First ever posts taken down for sharing the truth, making fair comments and honest opinions! I've modified greatly with some important, substantiated information in relation to the US Listing mystery. I've made it my job to make shareholders aware of what's transpired within LNGL which has had a material effect on their investments.
It's tough to grasp what's happened to the story of the Red Ant + the where abouts of our leader so let's partly sum up the Executive Chairman/MD/CEO's leadership qualities by these empty words... Investor conference call May 22 2019, GV "The reason for this call and I somewhat apologise for this, I did get a lot of requests for some communication to be better and shareholders wanted to know some things. Clear, concise communication is very important to me so I apologise we got to this point. We will now hold this on a quarterly basis". Apart from GV being heard at the obligatory AGM last Nov, 11 months have passed and he did not back up his promise once!
I have always endeavoured to express my views on the LNG Industry and LNGL in a positive light, having over the years given unwavering support, trust, loyalty towards our BODs/CEO to successfully reach FID and watch the Magnolia dream become reality! However, when your team shows lack of appreciation for that support, turning their back on us after stating LNGL was "pleased" to announce that take over bid with LNG9 at a dismal USD $.13c", questions will be raised, answers demanded to determine the truth behind how a Company can squander hundreds of millions of dollars to be on the brink of insolvency!
Will recap what I & LNGL shareholders are fighting for, as I pen a letter to BODs;
1) Failure to act upon proposed US NASDAQ Listing over a 5yr period when the idea was first floated on May 26 2015 under former CEO Maurice Brand. A move that would of seen a significant increase in Company valuation when valued in alignment with it's peers/ competitors who are all based in North America (specifically based in the Texas, Gulf Coast region where LNGL's Magnolia project was to be constructed). This matter was repeatedly brought to the attention of BODs over the years but for invalid/ contradictory reasons (documented), never took action. On July 22 2019 when the Company announced it would re-domicile to the US, the decision was made at a time when our capital was at its lowest point since Mar 2014 when cash on hand was at $15m. We closed Jun with $21.8m cash in hand, debt free, approximately 9 months left till liquidity runs dry.
In actual fact, the decision was a bluff... sure enough on 31 Jan 2020, LNGL paused its redomicile efforts to focus on extending the liquidity runway. I will substantiate this by letting you know that GV has stated the "Form 10" (to begin the US Listing process) had been "submitted".
Excerpt from my correspondence with MH on 22/11/19' who stated "The process has commenced and we are still working with the SEC on the Form 10". After several phone calls with the US SEC (EDGAR Filing Support) and searching Company filings on their website, the Form 10 has never been filed manually or electronically... no CIK or Filing Number recorded! If There was never any redomicile efforts to pause in the first place!
Mr Vesey was appointed CEO on 4 Apr 2016 with SP at AUD $.51c. During his reign the SP has peaked at $1.07 on 9 Jun 2016 (staying above $1 for only 2 consecutive days) while reaching current Low as at today of $.4c. His SP Performance timeline indicates his track record of generating measly returns for shareholders yet no action ever taken to list in the US! Date ranges are in 3 month periods in AUD;
Apr 4 - Jun 30 2016 High $1.07 Low $.46c
Jul 1 – Sep 30 2016 High $.81c Low $.51c
Oct 3 – Dec 30 2016 High $.71c Low $.53c
Jan 3 – Mar 31 2017 High $.91c Low $.63c
Apr 3 – Jun 30 2017 High $.71c Low $.54c
Jul 3 – Sep 29 2017 High $.71c Low $.37c
Oct 2 – Dec 29 2017 High $.51c Low $.38c
Jan 2 – Mar 29 2018 High $.70c Low $.42c
Apr 3 – Jun 29 2018 High $.59c Low $.40c
Jul 2 – Sep 28 2018 High $.81c Low $.52c
Oct 1 – Dec 31 2018 High $.71c Low $.41c
Jan 2 – Mar 29 2019 High $.59c Low $.45c
Apr 1 – Jun 28 2019 High $.46c Low $.23c
Jul 1 – Sep 30 2019 High $.29c Low $.15c
Oct 1 – Dec 30 2019 High $.25c Low $.18c
Jan 2 – Mar 31 2020 High $.29c Low $.09c
Comparative SP from our US peers, competitors in the Gulf Coast Region, Texas; Tellurian (Driftwood project) all time high USD $20.47 (27 Feb 17’) while in 2019 peaking at $11.24 (27 Mar) Low of $5.23 (9 Aug)... recovering to $7.78 by 4 Feb 20’ before falling off a cliff in late Feb due to Covid19 global economic crash, reaching a rock bottom $.69c on 18 Mar.
