I don't think it would be the big three's immediate intention...

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jantimot

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25/07/15

16:55

Post #: 15693853
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Originally posted by hottuna ↑

As for the price, I'd suggest that ignoring the last few days of trading would be sensible. I'd take the undisturbed as about 1.20, then I'd look at the new news and try to value that, so what is the new news?

Wayne has gone. I think that's a positive for sentiment. Not as positive as if a reputable independent without links to the old regime had been appointed in his place, but a step in the right direction. Taylor and Hutchison are interim appointments so the potential exists for this to be rectified.

The Chinese shareholders are officially acting in concert. With 34% of the company between them, this gives them effective control of the company. Given that COW also own a stake in Minsheng bank (the lender) and are the offtake counterparty for CDU, the potential for conflicts of interest on the board has increased.

Most importantly, the share issue to FSHL has been voted down - so CDU still needs significant funds. According to quotes attributed to the Chinese shareholders on Bloomberg, nothing approaching an agreement to underwrite a further debt drawdown has yet been reached. This means that a very real possibilities exist that no such agreement is reached, and the company is forced to either find a large source of capital elsewhere, or simply hand the keys back to Minsheng. I think the fact that such a small number as $3m has been lent to CDU by the Chinese suggests that CDU's cash balances have dwindled close to zero. That would qualify CDU as being in extreme financial distress, and administration or bankruptcy are real possibilities from here.

Putting all these together, I think that a buyer of CDU at any price greater than option value would have to be very brave.

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I don't think it would be the big three's immediate intention for it to go bust otherwise they would have taken FSHL money to pay Sinosteel for the electricals ......... unless they warned FHSL who said "get us out of this mess by voting it down" - gosh, the permutations are endless!

But it depends what they are finding out at the moment. The next few weeks will be interesting.

CDU Price at posting: $1.70 Sentiment: Sell Disclosure: Not Held
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0 Great analysis

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I don't think it would be the big three's immediate intention...

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