RE:RE:nice move up so far in the UKLondoner7 wrote: Naka – your response suggests that you’ve missed the point I’m making, because you haven’t addressed it.
What this US$66m buys is 1) additional financial stability pre-Stella and 2) “provides additional flexibility to pursue value-accretive satellite opportunities in the Greater Stella Area”.
I had already considered Ithaca’s financial stability and decided the risk reward profile was attractive. But I’m not on the board so perhaps they are aware of something I’m not. They have taken a cautious approach so far via hedging and the $300m Senior Note issuance and I don’t fault their caution. I just wonder if this is a step too far.
Let’s see if any “value-accretive satellite opportunities in the Greater Stella Area” are actually pursued, or whether this is in fact solely to add financial stability.
A day trader may not care for the value of Ithaca next summer but a long term holder should. To be clear whatever value may be assigned to Ithaca post Stella has been diluted. If yesterday you believed that it would be CAD$3.0 / share then today it is (0.81x3) CAD$2.43 (market cap CAD$1,052m) plus the benefit of whatever is achieved with US$66 between now and then – a poor deal if that US$66 is still in the bank or hasn’t been spent effectively. Of course if it has saved us financially we'll never know.
The other side of this is to consider Delek’s interest. They obviously think they have a good deal. They are now the largest shareholder with 19% of the company and 2 seats on the board. They will be nicely positioned to buy the whole company when they consider the risk reward profile right. On FPT-1 sail-away, on first Stella production or maybe when Stella is fully operational. I hope it’s the latter. This part of the deal is positive because a bid premium has been added till Delek open their wallets again or walk away.
If anyone can shed any further light on this deal beyond it's impact on today's price I'd like to hear it.
Londoner7
From Oct. 2015. Londoner makes a very astute comment on the Delek deal, "This part of the deal is positive because a bid premium has been added till Delek open their wallets again or walk away." Point is, they haven't haven't walked away have they. Londoner, thanks for the pep talk to a more than stale, dare I say, moldy bull. Ha.