I have watched AB selling used cars, oh sorry, I mean NWT shares several times recently. He seems to be implying that they are going to raise the $100 million for Jabiru 1 by putting more shares on the market. Says he won't be doing that at the then current price of .005 but it sounds like he will attempt it at some premium. Even at 1c I reckon selling 10 billion shares won't be easy. The companies past record stands in the way of this plan to some extent.
He also says he'll do this so that NWT share holders own 100% of Jabiru. The problem is that it won't be the present share holders who own it. There will be more new shares than old after the capital raising.
I guess that if Jabiru 1 capacity is all sold the EBITDA could in fact be close to the figures he gives in his presentation. These figures change by up to 50% from one presentation to the next with no explanation. (see Jab 1 announcement 19 May 2010. Revenue expected to be $1 billion over 15 years. Now it has magically jumped to $1.5 billion).
1.5 billion over 15 years Jab1 + 125 million over 15 years Jab2 + current "normal" business gives about $110 million revenue per annum. AB then gives a figure of $75 millin for EBITDA (he uses this figure for the equity value calculation). 75 profit out of 110 is pretty high. 50-60 more realistic.
He then subtracts $250 million for debt. 100 from 400 is more like $300 million in debt as far as I can see.
He comes out with $500million EV but I reckon $300 million might be closer to reality. (60mill EBITDA multiplied by 10, -300 mill debt). This only gives an SP of 1.6 cents per share.
Of course then there would be 18 BILLION shares on the market! The implied SP he gives of 2.8 cents might be hard to reach with a lot of holders trying to get out at anything above 1 cent.
* I still question his acceptance of 80% financing of Jabiru 1 by export funding agencies. I cannot find any supporting evidence at all for this ascertion.
* A lot more shares to be floated diluting CURRENT shareholder ownership by over 50% (@ 1 cent).
* Can they really sell $100 million dollars woth of shares at such a premium to recent long term SP?
* Very rubbery figures used to calculate "implied share price".
* director buying is possible good sign but it was only $9000 worth. I've bought more than that recently and I'm not convinced.
* the recent "BIG" announcements of 3 million dollars worth of new contracts (over what time frame is not given). It's very, very small potatoes in the big scheme of things. (revenue of one hundredth of a cent per share?) That is not "growing the business" at a fast pace as AB claims.
If they can pull off the revenue raising and funding from agencies, the revenue is as claimed, etc. etc. I can see NWT SP going in the right direction but not to anywhere near some of the claims around here.
It's a very big question as to the revenue raising. Issue price and number amount of further dilution of ownership will be crucial.
NWT Price at posting:
35.0¢ Sentiment: None Disclosure: Held
