Member Info for wwguk

Source:
https://markets.ft.com/data/equities/tearsheet/profile?s=SXX:LSE

Look at "Institutional shareholders" under the "Movers" tab
Data from 31 Dec 2018 - 02 Sep 2019

In addition, Citi hedged all their SM shares; HBK and Citadel added a short position.

Major U.S. IIs seem to be lack of confidence to the bond issue (in a revisit as before under a slightly better market condition), as most of them have reduced their holding or increased their shorts:
Jupierr sold 20m shares;
Capital sold 110m shares, nearly trigger the 5% threshold;
BlackRock sold 44m sharess (nearly 70% of their holding), and added their shorts;
Merrill Lynch sold 6m shares (100% of their holding);
In addition, Deutsche Bank sold 16m shares (57% of their holding).

"High risk project" rather than the "market condition" seems to be the main problem to the h.y.bond investors. As the high construction risk and market risk at this stage make the future cash flow projection less reliable.

Therefore, some change to the bond offer has to be made, either attaching a warrant or gov guarantee; or raising the bonds from other sources, e.g., public or commercial banks.

So far, no comments from SM on all the speculations.

Recent speculation in the news on some change to the bond offer (so as to rise its chance in the h.y.bond market in the upcoming revisit):
1. attached a warrant to the bond, or
2. covered by a gov guarantee, and
3. a public roadshow.

The only SM h.y.bond presentation we got was the one CF did in February at the JPM h.y.bond conference. If there will be a public roadshow, we should be able to get an updated presentation, revised from the one used for the first revisit to the bond market this August. It would be interesting to see how the cash-flow is modeled in relation to the first years sales and the suggested interest rates; and how the construction and market risks are addressed and presented to convince the potential purchasers on the projected cash flow from the mine.

John: "Personally I will relish the day the bonds are sold and hope they misjudge it - although past experiences suggest they have a much better understanding than we do of what is going on."

Yes, this is worrisome. As we know that HBK and BlackRock kept selling at around 10.5p; We are not sure if there are other big IIs (holding less than 5%) doing the same. If so, it might mean that they may expect (the failure of bond sell and) a placement at a discount of 10.5p for them to get cheaper shares to return what they borrowed in the shorting (as Capital did before stage 2 funding path announcement). Given the popularity of the share and the low price, if there is no such selling from the big IIs, the demand would easily succeed the supply, which in turn would move up the share price quickly.

We need some good news on gov support (to strengthen the chance of the bond selling) to let them stop selling, and this will result in a pop of the share price (as what happened before when Capital stopped selling a few days before 30 April (when they were formally informed (invited to take part of) the placement, and due to restriction on using inside knowledge for trading, they have to stop sell (although they knew/predicted this well in advance)).

Thanks, PAAA, about 20m Buys listed yesterday (4 September) after hours.
Might they have been done via the U.S. over-the-counter (OTC) market?

We have big buys; but also shorts yesterday.
BlackRock shorted 6.3m shares (0.09%) yesterday; now with total shorts 0.70%. They have about 1.02 % SM shares (as list in July). Can an II return their own SM shares, rather than buy them on the market to cover the shorts in case the share price rises (over the price the short is added)?

The total trading volume within the hours was 19m shares (i.e., a quite low volume). Additional one third of the volume (including over 6m buys) had been traded after hours.

The LSE market hours are 08:00 to 16:30. This doesn't mean the trading stops at 16:30. Stocks close for regular trading following the closing bell, if not before, but it's common for trades to continue being executed. Many get matched as part of the closing auction, finishing with a final uncrossing trade (UT).

Some brokers support after hours trading (extended hours trading). One can buy and sell like one normally would during ordinary operating hours, but volume is generally lower and price movements may be more volatile than they otherwise would be.

Similar big buys of the SM shares happened yesterday after hours.
Why do those big (O type, i.e., ordinary) trades often happen after hours?
Can anyone provide an explanation?

ffcmember, by smaller sum I mean that $500m is smaller than the over $800m IPA had tentatively agreed to cover. You are right that it would be the best if SM can sell the initial tranche without gov support, as the initial tranche was designed by JPM to test if its h.y.bond based solution is feasible for the SM project, that does not generate high yield for a couple of years. However, the first test in August failed, which indicated that for h.y.bond investors, cash flow is king (see ft article).
If the cash flow is to come in about two years as Fortescue, they need to see a solid cash flow modelling that demonstrates the money can be returned and high yield can be generated. Fortescue iron core is at the ground surface, mine construction risk is very low and all the iron core produced in first years had been sold to China. SM mine has two deep shafts and a long tunnel; and unlike iron core, poly4 is a relatively new product. It is not easy to incorporate the construction risk and marketing risk into a cash flow modelling. However, if the initial tranche is sold with the gov support; then when the next tranche of bond is to be sold, the construction risk should have been greatly reduced (demonstrated by the first poly) after the $400m CB, $50m share sell to Gina, $500m initial bond, $1b from RCF were spent. Market risk may also be further reduced by new evidence. This might be the reason why in its design JPM has agreed to let SM raise the $500m in some other ways (and still trigger the senior debt event and kick start the RCF).

