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12/02/15
12:22
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Originally posted by Downanout
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From my reading of the announcement, it appears that Castlepines will effectively be getting a preference share right, such that they will get paid their "coupon rate" out of profits before share holders get paid any dividends. They will also get paid their share of any dividends that may be paid to shareholders. Presumably their entitlement to be paid their coupon rate will accumulate until there is profit to pay it. Obviously a lot depends on what that rate is and how it escalates, which has not been announced, presumably because it has not been struck yet. Although the announcement is specific about the percentage share holding that Castlepines will get, so I do wonder if the rate has in fact been struck. The announcement does say the rate will be "commercially competitive", but that might mean commercially competitive vis-à-vis loan sharks and pawn brokers. Holders can only hope it is not too usurious. Does Castlepines get repaid their capital at some stage? - I don't know. Presumably if the DML can pay a high enough coupon rate, the value of Castlepines' 34% share holding, at the end of 12 years when the company is freed from the obligation to pay the coupon rate, will be sufficient compensation for the capital they might put in now.
I am happy to be corrected by anyone with a different or greater insight into the chicken's entrails of the announcement.
"The investment by Castlepines in DCB will be for a period of 12 years, and will attract a commercially competitive coupon rate (based on preferred equity return / yield basis by Castlepines). The annual coupon rate is subject to an annual fixed escalation factor.
Following the payment of the coupon rate by DCB, all profits of DCB will be distributed pro-rata between DML and Castlepines in accordance with their respective ownership interests in DCB."
I will be interested to see what substantial share holder notices emerge in the next few days.
If none appear, the stewards should definitely call an enquiry.
Good luck to longer term holders, we mightn't deserve it, but we could sure do with it at this stage.
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It is vague and I believe more clarity will be provided in this matter. It is no surprise that resource companies are very adept at providing bare bone information first up, rather than being threadbare!