Foxprime, page-3

Thanks Foxprime

Clearly the Taurus terms are far from ideal, but penalty clauses and the like are often not dwelt on at the time of signing agreements because the borrower can't see them being exercised under normal circumstances and / or they're not in a strong enough negotiating position to get them softened anyway. Plus, in cases like this where things are at least theoretically going well other than the EPA approval not being forthcoming yet, it's rare for lenders / investors to actually enforce such penalty clauses anyway - it's not a great reputation to get.

Taurus seem to be a bit of a different beast and want their pound of flesh, which isn't ideal, but presumably they were the best option for the company at the time they did the deal, and although annoying the sums involved aren't material in the overall scheme of things.

I don't see Taurus not compromising on their position as a huge risk personally though - ultimately they'll do whatever's best to ensure that they get their capital back, ideally with a decent yield too, and whilst arguments could be made for alternatives, my money's on completion of the project being the quickest and easiest way of that happening for them now.

It's hard not to try and second-guess what's going on behind the scenes, and it's obviously sensible to think properly about downside risks, but I'm relaxed personally and take a lot of comfort from the following:

- CEFC's involvement - I imagine their due diligence processes are pretty robust
- Recent appointment of two new, independent directors - no idea how "good" they are, but I'm sure they'll have asked some similar questions around EPA approval and funding risk before signing up (extremely embarrassing for them if something goes wrong now)
- Tony and the wider team's commitment - I won't pretend to know the full history of the Apollo Group, but whatever anyone thinks of them, Tony isn't an Apollo guy, and is putting his neck and serious cash on the line for this project - he's going to look pretty stupid if this doesn't come off broadly to plan, given how bullish he's being, and my guess is that he's someone who values his reputation very highly.

Others will no doubt see things differently, or have different risk / reward profiles, and that's their decision, but it's still a hold / buy for me at these levels.

Sevo's definitely better placed than I am to comment on the more operational aspects, but I'm personally (perhaps incorrectly) relaxed about it all now.