I believe (also as what SM told the ft reporter), SM/JPM did have planned to discuss the issue with their big II investors (immediately after the withdraw). The better way to get their support is to let them buy a part of the initial bonds (to cover the shortfall, i.e., to provide a backstop), as the success of the initial bonds would kick a good start along the JPM h.y.bond fundraising path.

They (i.e., the big IIs) did similar things in the open offer, i.e., they provided a backstop for the success of the open offer by booking all the new shares for existing shareholders (if case some of the existing shareholders would not take their entitlement).

ffcmember, SM has engaged with IPA since 2016. Lots of work at technical level have already been done (especially the due diligence). If there is a decision from the top, they should be able to come up with a solution for a much smaller sum than they had tentatively agreed before. IPA may not be the only solution, the gov if they want to may do similar things by other depts without IPA (if the IPA process takes too long to assist in this case).

ffcmember, to further ensure the success of the bond issuance, I hope (as reported) there will be a (gov) guarantee on (SM) guarantee on the bonds. Such arrangement may take some time, especially given the mass in parliament/gov in past few days. If Bojo did instruct the gov depts to assist and the rest is just execution by the gov depts, then hopefully this could be quicker.

Not sure if SM will announce the revisit with a RNS. The previous roadshow took three weeks (actually two weeks, starting from a Friday and ending at a Monday before the date to announce the rate range, plus three days to complete the issuance). SM did say that they will discuss the issue with their (big) investors and then re-engage the potential bond purchasers.

They did not say that there will be another roadshow. Therefore, in this round (given the discussion and continued negotiation since the withdraw) the time/days spent in this revisit could be much shorter.

I would hope to hear about some news relating to gov support, and some updates from SM before they revisit the market (in middle or late September).

U.S. and China have agreed to resume their High-level Trade Talk in early October. There will be lower level negotiations between the two parties in September to prepare for the high-level negotiation.

This means that the trade war between the two has calmed down for now (until early October). Therefore, market condition on this regard has been greatly improved.

At least a 0.25% rate cut by Feb in middle September has been expected, and this cut could also be higher, i.e., 0.5% according to recent new. Therefore, market condition on Fed rate will also be improved.

The average interest of the CCC bond on the 2nd of September is 12.04%, which is a bit lower than the 12.06% on the 5th of August (one day before the planned SM h.y.bond announcement).
This index has spiked to 12.49% a few days after the Trump tweets; it has also calmed down.

Due to the joint effort of many (especially those local MPs), the Bojo Gov has also noticed the funding bottleneck, and seems to be willing to assist.

Overall, the market condition, fortunately as expected by SM/JPM, has been greatly improved. This is very encouraging for existing shareholders!

It is based on the same source, i.e., the BBC reporter. Nothing new added, actually its significance reduced (by those not very meaningful quotations from the investment manager and the investor).

Sirius Minerals could be handed Government lifeline for cashflow problems
https://www.gazettelive.co.uk/news/teesside-news/sirius-minerals-could-handed-government-16859137

...PM Boris Johnson has said he wants to help cut the risk for investors, according to reports.

RogueRiver: "I reckon the BBC info came from a SM management insider, hence the lack of any comment from the company - and the reporter keeping his distance (i.e. reporting from outside the premises)."

Yes, the content seems to come from multiple sources (possibly including SM) and different perspectives. But he did have spoken at the side of the big stone with the name of the Woodsmith mine on it (at the mine site). He must have met and talked with people at SM, and it would be very odd if SM briefed and entertained him, then he would say something purely based his own speculation on the bonds, rather than on what he learnt from the SM and the gov sources.

GK: “...Meanwhile the media will be the media.”

Yes, GK and Scotman. However, they (the reporter and the Investment Manager of Redmayne Bentley) must have heard something from somewhere.
One day before the 30 April RNS, the news from Sky (although lack of details and not very accurate) did carrying some facts that we learnt one day later from the RNS.

This sounds like a light weight Gov guarantee on the SM guarantee, only if a default happens and the SM asset is not enough to repay the initial bond purchasers.

The best solution to SM is to have this $500m as IPA covered bank loans (from the original bank group) with lower interest rate. This will also demonstrate gov and commercial bank support to the project and enhance the confidence of the potential h.y.bond purchasers. After all the $400m new CB, $50m Gina, this $500m, and $1b from RCF went into construction (possibly reach first poly), the construction risk should have been greatly reduce (which is one of the main concerns of h.y.bond investors), so the fundraising later from h.y.bond market should become much easier. Of course, this (alternative funding raising other from the h.y.bond market) has to be agreed by JPM (to trigger than senior debt event).