BBY research think a sell down to 50.1% in the expansion would raise around $102m. Obviously this is way dependent on the PCI coal price, saying a $10/t increase in PCI price adds $170m to the 100% valuation.
So for simplicity say the sell down to 50.1% pays back the KEB loan.
Wall Street Journal did report Lawson in January as saying that “Japanese processes tend to be quite slow, but we definitely expect something by the end of our loan term”.
So post sell down, we need around $244m for a 50% share.
BBY research think there is around a 40m equalisation payment due from JFE Shoji for a loan provided to the Baralaba JV by COK of $100m. Cant see this anywhere in the accounts so cant test the veracity of this.
Assume consortium banks gear the project to around 60%, i dont think anyone is thinking the expansion will be backed 100% equity. Guarantees from JFE or SK perhaps with SK getting further options in return for guaranteeing the debt (eg like the 90m options to purchase at 12.5c at the time the KEB facility was extended).
It then leaaves around $56m in a funding gap, obviously this will hopefully be funded by non-core asset sales and other measures but at the very least a Baralaba sell down and improving BFS bringing down capital costs will get management past the KEB facility expiry, stablise the SP and give management more options.
Holding till then, lost so much already why not.
COK Price at posting:
9.3¢ Sentiment: Hold Disclosure: Held