Next Decade (Rio Grande project) all time high USD $10.39 (17 Jul 17') while in 2019 reaching a peak of $6.65 (20 Jun) Low $3.18 (11 Feb). Currently closed at $1.89 on 22 Apr.
Excerpt from June 2017 Quarterly Highlights report, "Redomiciling LNGL in the US could allow to be better positioned in a market where we have peers and competitors, unlike the current situation on the ASX. In addition, it seems important to be listed where our projects are located".
2) Failure to follow through and persist in the finalisation of the DeltaOE SPA, a move that would see LNGL sign their first ever SPA contract since the Company was founded in 2004 while also seeing an exponential increase in Company valuation. Also, as evidenced by past history, it strongly indicates when the first SPA contract has been banked for a proposed US LNG Export terng on the fence" suddenly jump in to secure off-take before missing out. Mr Vesey has preached this exact scenario playing out for years. Yes it's understandably tough to do business right now, not only because of Covid19, as contracting has screeched to a halt! However... raise liquidity and roll the dice on a hopeful resurgence in long term contracting in 2021!
Dec 2019 Company released announcement headed "LNGL comments on Vietnam Power Development Plan 7 Approval"... "As we have previously disclosed, the approval of the amendments to Vietnam's Power Development Plan 7 was the prerequisite for execution of our binding sales and purchase agreement with our partners, Delta Offshore Energy, for 2MTPA from Magnolia," said Greg Vesey, Executive Chairman, Managing Director and CEO of LNG Limited."We thank Prime Minister Phuc and members of his Cabinet for their supportive efforts, and will immediately begin completing the terms of what will be the first long-term sale and purchase agreement for LNG to Vietnam".
22 Dec 2017 Houston Chronicle article referencing interview with GV - HC Q, "And how are the negotiations going to sign customers for the planned 8 million metric tons of LNG per yer? A" Because we're not sure who's going to sign, we're actually having serious discussions with what amounts to three times the capacity of the facility. We're probably talking deals up to 25 million tons just to see what's real and who's going to sign first. I think the smaller scale and size we offer gives us a little bit of an advantage".
Extract from S&P Global Platts report 4/12/18' - LNG Limited called the annoucements (at G20) a sign that US LNG projects will " not be detoured in the immediate term " by further trade conflicts. " This provides assurance that projects like Magnolia LNG will be able to execute long-term LNG export contracts with offtakers from China without punitive external factors, " said company CEO Greg Vesey. In June, amid previous trade tensions, Vesey said an interested Chinese buyer was holding off completing a purchase agreement until there was greater certainty.
Why throw in the towel when this first ever SPA appears to be on our doorstep? What ever happened to all the "serious" negotiations for 3 X the capacity of Magnolia? Where's our Chinese buyers disappeared to now that the 25% tariff on imports has been dropped to zero, though 10% VAT applies? Especially when IDG is a major stakeholder... first Chinese Company to invest in a US Project, surely they have influence?!
