RE:Another Twitter postFerryboy wrote:
https://twitter.com/kashyap286/status/1732253550711865753
Another interesting summary of AOI on Twitter .... guy makes a couple of interesting points
1. Reason they pull money out of Prime asset as quickly as possible (and not pay down debt) is because of Nigeria/National Oil company (Exxon example)
2. 10% of AOI float can be had for about $80m .. less that 1/2 the cash on hand. I wouldnt pay an enhanced dividend with this as an alternative
GLTA
The thesis has flaws....Exxon is still active in Nigeria and there was nothing nationalized. Ok, it's Africa, but Nigeria messed around a decade with the new Petroleumtax regime (to support new development/exploration)..and just now, when they got this PT-regime online, they should think about nationalizations ? Makes around...zero? sense.
Yeah...if the debtholders only got half a brain....Aoi should force Prime to raise 2b debt and pay out 50% to Aoi and kiss Prime goodbye. I don't want to research the 10-Qs now, bur for sure, that style is not possible. Aoi is on the hook for that debt or Prime is limited in their payouts.
To resume it: The thesis is bullshit. Aoi/Prime loves debt and loves to pay interest with cashflow. Some diner nights with bankers and fantasizing about future great acquisitions with further debt...and the expected performance boni are more interesting, than a lean and convenant-free company.