Ann: Funding Solution Secured for Project Development Costs, page-61

That poking stick is a ripper @sergeant .I was actually writing this post when I saw your comment. FID pre-Xmas would be fantastic.

In case my ramblings are to long the summary is, BP likes the new deal, HHR have options moving forward with a better chance of getting funding and RR are even more committed to Phase 1.

It’s nearly Christmas. We probably won't get FID this year. But I still think there is a lot to like about HHR's new deal with RR. I am not pumping the stock, I don't think any HC posts will change HHR's SP. (this is not an IVZ thread!)

Bell Potter updated their target price for HHR from 7c to 9c in December. The 2c difference is that BP now believe that HHR will not require a $30m CR in order to achieve project funding. In the update BP has stated that

- they believe that HHR's Plan A is still to retain 40% of Phase 1
- HHR have over an additional 12 months to secure debt the terms of debt will be improved due to FID and fixed price development contracts being in place
- HHR will not require the CR of $30m to secure debt funding

BP believes that this new arrangement with RR adds value to HHR. Previously HHR was seeking finance pre-FDP and FID. They now can defer that until post FID and well into field development making prepayments and debt funding much more achievable. The RR backstop ensures that Phase 1 can continue to FID without pause and HHR can retain 20% of Phase 1 with no funding risk.

If HHR is successful in gaining funding and retains 40% the new deal improves the project cashflows for both RR and HHR.

RR initially was to provide a $40.7m bonus payment to HHR. Now if HHR retain 40% the $40.7m bonus has been exchanged for an additional $54.7m farm in.

This is to HHR's benefit as they would receive an additional $14m contribution to Capex. This improves the debt/equity ratio assisting HHR with finance.

It also benefits RR as they have effectively reduced their costs by $35m due to the EPL capex rebate. ($54.7m-(54.7*0.914) =$4.7m)

The SP still to me reflects the markets uncertainty about HHR and what they are actually going to do. Do HHR have 20% or 40%, is it a financing or divestment solution? No-one knows yet. Hopefully FID will be some positive news for the market early next year.