3) BODs are expected to act foremost in the best interests of the Company then its shareholders, to be honest and truthful in reporting the Company's in the moment, up-to-date position and forward looking future outlook! As the story has unfolded with LNGL facing insolvency, LNGL holders can lay claim to hearing/ reading misleading, insinuating, suggestive, exaggerated, convincing commentary via media statements/ reports, Investor conference calls reporting on deadlines to reach FID and construction or how ongoing SPA negotiations were going. Examples;
1) March 2018 Quarterly Highlights report - Though discussions and negotiations related to offtake remain confidential, we believe the progress we made toward selling LNG capacity at Magnolia LNG, during the 3rd Qtr of LNGL's fiscal year will prove to be "extremely" valuable towards finalising sale agreements". SPAs finalised? Zero.
2) Oct 29 2018 UK Reuters interview with GV, who states, "While trade issues with the Chinese market impact our discussions, our negotiations with customers in other parts of the world remain strong". Vesey told Reuters in May, "For us, it's strictly been about marketing to China". Nov 15 2018 AGM, GV, "Targeted marketing areas... There seems to be some sense that China is the only thing we're looking at and I want to dispel that rumour (who started it?!) for you here today. Could this plant be entirely contracted through European buyers? Absolutely! Could it be entirely contracted through Asian buyers? Absolutely. Those are all being negotiated".
3) All the following were LNGL statements that were made prior to the IDG investment in June 2018. IDG was the first Chinese Company to invest in a US LNG development project;
1/17 - Moving to finalise firm off take agreements.
3/17 - Forecast FID in July 2017.
3/17 - Construction on Magnolia is expected to begin later this year.
3/17 - Negotiations (with investment grade counterparties) are advanced.
6/17 - Expect to have the whole facility contracted in the next 6-12 months.
10/17 - Confident of signing off take agreements with credit worthy buyers later this year or early 2018.
11/17 - Discussions heavily focused on investment grade, credit worthy buyers.
12/17 - "Because we're not sure who's going to sign, we're actually having serious discussions with what amounts to three times the capacity of the facility. We're probably talking deals up to 25 million tons just to see what's real and who's going to sign first". GV
3/18 - There's real potential to get a final investment decision by the end of the year.From Oct 28, 2015, when Cheniere signed a SPA contract with Engie for 1mt, the next time a US Company signed a SPA contract was on Jan 16 2018 when Cheniere locked in with Trafigura for delivery of 1mt. Fact! This was due to the great oil crash in late 2014 and oversupply of LNG.
So... how can a greenfield, start up Company (LNGL) make confident, expected projections on signing sales contracts, reaching FID and construction when zero other sales contracts had been banked by our peers... Sabine Pass, Corpus Christi, Cove Point, Cameron, Elba Island (proposed at the time), who were all under construction, brownfield projects?
How can you make such bold timeline projections when... In a Bloomberg interview in May 2018, GV remarks, "For us it's been about strictly marketing to China". Then, "In our marketing conversations with China, we were working with all the key firms at a very low level". CEO GV (AGM 2018) commenting on the impact of IDG who had been invested since 4/6/18'. "What IDG does for us is immediately elevates us to the highest levels of those companies". A reasonable person would assume negotiations had made little headway until IDG arrived yet Company statements led us to believe we should of had the whole facility contracted, FID reached with construction underway by now!
It was purely false purporting of a de-risked, shovel ready project being an absolute certainty to reach construction. CEO Mr Vesey having sold us a dream that was destined to be realised... It's a matter of "Not If But When", his famous defining quote referencing Magnolia shipping LNG all over the World! Where we stand today, it was all "smoke and mirrors".
4) Failure to take necessary advanced action to address the Company's dwindling cash reserves, while sitting on a valuable asset in Bear Head. On Aug 27 2014, the Bear Head land in Nova Scotia, Canada, was acquired for USD $12M (equivalent to approx AU $19M). Bear Head is LNGL's secondary project that has gained very little attention or traction over the years with focus centred on success with Magnolia. As per the 2019 Annual Financial statement, the land seems to be valued at USD $11.8m. If sold, proceeds from the sale would keep LNGL fuelled for a further, approximate 3 Qtrs buying us time to source additional capital and hopefully seeing a vast improvement in SPA contracting in 2021 when it's back to business as usual!
