balls up...or not...

What a balls up…

So how does the market react to this?

This is a dead IPO…gone, it is no more!

It has ceased to be! 'It has expired and gone to meet its maker! It’s a stiff! Bereft of life, it rests in peace. It’s metabolic processes are now history! It’s off the twig! It’s kicked the bucket, it’s shuffled off its mortal coil, run down the curtain and joined the bleedin' choir invisibile!!

THIS IS AN EX-IPO!

No its not I hear you say…yes it is…no it’s not…yeas it is…

Hmmmmm…

Interestingly, we now have the “$40m asset” back in JPR…so will the market buy it up, or sell it down?

Has some of the recent selling been the “players” telegraphing their intentions to JPR, rein forcing the direction they wanted to go? Will they now support the stock given they have got their way here?

Am I reading too much into it?

O.K….with the “asset” back in the shell, add the assumed $40m value back to their current $5m cash position and suddenly we have a share value of some $38c…given this brings the options into the equation, fully diluted we get 30c backing ($12m cash)

Suddenly they only need to raise say $30m initially?

But is the asset still worth this much?

Assuming $40m is too high, $20m for the asset sees 21.5c backing on the share price…or 20.5c fully diluted.

Remember…this is just the biofuels asset…we still have the company shell and of course the much “discussed” PV asset…although in fairness, this may get put on hold for a while now? Maybe not?

Still too high?

Even assuming a $10m fire sale price (can’t see it myself), we still get 13c per share backing just for the biofuels asset.

Options…

Raise enough capital at 15c to keep it rolling in the interim = 270m shares ($40.5m)…this will result in about 385m total shares on issue and $45m in the bank. All going well, they raise the balance of the required funds closer to completion, hopefully in a much healthier oil environment and at higher share prices. Assuming at least 25c = 120m shares for a grand total diluted position come production of 505m shares.

Applying the above scenario to the IPO numbers suggests interest at a 25c price at production given current feedstock/sales numbers…of course, higher oil prices will support higher share prices.

A similar dilution based on a 20c initial raising and 30c subsequent raising will result in a total of about 420m shares on issue and approximately 30c post production value for JPR shares…again impacted either way by the prevailing oil price in 2008.

Amazingly…this plant will be profitable and will find a market for its product much more competitively than nearly all their peers…and as I keep saying, the Biodiesel market is driven by much more than just the crude oil price.

Ironic perhaps that of all the biofuels IPO’s , the most profitable is the one to be shelved…equally ironic, the shelving of such projects will only result in supply shortfalls in the years to come?

But…I suspect it has not been shelved!

Anyway, there is a potential here in my view for the price to rally…to facilitate lesser dilution? Some big numbers were once looking to back the IPO, it would only take a small fraction of this to begin buying into JPR and given the limited volumes going through, the price could spike considerably.

Wishful thinking?

We still of course have the potential for a PV asset in addition to all of this…let’s not forget their involvement here? It may well depend however whether PV backers view the shelving of the IPO as a sign to buy in, hold off till later, or perhaps bail out all together?

It may all come down to the maths involved and where they see any potential future “value model” based on specific placement levels…as such, corporate agenda may dictate here, but perhaps not until after the initial reactive noise has subsided?

Might be a good buy at current levels on this news, maybe not? Certainly a few pilled in around current levels on Friday, suggesting possible behind the scenes interest?

Also interesting they have pulled the pin in plenty of time for the options to be considered…but for buying or selling?

Lol…the eternal optimist!

Cheers!