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As taken from the 21st March 2019 RNS reporting final results for 2019 -
"An innovative 'build-own-operate-transfer' ("BOOT") structure was agreed with the consortium which further underpins the financial attractiveness of the development by leveraging vendor financing. FEED for the pipeline was completed in November, with FEED for the CPF scheduled to be completed in early 2019. Since June, and in parallel with the technical work, the Company has made progress to further develop the structuring and commercial framework relating to the proposed BOOT transaction."
And later updated on the 19th September 2019 RNS for interim results -
“Tendrara TE-5 Development
During the period the Company continued to make progress in advancing the development of the Tendrara TE-5 discovery, including the continuation of Front End Engineering & Design by the Enagas-led consortium together with the progression of the Moroccan environmental permitting process and has continued to progress discussions in relation to a gas sales agreement ("GSA") for offtake from the Tendrara Production Concession. The GSA is a critical element required to support project sanction. The Company has to date received a non-binding GSA offer from Morocco's Office National de l'Electricité et de l'Eau Potable ("ONEE") and negotiations on the terms of a GSA continue.“
Has anything been announced which sheds doubt on whether the BOOT agreement with the consortium including the envisaged vendor financing is still in place? If it's not, then surely it would have been RNS'd given the materiality.
So can we safely assume that even in a no deal sotuation, there's still the bones of the consortium agreement in place to build the infrasturcture and the question would be, what funds are needed for Sound to participate and meet the bond coupon etc (possibly by utilising a reserves based lending facility).
If the BOOT is still very relevant, then the IR team at Sound could maybe remind the market of the importance of the work achieved to date with the cosortium partners on the BOOT, to help instil some confidence that even in a no deal situation with the unnamed party, there's a route to market, but yes one where capital raising is needed - maybe through an Open Offer/Placing or whatever - but one that can be properly planned for during a time that the "Company's cash position has been strengthened". Let's not waste the time, if this current deal is looking like it's not going to suceed, then the BOD better be doing overtime to get the Plan B in position.
When it comes to the bond, that's not repayable until May 2021. As I understand it (can't recall where I picked up a post mentioning this), but JP downplayed the significance of that and said the bond could be easily rolled over with potential for reserves based lending. So if that is true, and as long as we continue to be a going concern until then with cash in the bank to pay for, amongst other things, the cash needed to pay the coupon, then they can't just windup the company. They have no justifiable reason to. The company has been successful with open offers in the past where it took all of 6 weeks from announcement to getting the cash in, so they would surely want to try that first, before throwing in the towel.
Hi, it's not BS and I'm no con artist, and I'm not paid by Sound (they have no vacancies on the payroll remember!). I came into Sound at 9.5p, with various top-ups on the way down. I've been in Echo since the IRG days (was really glad to see that one saved as I thought it was all over), but again have bought more on the way down. I'm being very open here folks, I've registered and posted for the first time today, there's nothing more to it.
Thanks Pontcanna / all - I have no issue with putting a bit of further information out about me. I'm a PI who's been "investing" in AIM for 10+ years. Oh to have realised though how much the odds are stacked against you when you enter the AIM. I'm certainly not a plant or anyone with connections to any of the companies I'm invested in. Yes, trying to turn a profit on AIM - not that it's worked out too well over the years, but what I have seen is when confidence returns, things can quickly change with a particular stock on the turn of a coin. I might not post that much, but what I can promise everyone is that I have no hidden agenda and if I have something to post, or an opinon that I feel may be of interest and helps to stimulate or add to the broader debate, then I hope you don't mind me joining in.
Yes, got stock in SOU (c600k) and Echo (c1.9m) - probably more than I should have if truth be told - low averages though. Just registered today, so yes a new poster, but as I said, been reading the LSE site for years (the last time this much was during the GKP days (and TK's infamous trading plan!)
Thanks Tombi1 / Scarf. I'm a daily reader on the LSE Share Chat forum (mainly SOU/Echo) but have opted to read other peoples posts up until now and haven't felt that I've had much to contribute. But with the current situation here at Sound, I've decided to peak out from behind the covers, use my voice and provide some additional perspective.
Thanks all for your feedback on this post. On a related topic, relinquishing JJ from CFO on 6th Feb, and JP stepping down as CEO (as announced would happen earlier in 2019), as well as the cost cutting iniatives undertaken during 2019, certainly all appear to be the hallmarks of a company downsizing the payroll and cutting costs to preserve capital - given the interest expressed in the Eastern Moroccon porfolio. I find it hard to believe though that if the BOD really want to trash the company at this stage, why wouldn't they have raised more. The company have been successful in two capital raising efforts in the past 12 months, c£2m in June, c£1.5m in Dec, so on the face of it, Sound don't appear to be having any problems raising capital (and the amount raised isn't too disimilar to last time round) it's just getting more expensive through dilution to do so. So, maybe their reasoning for the capital raise to boost the balance sheet while the negotiation of the sale completes, is genuine and puts us in a stronger position if things take a while longer. Positive intent and all that.
I'm also intrigued about the future of SM farm-down process being announced when the outcome of the Eastern Morocco monitisation process/potential sale is concluded (as touched on during the last Fireside Chat). If there's a viable Plan B, then that's all that matters. Only time will tell of course as to whether this is the case - but maybe Investor Relations could throw us a bone (early Christmas present) and show the market that they've strengthened their position further and restore some market confidence, by publishing some information on what their Plan B is. Nothing too specific, just enough to give credibility that they have one. A non-binding HOT works both ways after all.
In the event this "deal" doesn't complete, what are peoples' opinions on whether Sound will be the subject of a takeover by one of the "majors" with deep pockets (or even Sonatrach)? With all the articles in recent years referencing various majors; Repsol, Gazprom, Shell and Novatek (to name but a few) all being interested in some shape or form with developing infrastructure/taking exploration acerage in Morocco, is it beyond the realms of possibility that we wouldn't see the emergence of one of the "majors" in this story (maybe they're one of the "non-disclosure agreements with 23 companies / 15 management presentations")? Given the much hyped potential/exploration upside contained in Tendara, and the value of the Horst discovery when brought to market, taking Sound over would give a "major" a strong foothold in country. And would a takeover of Sound not give the purchaser some valuable VAT recoveries on expenditure to date, making the acquisition even cheaper?