MagIndustries Corp MAAFF

SNEL

[zeekay]

Sorry for the late post, but I had a PM request to add my two cents into the conversation.

The company received a total of 8.3 million dollars of the 24 million that was to come in.  2.3 in payments and 6 in the sale. Yes, some feel ripped off that they could have waited and collected more money, but two things pop out as important.

First, is the cost savings.  IMO, MagEnergy will end as a company.  This is not the direction of the company and two offices and one Manager (hopefully more with a management restructuring) will be gone.  As well, no sub contractors or additional employees will be paid saving the company additional cash.  

Second is a liability issue.  The purchasing company (Still not sure why they won't say who!) assumes all future liabilities with the project.  This saves alot of headaches with a government that fought with MAA over payments to begin with.  The DRC government has had issues paying projects in the past and if something major went wrong, MAA could have been fighting for awhile to get their expenses/ monthly payments.

My take is that any purchaser of MAA wants the potash portion only.  They do not want the liability of turbines and dealing with the DRC government.  By ridding themselves of a potential deal breaker (SNEL and eventually MagEnergy), they put 6M in the bank and can wait a bit longer for a better deal.

Yes, this receivable was sold at a discount, but factoring in the country you are dealing with and the liability issue, a 50% discount rate (approx) (US inflation taken out) is not terrible.  Would you put up 6M to get 15.7M from the DRC and US inflation going up???  Big gamble.....Might as well put it on MAA!!! 

I was hoping for more, but it keeps the cash balance up a bit longer.