The key question in my mind is whether HL/China want to go ahead with the big picture. If they do, then this seems very odd in that a lowball of .40 is even being tried on. They must know that it would be rejected outright. The press leakage tactic will be seen very negatively by all. If they don,t want to proceed (because of the capex, not the few cents in acquisition cost) which is a minor part of the cost, then that would be bad for the Africans and it would be in their interest to support SDL first, partner second. As they do not know who will actually front up with the money.
If it is a negotiation for real, then it has been handles very badly and naively. We do have a chance at 48-50 for a half way house deal.
If HL do want to go ahead but want to sidestep SDL, it will be an international incident as the CDB who are a lady involved will look conspiratorial. Biya has been working hard to turn Cameroon into a "no corruption" zone. Other players like Avima, POSCO and Glencore can lend some weight here too. The international fallout from a shafting of that nature would be enormous. I do not see this as a probability.
The hedge funds are in deep. as mentioned before, the largest is a HK based one so not sure what to make of that. 48 would see most shareholders walk out intact.
Then the is the possibility of a suitor(group) in waiting. If they offered .55 I think it would be in the bag. Alternatively, it could be a cocktail.
What HL and China has shown the Africans is that a contract is not binding and that if they get to a position of power they will abuse it. I would not believe any of this $20 billion bs if I was him.
If China is even hinting that this project is not their cup of tea at the moment, then they will have lost the Africans. If they try to shaft SDL by going around them, the international community will see this as a very bad sign. Apart from the Ip issues etc...
The question is how HL can save face now that they have thrown 40 at us through the media. My guess is for a top up from a Chinese steel mill. The HL vehicle gives China some maneuverability although they are looking very bad at the moment.
SDL Price at posting:
33.5¢ Sentiment: Hold Disclosure: Held
