Sorry, been off the air for the last 36 hours, as \i have just arrived in London last night for the cricket. And the internet is slower than the poms stalling tactics!
So, the market didn't like the announcement that the convertible notes were paid off? The market has no clue.
What reason does the market have for why HGO chose to pay off the debt early, hm? They cleared the debt at the equivalent of 34cps if my envelope calcs are correct. A$49.86m debt cleared, so as to remove the future dilution of 168.4m shares.
Now, why would they do that? Is it because:
(A) HGO are complete numpties?, OR (B) HGO have a VERY GOOD REASON to think that that top-up will come into play, and therefore removing debt at the price of 34cps is value accretive for the company?
It is the only logical conclusion to why HGO sold ESG for only $1.00 (plus top-up) when in April they publically said it was worth well over $2.00, just based on average metrics. IMO, ESG will eventually fall for MORE than the average transaction value in the sector.
So why anyone would now sell HGO for less than 34 cents, the price at which HGO cleared the cn debt early, I have no idea...
Think about it? WHY would HGO bring forward their debt repayment at 34cps unless they thought HGO shares were worth AT LEAST 34cps?
I topped up on HGO at KL airport en route. WHY? Because I am convinced that ESG will receive a bid from someone, probably Santos, SOON. I believe it will be within 3 months, and could be this month.
I have no inside information. (In fact, I have never met, spoken, or received an email from anyone at either ESG, Santos or HGO.)
However, all I will say is that all the information is there for investors to make their own conclusions, both in the market announcement, and in the posts on Hot Copper.
And if, after you have done all your research, you still cannot see that ESG will be taken over, and therefore HGO's price will at least double (even without Kanmantoo - just on the ESG 'options' top up)... well, you will never see it.
Feel free, in 18 months time, to make me eat my words if ESG is still independent. It won't be.
Good luck holders, and good luck to the Aussie cricketers.
Y
HGO Price at posting:
23.5¢ Sentiment: LT Buy Disclosure: Held