Instead, LNGL waited until Feb 28 2020 to announce a TO bid from Singapore based LNG9, offering USD$.13c (AU $. 20c). BODs unanimously recommending shareholders accept the offer or risk LNGL entering into administration or liquidation, which event would introduce risk of significant value loss resulting from, among other things, insolvency clauses existing in key Magnolia LNG contracts, such as the EPC contract, the equity commitment agreement, and the site port lease, which clauses provide counterparties with rights including contract termination.
There was zero back-up plans in place should the TO bid be unsuccessful or withdrawn, the latter having already happened. At the Nov 18 2019 AGM it was stated that there were various options on the table to raise liquidity that brought strategic value to the Company, claiming being confident in closing such a transaction. It was of no surprise the TO bid was withdrawn, knowing LNG9 could pick up the invaluable assets they require in a quick fire sale in possibly liquidation or through other means, for a fraction of their offering price.
Bottom line... there's been no decisions or actions to support BODs having worked and fought in the best interests of our Company and its shareholders to maximise valuation potential. Its black and white!
There were 2 ways to maximise valuation;
1) A US Listing - Voice recording from 2017 Oct 26 AGM in Lake Charles in which I was present, GV, "If you look at our valuation here in Australia vs the valuation of our competitors who are way behind us, it seems out of whack. The other thing is we don't have any competitors here in Australia. One of the best things you do as a business is you compare yourself, benchmark, with your competitors. I don't have any here in Australia. My competitors, hell most of them sit in Houston, they are Gulf Coast or West Coast so being in the competitive environment is kind of a fundamental of business that you want to take advantage of". BODs from 2015 - 2020 knew exactly the significant advantages of redomiciling to the US but why it never happened remains a mystery today!
2) Signing of SPA contracts. Our HOA with VGS on 23/1/17' saw the SP rise from 70c on 10/1/17' to a high of $1.01 on the day. HOA with Meridian on 23/7/15' saw the SP rise from $3.70 on 16/7/15' to a high of $4.15 on the day. So one can come to the simple conclusion that once a SPA contract was secured, the SP would of bolted exponentially beyond where our SP has floated during GV's tenure since 2016.
I did not include the MOU with DeltaOE because the SP barely moved from 18c on 6/9/19' to 29c on 16/9/19' the day of the announcement. This minimal SP movement is very strange considering being a significant announcement... when queried by the ASX about whether LNG considered the market release, “to be information that a reasonable person would expect to have a material effect on the price or value of its securities”, LNGL's response was “No, LNG considered that the Information was unlikely to be information that a reasonable person would expect to have a material effect on the price or value of LNG’s securities”.
I'm currently drafting a letter to be sent calling for an "Exceptional General". The usual requirement to hold such a meeting is I believe... upon the Company receiving the request, a meeting must be held within 2 months. I'm aware we don't have that luxury of time however, if we somehow manage to escape insolvency in the next few weeks by raising additional liquidity, BODs have our requirements/ proposals for resolutions in writing which legally can not be ignored. We will exercise our power, finally have our voice heard!
Planning to send this through the law Firm I have engaged this week, time is of the essence! I'm open to thoughts on resolutions from shareholders I'm representing "as one". Ideally I would like to collect 50 signatures or more in support of initiating this action having already received a meaningful response from fellow holders via email... really hoping though to attract a further 30+. It does not matter if you're only a small holder or sold out, every vote/ voice counts. Would be great receiving as many "likes" as possible, only in recognition of approval, then in turn hearing from those supporters by contacting me at
[email protected]... I appreciate those who have reached out already!
Although the future appears bleak, let's continue to hang in and battle. Easier said than done I know!
All the best. JK.
