I don't really want to be negative spaceb and I'm relieved they've announced a deal with details as well. I think it adds a lot of credibility getting proper bank funding. I also think libor plus 460 is decent. I think Coal of Africa did libor plus 300 (from memory) but this is more development funding. The seven year term is very good for the $35m.
On the down side. It is the usual sort of funny, need to read between the lines sort of CCC announcement. I mean what they're saying I think is that EDF are out now. They had $40m of EDF facilties with $15m drawn. So they get $65m of new facilities and lose $40m existing so net additional $25m of funding. (Plus hedging lines).
What is a bit of an issue for me is they paid serious cash for those EDF facilities in terms of upfront options and consultancy fees. There were supposed to be great benefits in delivering coal, great relationship, blah, blah. It was really the basis of the CCC story. Anyway, now they're gone I'd say. Did EDF want out? Did they cause difficulties in drawing the balance? We'll never know. They had to go I assume anyway as EDF had security over the South African assets. EDF did a great deal and it was sold as great deal for CCC.
I suppose that's all historical now, although it reminds that the story was very hyped. The other potential issue is upfront fees. They have tended to pay out a lot in the past. It would be normal to pay something but there's nothing on the term sheet. Will we see the usual warrants and consultancy fees popping up somewhere?
CCC Price at posting:
39.0¢ Sentiment: ST Buy Disclosure: Held
