You will notice that HSBC are no longer involved in the financing, they were one of the sticking points towards getting approvals as they had real issues with the pricing of the Coal futures and therefore couldn't get enough hedging into the deal to protect their interests on the downside. RES didn't want to enter into hedging where you are essentially locking prices into lows. With them gone all the funds are essentially South African based.
IDC and PIC were both the mezz and Quazi Equity providers, and due to their previous return requirements would have ensured that equity wouldn't have seen a real return (dividend etc) for many years.
The only further bits that I can add at the moment is the need to wait and see what the terms are. Due to the ASX requirements some of the nitty detail won't need to be announced to the market. It will still be extremely important that both transport costs (remember its 1000km via rail) and port charges are substantially reduced. I would also be interested to see how reliable the offtakes are as they are quiet a few years old now.
It would be great if the company was to release its latest assumptions in terms of coal pricing, mining, processing, logistics costs and even their expected CAPEX then I could easily run all the numbers for everyone.
Lots of focus needs to be put on the deals for PIC, IDC and Noble. RMB's terms on the pure senior debt should be reasonable but they will make that back in the mezz if they are in there with PIC/ IDC/ Noble who I would expect to be providing all the Non Senior funding.
In saying all of that, this is a good result for shareholders that means a funding solution and potential operations in the next few years. Glad to see a bounce again that should help a few long term suffers!
RES Price at posting:
9.8¢ Sentiment: None Disclosure: Not Held
