Sizzle Deal

Ok…..up until now I have been thinking about what the proposed deal means only from an EUR investor/company point of view

Recently I have been trying to get my head around more of what it means from a Sizzle shareholder point of view, and reading through a few of the Sizzle documents.

This is what I’m seeing….

In a nutshell, the Sizzle shareholders invested $155M to set up the SPAC, and this at $10 a share. This was for 15.5M shares in Sizzle. Interest on the money over the last year or so looks like it has increased it too $159M.

The proposed deal means EUR will receive 80.3M shares which means CMC will have a total of 95.3M shares on listing.

Deal expenses will be 25M so CMC will be left with $134M USD cash.

This what happens if all goes exactly as proposed ,ie no redemptions. Redemption will reduce the cash CMC receives and also reduce the % owns of the assets proportionally…so everything fair there.

Note that part of the deal conditions are that if the CMC share price gets to $15 and $20 after listing then EUR will get up to 10% bonus shares!

So it seems now…. from looking at the Sizzle documentation that they do indeed intend to list on the NASDAQ at $10 a share which is indeed the implied value…..

Initially this seemed a little concerning to me as this implied value is where the share holders on the NAZDAQ start, so where is the immediate upside for them going to come from? The only thing I can think of is that perhaps the DFS is going to look quite a lot better that maybe we think? - and maybe they are banking on FID, NASDAQ listing potential etc

Now CMC will have @$180M AUD cash (assuming EUR hands over their cash also), and a project with an NPV of approximately 800M or more (to be clarified soon with DFS)….. so none of this is completely silly…. Even though it does sound so high…. If DFS came in at NPV over over 1B… then the implied listing value will seem reasonable and fair.

If CMC does list at implied value $10/share….and this rises…this means the NASDAQ will be rating EUR as a $1B and rising company….

If CMC it gets to $15/$20 a share… EUR will be rated at a 1.5B to 2B plus company…..

So… it seems we are going to list at implied value……and while this does seem high….. surely these guys know what they are doing…. The deal expenses are US25M……so surely the current Sizzle shareholders aren’t going to vote for deal (remembering there are quite a few institutional holders) …just to dump on listing….(ie. lose on deal expenses and then on share price). This would make no sense at all...

So, seems to me…. If they vote in favour of the deal… they will hold on tightly to their shares after listing…..which means all this just might work!!

A few things that perhaps they have in mind…. that means listing at $10/share will be fine.

DFS will be released before listing? - Seems to me now that this MUST happen, - and seem to me that it must be going to look good, - ie more than what we would be expecting.

Cash on listing will be about 180MAUD, which is a nice healthy balance / fair balance for a listed 1B company.

Also, it is interesting to note that it looks like there will only be 15.5M shares initially listed on the NASDAQ…. which is not many at all! Liquidity will be very low!

Low liquidity of course can be a two edged sword , but again, if Sizzle shareholders give the deal the go ahead… no doubt they will hold on to their shares on listing….then CMC shares will be hard to get hold of…. meaning perhaps the $15/share - $20/share targets are not so out of reach after all….??

Bit mind boggling really if this happens…. If CMC gets to $15 or $20 are share… this is valuing EUR at over a 2B (AUD) company…..

Interested in others thoughts on all this….not sure if I have understood it correctly so feel free to correct me if I haven’t….

Also, definitely not financial advice…all just musings….and trying to get my head around what these Sizzle guys are doing.

The more I see of this deal the better it looks for EUR……