RE: RE: RE: RE: RE: Deal Cacheitup, Your problem is that you alway apply complete western market business practices to China state-owned companies. If chinese uses these practices to do business, China is probably still as poor as India because Indians are doing business in exactly the same way as we do. Let me tell you what chinese want. They want our resources but they don't want to give us an impression that they are just coming here to take our resources whithout benefitting canadians. They have a long term plan. They just do things step by step. They know if they are doing things in the way you described, they will get strong oppositions from goverment and publics. It is not beneficial to their long term interest.
You assumed the CNOOC would fund the WPX project at 8% interest rate. I would not be suprised to see the interest rate may be 4-5%. OK, let say 8% and total interest carried for 10 years is $2B as you said. Do you know what's the WPX price in 10 year? Maybe $15/share. Why? Becaue among the 10 years, WPX would produce potash for about 7 years. Let's use the current potash price to calculate their earning for this 10 years.
Production cost including everything except interest: $200/ton.
Potash Price: $400/ton.
Profit: $400-$200 = $200/ton.
Annual average production for 7 years: 2.5m/year.
Total profit = 2.5x7x$200 = $3.5B
Net profit = $3.5B-$2B =$1.5B
Don't you think a potash producer with $1.5B in hand and only 230m shares worth of $15/share?
Then let see how many shares the $2B can convert to.
Shares converted from interest = $2000/$15 = 133m.
By the way, if WPX issues 133m shares to CNOOC, WPX will keep the $3.5B in hand because they don't need to pay this interest and they can use it to pay back the debt.
Now CNOOC Total shares = 45m+133m=178m.
It is about 49.5% of WPX stake.
You see the calculation is so easy.