RE:RE:RE:RE:RE:News: LPV & CPC - Terms of the Financing IMHO (emphasis on “H“)
The accretion of Largo/LCE depends on our own success in penetrating the long duration energy storage market (VRFB). The justification for the new entity (LPV) depends totally on our ability to gain a considerable part of the VRFB leasing pie (a small amount of leasing can be easily handled in-house). There is no reason for the creation of LPV if not for Arias' anticipation that long duration energy storage will be dominating Largo’s business thanks to the leasing of VRFBs. Therefore a successful selling of LPV Subscription Receipts (SR) would be an indication that investors believe in Arias vision. Somehow I have a feeling that Arias et al will be investing in the new entity.
The devil’s in the details but the big picture seems to indicate that the main source of LPV revenue / cash inflow will come from the periodic payments received from the VRFB leases; LPV expenses will consist mainly of G&A (General & Admin) and LPV assets will mainly be valued based on the Vanadium in the batteries located on the customer premises. As a subsidiary (Largo only needs to own 51% of LPV for it to become a subsidiary) LPV financial statements will be consolidated with Largo’s. The consolidated financial statements will give a combined view of the value of the whole corporation (Largo + LPV). Furthermore by creating LPV as a separate public entity Largo can raise capital by selling off LPV stock / SR without diluting Largo’s stock.
My 2-cts. DYODD