To CR or not to CR that is the question?, page-3

Hi SLee

There will be no equity capital raised by this company for quite some time. Maybe a year or two away and will depend on how Stuart Elliot decides is the smartest way to manage the cost of capital

In the meantime the SS LNG project will be debt financed because that will be significantly cheaper than equity.

An equity partner in the SS LNG project is an option to accelerate growth, and this also could mean that new shares at the EWC level are not issued because the deal is done at the local subsidiary level.

The same applies to the Philippines project. Options exist to develop the project with debt initially and then with equity at the local level.

The option also exists to completely sell one of the projects if Stuart Elliot wanted to narrow the companies focus. That would realise some short term value but would probably not be the highest ultimate return for long term investors.

Whatever balance sheet options SE ultimately chooses, they all involve value creation at multiples of the current share price and none involve needing to issue shares at a discount to NTA.

The shorts have been betting against the balance sheet and with yesterday’s announcement in Indonesia and along with the strategic value of the Philippines project the balance sheet issues will likely resolve themselves.

This means the short positions in the stock now face significant financial losses because there is just not enough liquidity to get out of the position.

its unlikely they will capitulate any time soon but in the end it will be a stale losing position that will not stack up against an improving capital structure and project value - particularly when off-take agreements, bank finance and business partners all begin to form part of the business plan.