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well thought out reply tt what many are forgetting is that the...

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tilleydog

1,160 Posts.

11/03/16

14:00

Post #: 17252008
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Originally posted by tt2000 ↑

@damascus

I could accuse you of being JC or you could accuse me of being Lone Star, but we all know that this is not fruitful or true.
You got to remember (as someone else pointed out here) that there are only a small handful of shareholders or noteholders (two that we know of) that even read these posts, so nobody's view on here is going to have a material impact on the outcome.

I am simply applying my knowledge of corporate finance to this particular failed investment. I have given up hope of getting anywhere near what I had envisaged, and am now just predicting the likely outcome. For the record my likely outcome has happened at each and every decision point so far.

7 Sept, AZZ announces a purchase and sale with little detail for a US$250M transaction given its market cap.

10 Sept, after AZZ having announced that it was a cash consideration agreement with no conditions precedent, my expected value was at least $0.80 (allowing for tax).

1 Nov, (28 days prior to stated completion of 30 Nov), I stated the likely scenario was non-completion as completion required shareholder approval that we had not been advised of. This turned out to be true.

1 Dec, AZZ announced that the purchaser had requested an extension.

Dec/Jan I forecast a cash position of $2.2M for end of Dec. On 1 Feb, AZZ stated the cash flow position was $1.4M - Note my estimate was optimistic

Since Jan/Feb I have been saying that the likely outcome is administration if there was no deal by 17 January (28 days for meeting to approve share and 45 days settlement).

I said the last date to approve a change to the capital structure was 10 March, and if there was no change / any funding voluntary administration is on the cards. Surprise, surprise what was the announcement on the 3rd of March? (and AZZ only announced prior to the 10th as the Trustee called the meeting to appoint the Investigative Accountant on the 21st March)

So you tell me, despite how you and @IFINO accused me of "persist with sensationalist projections", have I yet to be proven wrong?
(Except of course about my idea to invest in this on the back of the announcement that there was an executed sale and purchase agreement with no conditions precedent).
_____________________________________________________________________________________________

My likely case predictions going forward:

On the special resolution to extend the notes - It is highly unlikely that 75% of noteholders will approve this resolution.

Reasons:
(i). Given that 13% of noteholders are the Master Fund (and that ABW is currently in suspension)
(ii). Noteholders not receiving interest and being awarded 4-1 conversion instead of 3-1 conversion, means they only benefit from a sale in excess of US$120M - not rocket science whether they would accept equity style risk without equity style return...
Reason against:
If the Investigative Accountant determines that the market value of the assets is less than $US35M ($48MAUD), then only would noteholders have downside risk, that they may weigh up against upside of holding on. But on the basis that AZZ does have 6,764mboe as at 30 June 2015 and

Considering all Permian deals, the Midland basin of the Permian has seen slightly higher 1P reserve valuations recently, bringing the play average up from $13 per 1P (proven) boe of reserve to nearly $18. By contrast, the IHS report said, Eagle Ford 1P reserves have seen recent valuations closer to $15/boe. The “Permian Premium” indicates the upside expected from the play, as productivity continues to increase.

Based on a range of $13 per boe - $18boe, thats a price of US$88M - $122M.
As you can see unlikely that noteholders would vote in favour of this, and very likely AZZ will be unable to pay its interest / amount due to noteholders and be forced into administration.

_____________________________________________________________________________________________

Now you can argue with me all day, and keep referring to these as "sensationalist predictions", but at the end of the day whatever hopeful dreams you've had haven't happened for you have they.

Once again, you can accept the application of objective logic to arrive at an expected outcome, or remain in denial.
Our views will not impact the course of this. It is what it is. Accept it, do not fight it

Heres the link to the article on 7 January 2016 (when oil was even lower than now and the outlook was a lot more bearish) that suggests that AZZ is worth between $88M-$122M based on its 1P reserves

http://press.ihs.com/press-release/...ities-driving-consolidation-top-performing-pe

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well thought out reply tt
what many are forgetting is that the noteholders is a form of debt and hence they invested in that form of funding for the priority it gives them ahead of shareholders
given 6 months of azz going no where surely they will want their money now not in 12 months time
AZZ Price at posting: 50.0¢ Sentiment: None Disclosure: Not Held
2 Upvote

0 Great analysis

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