Post by
Kanatainvestor on Nov 13, 2023 11:08am
Short-termism of this market is mind boggling
The stock is selling off as the deal has been written off, while in reality the deal is one step closer to being concluded. The fact that two prime banks are offering PCP $650m in debt funding speaks to the quality of the underlying asset and the security of the cash flows underpinning the investment. The equity portion of this financing was always the least problematic in my mind. Having worked in a pension fund in the past, which exactly the type of asset owner PCP is likely to be raising from, this asset is perfect fit for them, the challenge however is that entities such as CDPQ are relatively slow in their decision making, hence the probably the delay. What I find interesting (and if I’m reading the press release right) is that PCP is ready to deploy $450m of the debt financing towards the deal, this means PCP doesn’t need to raise a large amount of equity to close the deal. My guess is that PCP is aiming to raise $200m or so in equity commitments to make sure the resulting entity is not too over levered. This is not a high hurdle for an entity that raised several such size funds in the past, and considering the financial rationate behind the deal.
Finally, my guess the final agreement will likely be struck before year end. The 15th of January has probably been chosen to give NBLY/PCP a safety buffer so they wont have to extend again should there be any unexpected delays. Although the deal closure has been postponed by 60 days at the most, the risk of the deal falling through has clearly diminished based on today’s press release.
Comment by
gunner1324 on Nov 13, 2023 1:15pm
I`m with you with your comments . I was thinking any possible drop today would be a gift , and took advantage of it 3x`s .