What could be the possible scenarios with SDL in near future :-
1) GJ and Board refuses Hanglongs offer at 50 cents , alligns with other stratgic financing partners and carries on till the production stage . Risks involved - saying non to Hanglong might mean Hanglongs investment strategy will change and they might try to offload their stock .GJ would refuse so - only if they exactly know what would be the back up plan - i.e if they have strategic long term investors with him or not ( keeping in mind that the day he declines - he might have to buffer for 20% of stock offload).
2) GJ and Board negotiates with Hanglong the offer they have made and come up with something more realistic and genuine - as an outcome for it's shareholders and staff . I reckon one of the biggest assets SDL have is it's people ( obviously apart from the mines and the 50mtpa capacity) so Hanglong might want to retain the key people and keep them on board and thus they can be considerate to what Board puts forward .. GJ has been a very powerful leader and he has skills to positively negotiate what's in the best interest of company and shareholders and we shouldn't doubt his intentions , so very much possibility that if SDL goes to Hanglong - something more real and better would come on table ... What is better will depend a lot on Q4 Report .. production capacity , mining permits , rail and port commencement etc ...looks like all these 3 things are well on track - so he would like to tie all these loose ends before he goes to the negotiation table and get us - anything between 75 cents to $1. It might be a good deal in terms of market conditions today - as it's 50% premium from initial offer , however due to the long run viability of project many shareholders percieve that it will like giving away too cheap .. It's an investment where shareholders could have a good confidence and could expect SDL stock going up to $ 2-3 ( 5-6 times) in post production days .
3)Alternate Bidders - as we know there are couple of players keeping an eye on SDL - so the game might get interesting and there might be a bidding war ...Some other big players might team up and take over or do a Jt Venture - which is in best interest of company and Shareholders . This will be a +ve outcome for everyone - including Hanglong - as any +ve outcome for the company - they get 20% benefit.. This would mean the last obstruction of financing has been resolved , company has it's financing in place and we remain the shareholders and see the company going in production stage .. might be short term benefits might not be that huge , but will be a big relief to long term holders as they can see company going to production stage and may be the dream comes true to see SDL going up to $2 - $3 mark.
4) If Hanglong guys are really tough in negotiaitions and if none of the above happens - GJ might to protect shareholders interest accept the 50 cents offer ( very unlikely to happen ) as from the day of offer we have been trading at > offer price , DB ( Hanglongs consultant) has acquired additional 1% holdings at > 50 cents ( as they picked majority of there additional holdings on Thursday and Friday when SDL traded at 53-55 cents). Worst case scenario if it happens -
So , IMO What's the risk ?? i reckon it's worth 2.5cents worth of risk (4.75%)(down to 50c from 52.5c , if point 4 happens ) vs a reward possibility of ---------> 75c to $ 1 (50-100% premium , if point 2 happens - short term ) ---------> $2 to $ 3 (400-500% premium , if point 1 or 3 happens - long term )
Good Luck guys .. DYOR Regards KG http://bransonaustralia.com/awesomeevent
SDL Price at posting:
52.5¢ Sentiment: LT Buy Disclosure: Held
