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LNC

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99.5¢ linc energy ltd

Just read Bigal's lengthy write-up and was very impressed....the...

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30/01/15

17:10

Post #: 14670207
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Originally posted by bigal36 ↑

Its interesting that they say they keep a record of all communications with shareholders.

I wonder if they have kept the five year cashflow statements that I sent them a couple of years ago which showed that they were trying to develop too many projects and would likely run out of cash.
In my previous communications I warned them this was going to happen and previously suggested selling every asset other than UCG and told them that they should just concentrate of developing UCG with a very small team of experts.

Just after the Adani deal I seem to also remember suggesting another idea to them which was to run the company with minimal staff, sell everything (including UCG) and just put all the cash into Corporate bonds and wait for the royalty to kick in.
At the time the assets they had were still worth something as coal was still in demand.
I think I worked out that by selling everything they could put approx $700M in bonds at approx 8.5% (back then that was the rate).
This would have given the approx $60M in interest less $50,000 in admin costs per year.
They could have sat on a NPAT every year of approx $42M and just waited for the coal royalty to kick in.
The response I got at the time was we are an energy company and are here to develop energy assets.

Back in those days I had several phone conversations with senior staff and also sent many emails as I was quite a large shareholder back then.
I even tried to arrange a one on one with PB to explain my logic but was refused.

I got nowhere with them which is why I became so negative towards this company.
I wonder if they wish they had taken up my idea now as they would now be sitting on $700M in bonds, have no debt, be paying a nice healthy annual dividend to shareholders and they would still have the coal royalty.

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Just read Bigal's lengthy write-up and was very impressed....the thing I came away with after reading it (other than that it made good sense) was that it just seems as if money burns holes in PB's pockets....he just couldnt seem to put any aside for contingencies. Being proud of having 400 employees and four divisional presidents with him at the top as the king when you had absolutely no cash flow (I dont count Gulf Oil because it needed drilling at costs equivalent to income just to stand still) just seems absolute madness!

LNC Price at posting: 99.5¢ Sentiment: Sell Disclosure: Not Held
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