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Sadly I disagree with those thinking it goes forward in current form - I do think the opportunity to do that was to get the finance deal done which clearly hasn't happened (probably because the sum required is large). Downing tools and re-start will be a huge cost and will have to be borne by however this goes forward from there.
I think the best chance now is an orderly sale, to somebody (Glencore? other bidders?) at numbers Orion and La Mancha are happy with. Hopefully not administration. Right now I'd be over the moon with 50p and I'd take anything reasonably 25p+. Whether Orion/La Mancha would take that is a question but what are their options if they aren't capable or willing to stump up the whatever hundreds of millions of $ required.
For me this became a sale outcome when the contractors downed tools I think people hoping for a continuation of build/eventual dividends etc are likely to be wrong. But I'm happy to be wrong also as I have been on many previous occasions! Something like 35p might represent c. 30% of La Mancha and Orion's blended average and maybe they are prepared to suffer 70% loss (I'm not sure what the situation is in that scenario with the convertible bond maybe they get paid out ahead of the equity).
It's a sad outcome but I'm resigned to it. Especially when the alternative is 0p. None of the above is a recommendation to either buy, or sell, this is a very individual decision but I'll hold for outcome.
The main/only protection I see for PIs which another poster has commented on today but I also assumed very early in this process was Orion and La Mancha because they will hopefully not just agree to anything and will keep it orderly. They put in $200-250m, lets assume $65m of that the convertible bonds get paid out in full leaves $135-185m (I forget the precise numbers and some was for Vermelho/royalty etc). Right now they own 33% of the company between them.
Using a mid figure of $150m as a guide for 33% of the company, at 30% of their investment a buyer would be paying $135m in total for the equity - £110m gbp (assume 1.2x fx) and around 42p a share.
So the question is, will a third party or Glencore take on all the debt, the completion to build cost, pay up the convertible bond, and stump up $135m for the total equity (of course, for Gelencore the total equity payment is less as they already own 17%).
We will see. I'd be happier the higher the price and I'd be pretty down about 0p.
Administration might not be that bad as 3rd party liquidators would take over & sell to the highest bidder, meaning the 'cornerstone' owners couldn't use their share holdings as a veto as basically it would be taken over by the banks.
And the shares would be worthless! How is that good for PI’s?
That is why shareholder lose 90% or if you are new just a gamble. Maybe it go up multiple bag it it can find the fund or lose it .
Stop building 4 months as they are waiting fund from somewhere show serious trouble at moment. It cant be build until they can find a solution to deal with funding . If it cant so administrato is next rns as many big firms got it when they cant find the fund.
Many firms big or small got trouble when they deal with fund or pay debt. Many have go bust as end result. When share lost over 90% its value it usually cant cope by its over the next will gone forever.
Many big name hight streets got the same result over years . Funding until it can earn money is very important point for the mine as just over there but cant sell anything .
If they can’t find funding, they will put themselves up for sale. Shareholders will get something, even though it will be at a discount to what the assets are worth. I believe funding will come, but at a cost of dilution. We own a tier 1 asset, that is part finished, that fact underpins our value.
Tuan you've just arrived and all your posts are negative. Are you short? Looking to buy? Or just here to 'advise'? Just wondering (who you work for - but I could be wrong). Most retail investors are out with big losses already, maybe smart money is buying their shares right now or not. There are of course many entities which wouldn't want a company like Horizonte to succeed - as it could produce nickel at lower price than say Indonesia.....
Wilko.STF.Purp. all of them go into administration as they couldn't find the fund . That is the fact and all big firm . Many bigger got more trouble as harder to find funding as it requires higher capital investment into it.
It is all money and the fact many got that way so HZM on AIM share anyway .
Folks I really don't see admin as good thing for anyone. really noone.
2/3 of the cornerstones will be wiped out along with the PI's. A liquidator will come in, set priorities, will have to first service debt. Say bids come in, they can be as nasty as not even covering the debt.
Even if 1 or more of the cornerstones come together to bid, still the PI's are entirely wiped out as per point above. however I would argue that it won't be a favourable strategy even to the cornerstones to allow things on purpose to go all the way to buying it back at admin. timeframes, uncertainty, further devaluation, and... even looting!
More costs to cover to, bring in the administrator to charge a fee. moneys spent to secure the place, etc etc etc.
It really is not a simple thing.
then the admin auction timeframe. IT will NOT be controlled by the cornerstones. it will be done by the admin.
admin will have different priorities to cornerstones. they service the debt first.
So I don't believe for a second that it will be let to go to admin intentionally, with an ulterior plan by a cornerstone to buy it on the super cheap there. I do not believe it for a second this is sensible intentionl strategy...
Having said that, it is actually all the very possible indeed we ended up in admin? Why because it is actually default position to be at, if all else fails in the interim.
Point though, is that I firmly believe its even in the cornerstones, and Apex's to sort it before it gets to that.
The main problem with the cost over run was that everything was already costed and debts were secured.
Now any potential funding will have an independent forensic due diligence which will take a while to complete.
It's going to be a few months before we get a definitive answer to whether they'll get funding or not.
If they secure the fund from somewhere it up 3 bag at one. High risk but high lose as place gamble as last RNS drop so must but this time rns confirmed more big trouble as they ask contractor stop building and wait 4 months. That is point show they cant find sulotion within big shareholder. They need find someone from outside to deal with funding.
90 % value lose show that way forward as all party try thier best but outcome is zero solution .
If takeover happens how much can they sell this? As they got 60% finished project so many bigger outside would take it that way.
My own very thesis is that if a cornerstone really want the asset, and no debt solution is found is to bid.
