Dhukka, "The reason for the low ball price in my opinion is the...

Dhukka,

"The reason for the low ball price in my opinion is the off balance sheet debt the company still carries from PPC-1. Remember that they have never consolidated the PPC-1 vehicle into their financial results."

I had a look through 07, 08 and 09 reports, in particular Note 22 Commitments for expenditure. The numbers are, respectively, 4.8m, 96m, and 91m. These are totals of all commitments (they provide breakdowns for <1 year, 1-5 years and >5 year horizons).

I would expect that this includes PPC-1's commitments as I don't see them spending such amounts on domestic operations?

Also, debt grows from 7m in 07 to 43m in 08, and the 08 report also shows 46m in Loans and receivables, which presumably is the on-ward loan to Pipe International.

Finally, according to the 9th Feb 2009 update on PPC-1:
- US$47m invested to date
- US$5m to be paid Q1-2009
- US$40m to be paid back-to-back with customer receipts in 09/10
- US$38m to be paid in 2010 (US$25m covered by existing 7 year contracts, $13m expected to be supported by future sales)

That's a total of US$130m of the AUD$200m cost attributed.

So of the $74m noted as due within 1 year in the 09 Annual Report, I'd expect that to include the US$40m and some portion of the US$38m (with the remainder to be accounted for in the 10/11 financial year).

All in all this is to say I think the PPC-1 numbers are essentially included. It seems that most of the construction & operating costs are covered by sales of IRUs, and there's roughly $40m in debt carried by the PIPE parent.