Ann: KPO TO APPOINT FINANCIAL ADVISORS TO SECURE DIRECT THIRD-PAR, page-21

I think the board needs to congratulated for looking to bring partners into KDP.
Based on the numbers they have provided 50 per cent of KDP could be worth at least $50 million and could provide most of the equity required over the next 18 months.
The December presentation indicated that had Saddle Hills been up and running as a 22 MW peaker in 2021 it would have generated EBIDA of $14 million and cost about $55 million.So assuming they were to build a 44 MW peaker based on the same numbers it would have generated $28 million.
We know the forecasters numbers have always been low so the 2021 numbers are a good guide.
I would expect KDP to get vendor finance for at least 40 per cent of the project and the capital cost I am using would include the developments fees owing to KPO of about $7 million.
We still do not have a final handle on the legislation but there is sufficient out there to do some rough modelling.
Assuming KDP gets 40 per cent finance for SH then KDP would require $60 million over 2 years to be generating $28 million EBIDA a year.
If we assume it gets 2 of the 440 MW projects up over that period it would get its feasibility costs repaid and $50 million in development fees for
each project and a free carried interest.It is quite possible that an investor who puts $50 million into KDP for 50 per cent could ge getting a $25 million return a year from 2026.
These are big numbers that should attract major financial advisers.
The management team has no doubt been burning the midnight oil to put all the numbers together to produce a teaser to attract the best advisers.
This will then have to be reviewed and the selected adviser will produce their own numbers to be sent to potential partners.
I would expect it to take 4 weeks to sign up the advisers and another 4 weeks to get into serious discussions.
All of this is going to generate North American interest in KDP.
If the share price does not rise then there is a real risk of an opportunistic bid.But I doubt it would be successful unless it was pitched at more than 5 cents a share.It is also not in the nature of the potential partners to go down this route when they can keep it clean and simple and get 50 per cent of KDP working with the company.
Finally,this process should produce third party numbers on the development side of the business.
The technology side remains with KPO.
There is no doubt that management is under pressure to shore up the finances.But in my view selling equity in KDP is the best option as it will stop the cash drain in KPO and validate the business plan.