The bid they make, it will be at a discount to their existing share holding. whatever bid they come up with.
the moneys they will spend on their bid will serve the utility of avoiding all uncertainty getting the asset at auction with no disruption. Yes they will have to serve the existing debt fully [as opposed to whatever discount they could get to that at auction, which is the only bit they are saving in an admin-buy strategy]. But they will reduce their added costs by the extra delays, degradation for halting everything for whatever admin time.
So I as again, what is it worth to an apex to come with a bid of 20 or 50 or 100mil to bid to buy the whole thing now.
I genuinely see it as more likely, and the whole thing be put to a fast track GM vote.
If you were the company thinking about taking this company over, the first thing you'd complete is some in depth due diligence.
That's probably happening right now.
My thoughts fwiw are that HZM have proven themselves incompetent at costing this project to get to the income deliverable point. If I were glencore I would want to take control of the build and commencement of production. They have the knowhow, scale and cash to make it happen.
I do not think it will be a (Glencore) buyout as Orion and La Mancha, as someone said earlier, can potentially block the sale vote to try and get a better price. A dangerous strategy because if no higher offer comes through it will be admin.
Obviously a white knight could turn up, and why wouldn't they. But again they surely wouldn't want HZM running the show.
For me I think the likely scenario is admin, similar to the Debenhams debacle. With Glencore taking this over in a pre pack offer very quickly, securing the debt which may be renegotiated. Glencore will have already conducted all the DD they need imo, and I'm sure this is far too tempting an opportunity to let go.
I'm very disappointed that the management miscalculated so badly, as I am sure they are too. Professionally this will be hard to come back from imo.
Magnum, want to explore this idea:
I do not think it will be a (Glencore) buyout as Orion and La Mancha, as someone said earlier, can potentially block the sale vote to try and get a better price. A dangerous strategy because if no higher offer comes through it will be admin.
what is the mechanism for that? I mean, if there is any sale talk under the above scenario, should there forcefully be an RNS? And if yes, with the disclosure of what is the price? + A general meeting to vote?
I am asking with this in mind: can there be a bid that is blocked without putting to vote in a GM?
What I am hoping on this scenario is an RNS. To get a market reaction.
I think it's more likely a suspension RNS is coming rather than anything looking for a market reaction.
Mv01, offers can be made at anytime by anyone to buy a company. The management will only usually disclose to the market that an offer has been made if they are recommending the offer. OR if the offer is leaked which forces a RNS that an offer has been made.
Not always the case that the offer is made public in the leak scenario (see THG recent offers)
If the management this the offer is acceptable the it will RNS the recommendation to accept the offer usually at a EGM to vote on a special resolution requiring 75% of the vote to agree. If Orion and La Mancha together hold around 33% of the votes then it is possible their block holds most of the power either way.
In a sale they get cash in no sale they run the risk of admin unless a competitor comes in with another offer.
If an offer is made public then the SP will likely re-rate to around the offer level. (see HOTC today)
The above is my understanding based on previous experience and nothing further will be known until the company communicates it imo.
Thank you Magnum.
It feels like a stale mate to me situation. No one cornerstone can outsmart the others by offering a petty offer in fear of block. No cornerstone [in my own thesis - to present this as opinion and by no means as fact!] will want to see this intentionally going to admin, and nor by negligence out of their own action I would argue.
And I would say that we are headed to admin if no agreement can be found.
So why not naively argue here that there has to be some fair equilibrium value to agree to here?
in exploring this thought I have one bigger fear now but don't know if it is at all possible:
Is it remotely possible that all 3 cornerstones sit down and agree to offer a low ball collective apportioned bid to buy the company?
I mean it this way: say in simple terms they own 15%, 15%, 20% of the equity correspondingly [numbers made up], and then say lets bid a total of 1mil to buy the company, 300k, 300k, 400k each.
what are the mechanisms of
(a) avoiding this going to vote?
(b) assuming it does, do then bidders still preserve the right to vote given clear conflict of interest?
On (a) does the BOD have power to reject such a bid, or do they have the obligation to put it to RNS and call an EGM.
I am using extremes, as I see the stale mate deadlock if cornerstones forced to act in isolation, but not if they can collude.
They could do that and form a consortium. But if I were Glencore why would I do that? I'd want Orion and La Mancha out of the equation and have a bigger piece of the pie.
They can get together and force the company to hold a EGM and add a resolution to be voted on. I think only 10% shareholding is required to take this action.
I do not think suspension is pending as the company have told the market that they have cash until new year. This does give time for potential buyers to make a reasonable offer. A race against the clock and the potential bidders hold the power imo.
Thank you again...
I am just dismantling the Glen-the-Apex-I-am-here-to-B4TT-F**K-you saga which I don't buy for a sec that it can be that easily beautifully cynically and precisely engineered...
If something might happen, and does so in the end, does not mean it's all planned all along...
There's quite the few more chapters to be written here.
Whatever else is been said at this point is just fear spreading and hope dependent on the side...
What is price close today? It start to sell off a lot and it is run away collapse on horizon. Yes very high reward when they can find the fund and it will multi bags at one. Nobody double about that but it is hanging to go administration on its course.
Totally agree mv01 but they have form apparently
This has not been engineered by Glencore as clearly there were unexpected issues on the ground and a war in Ukraine.
Whether they subsequently try and take advantage remains to be seen but I agree the other cornerstones offer all of us protection and if La Mancha really wanted they could loan the $100 million that they withdrew from their other Brazilian deal at a very favourable rate of interest to them.
Maybe Glencore are trying to stick their oar in to mix it up,but clearly the lenders are engaging too.
Very complex and no way to really second guess.
Glen don’t automatically get the Vermelho asset if they buy Araguaia out of administration and the company sure as hell won’t give it to them without a serious fight from all shareholders etc at that point-institutional and private.
I think that they would rather have both so either bid or play ball to get the offtake on both