheme of things and doesn't change my overall view of the opportunity.