Niko Resources Ltd NKRSF

RE:RE:RE:BP Sees 5-10% of Global Earnings from India

[zibo]

I have been trying to evaluate NIKO's options and keep coming to the conclusion that a sale of D-6 is the most likely outcome simply because NIKO as per the last MD&A  show total liabilities @ 904 Million, probably less but they have to include everything on the books.

 

If they hang onto D-6 their share of Development costs (10%) is around 400 million, new production is expected to start by the second quarter of fiscal 2021, they are operating at a loss presently and have not been making payments on the loans or notes which is compounding debt. So they will have to continue operating at a loss until 2021.

If Bangladesh & India pay up approximatly 70 million they owe that will help but won't cover the up coming cash calls for D-6 development which means having to borrow new money to carry on. 

Paying out Senior lender's and the notes is over 500 mill + 400 mill equalls a new loan of 900 mill, when Niko has 900 debt on the books currently and needing 400 mill development costs that would require a lender to loan 900 mill against 1.3 bill debt, not a good scenario for a lender.

If push comes to shove with cash calls I believe the Lender's will back Niko rather than write off a 400 mill loan but under what terms? and this just adds more debt for Niko.

As far as you say if BP was interested in Niko's 10% they would have bought it already I disagree. (1) Why would they have bought it earlier and incurred debt/carrying cost when there won't be any revenue until 2021. (2) If another player made an offer they could then get involved at that time and if not (3) The longer this drags out for Niko the better opportunity for a deal for BP.

I think a Fire sale price is 500 mill, if that happened according to the waterfall agreement Niko would recieve 99 mill from the proceeds and would have paid off the majority of the loans and notes and if they get paid the 70 mill from India & Bangladesh they would be in pretty good shape, the shares would have value and doing a PP to raise future cash would be realistic.