RE: RE: RE: Korean CEO of Sangdong Mining Dismisse As I recall, someone here posted something to the fact that the apparent delay has nothing whatsoever to do with Warren Buffet or Berkshire Hathaway as this deal would be too insignificant.
I totally disagree. The apparent delay in fact could be because of Berkshire Hathaway, their negotiating tactics or whatever at their end. The reason why I think this deal will require a decision/approval at their level is simply because the deal is mcuh bigger than what may be apparent at first glance. Yes, we have the $35 mil cash for 25% stake in Sangdong, plus another $35 mil. contribution to the APT plant for 55% stake in the plant. Then there's the UPTO 90% offtake.
At first glance, it would appear that IMC is on the hook for $70 mil. But the larger liability is in fact the offtake. It is an agreement or a commitment to purchase xx% for xx amount of time at xx dollars. Even at a discount to market, it is nonetheless a commitment on their part to purchase. Do the math as one can quickly see that this concerns a large amount of money.
Additionally, IMC I believe is also on the hook for their portion on the loan from Shinhan for the APT plant and related capex. Remember IMC is putting in $35 mil. for 55% of the APT plant, with Woulfe holding the remaining 45%. The bank must want not only Woulfe, but also IMC in the bank agreement as they will be majority owner of the APT plant.
Considering all these issues, given the magnitude of the deal, I believe the final say does rest with Berkshire Hathaway. Let's not forget BH own 80% of IMC. They are not just partners, but the owners. The family that owns the 20% are there to run it day to day, but significant decisions like this one will definitely involve BH. So then one could imagine the amount of time it must take every time a change is made to the negotiations. Anyways, enough said. JMHO