GREY:STTYF - Post by User
Comment by
greenandgoldon Aug 18, 2011 8:37am
309 Views
Post# 18955100
RE: Due Diligence -- SND RISK ANALYSIS
RE: Due Diligence -- SND RISK ANALYSISBut, if one of SND's deal companies screws up and goes bankrupt. What would their properties be worth even with a PPSA? For example, SND has given $14 million to Terrex Energy to buy some worn-out oil fields and revive them with new chemical flood technology. If Terrex is wrong about these properties, if the fields don't respond to chemical flood, what assets does the company have left? A bunch of worn-out oil fields and some customized ASP flood equipment that didn't function. These assets won't equal the $14 million investment.
*
The guys at SND have to be right in their judgments for our investment in them to be safe. And, if you look at stock prices, the market seems to be betting against economic production at Terrex, Royal Coal, Donner Metals and most of the other deals (cheaper stock prices than before SND gave them financing).
*
All that said, the SND guys are contrarians, and have always been right. I can't think of a deal that Nolan Watson has screwed up in this short but illustrious career.