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$2.5B Real Estate Development Project in
Oman with the Government to Begin any
day now per the Ministry of Tourism and will be
finished by 2024 once the $20M initial payment is
made to begin construction!
http://www.omagine.com
Omagine, Inc.
Empire State Building
350 Fifth Avenue, Suite 1103
New York, NY 10118
Tel: 212-563-4141
800-535-2532
Fax: 212-563-3355
info@omagine.com
https://www.youtube.com/watch?v=ipGz1tfnTiE
The company is headquartered in New York City and has a subsidiary in Muscat, Oman. Depending upon unfolding events, the Company intends to open branch offices in Beirut, Lebanon and in Dubai, the United Arab Emirates during 2018.
We are a publicly traded Delaware, USA corporation. Our stock symbol is OMAG.
We select distinctive locations, mostly in the Middle East and North Africa (the “MENA Region”), which we design and develop into unique tourism destinations that have a “high culture” flavor and a “pop culture” texture. The MENA Region is one of the fastest growing tourism destinations in the world and governments there are diversifying their economies with tourism projects that create local employment.
The Company is focused on MENA Region entertainment, hospitality and real-estate development opportunities because we believe the enormous financial resources in the MENA Region combined with the governmental strategic vision presents superb development opportunities.
In addition to the Omagine Project in Oman, we have been holding serious discussions with Omani government officials regarding other projects in Oman and we have held initial discussions with government officials and business people in the MENA region about similar projects and other business opportunities therein. Company management, which has strong existing relationships with many businessmen and various Government officials in the region believes that opportunities will develop for the Company.
Oman is a wealthy, politically stable, forward & outward looking country in the southern Gulf region that has enormous economic and geographic assets. With its mountains, waterfalls, deserts, extensive coastlines and 6,000 year old cultural and maritime history, it provides unique tourism opportunities in the MENA Region.
Our destination properties are upscale, uplifting and uproariously entertaining.
Our projects always include traditionally designed residential and commercial components but the tourism components are thematically imbued with culturally aware and scientifically accurate entertainment experiences. All of our developments are historically faithful to their surroundings. The tourism elements tend to emphasize the great art, music, culture, science and philosophy of the world – the Great Ideas - while simultaneously being hip, stylish, trendy and very 21st century.
We have a family-oriented design and development bias which we employ to make our properties tell true and entertaining stories about their surroundings and the world. Our developments seamlessly integrate entertainment with art, culture, science and history.
Our aim is to generate exceptional value for our shareholders and to change the world into a more peaceful, prosperous, egalitarian and friendly place.
Omagine LLC, which is a 75% owned subsidiary of the company, was formed in Oman as a limited liability company in 2009 for the purpose of designing, developing, owning and operating the entire Omagine Project. The Omagine Site on which the Omagine Project will be developed consists of approximately 245 acres (equal to one million square meters) of prime beachfront land facing the Gulf of Oman just west of the capital city of Muscat and six (6) miles from Muscat International Airport. The Omagine Project will be an integration of cultural, heritage, educational, entertainment and residential components, including: a high culture theme park containing seven pearl shaped buildings, each approximately 60 feet in diameter, associated exhibition buildings, a boardwalk, an open air amphitheater and stage; open space green areas; a canal and an enclosed harbor and marina area; associated retail shops and restaurants, entertainment venues, boat slips, and docking facilities; a five-star resort hotel, a four-star resort hotel and possibly a three or four-star hotel; commercial office buildings; shopping and retail establishments integrated with the hotels, and approximately two thousand residences to be developed for sale.
The company's internal financial model presently forecasts significant net positive cash flows for Omagine LLC over the seven year period subsequent to the signing of the Development Agreement and a net present value of the Omagine Project of approximately $1.55 billion dollars. The Company intends to continually update this model at regular intervals as new facts and information become vailable, as the development program and design process unfolds and as market conditions require.
From the last 10Q
INVENTORY AND PROPERTY
The Company’s consolidated financial statements for the nine months ended September 30, 2017 reflect $718,614,000 of land under development which the Company has allocated to inventory ($490,813,363) and property ($227,800,637). This $718,614,000 of land under development was purchased by LLC on July 2, 2015 pursuant to the terms of the Shareholder Agreement whereby an LLC shareholder agreed to transfer the Land Rights over one million square meters of beachfront land to LLC in exchange for the issuance to such shareholder of 663,750 Omagine LLC shares (the “LLC Shares”). Since the Land Rights represented a non-cash payment for the LLC Shares, it was necessary to value the Land Rights.
Three expert real estate valuation companies were engaged by LLC to independently value the Land Rights in accordance with the professional standards specified by the Royal Institution of Chartered Surveyors (“RICS”) and International Financial Reporting Standards (“IFRS”). The average of the three Land Rights valuations was 276,666,667 Omani Rials ($718,614,000).
LLC engaged the services of PricewaterhouseCoopers LLP (“PwC”) as its IFRS accounting consultant to definitively determine the correct method of recording the $718,614,000 average value of its Land Rights in its IFRS compliant financial statements. After receiving PwC’s written opinion, LLC then consulted with its independent auditor, Deloitte & Touche (M.E.) & Co. LLC (“Deloitte”) with respect to the matter and received Deloitte’s written opinion agreeing with the PwC opinion. Both PwC and Deloitte independently concluded that the Land Rights should be recorded as capital, work-in-process (inventory) and land on LLC’s financial statements. With respect to the Company’s consolidated financial statements, OMAG’s independent auditor in the U.S. has likewise concurred that, pursuant to US GAAP, the Land Rights should also be recorded as capital, inventory and land.
In determining the allocations to inventory and to land, LLC followed the advice of Deloitte by computing the percentage (x) calculated by dividing (y) the area of the land LLC definitively knew it intended to sell, by (z) the total area of land constituting the Omagine Site, and then multiplying that percentage (x) by $718,614,000 to get the correct number (N) for inventory. The correct number for land was then calculated by subtracting N from $718,614,000. Using its detailed internal financial model, management calculated (x) to be equal to 68.3%, thereby making the inventory number $490,813,363 and the land number $227,800,637. In its consolidated financial statements therefore, the Company has divided the Land Rights between land under development which is held for sale (inventory) and land under development which is held for investment (PP&E). These percentage allocations may be modified over time as the more precise land uses become apparent during and after the master planning and construction processes.
As more fully described in Note 1 and in Note 11 (See: the “Omagine LLC Shareholder Agreement” section of Note 11), financing for the Omagine Project has not yet been secured. If such financing is not obtained, LLC may not be able to complete the Omagine Project and may not be able to recover the $718,614,000 value of the land under development described above.
Omagine, Inc. has today filed with the SEC its quarterly report on Form 10-Q for the period ended September 30, 2017 (the “10-Q Report”).
Below are certain excerpts from the 10-Q Report. The excerpts do not purport to be or represent the full filing. Please use the following link to view the complete text of the 10-Q Report:
https://www.sec.gov/Archives/edgar/data/820600/000121390017012389/f10q0917_omagineinc.htm
Excerpts from the 10-Q Report:
Summary
The development of the Omagine Project has been delayed. We never expected that a $5 Billion company like CCC would default on their investment obligation – but they did. CCC has now been removed as an LLC shareholder and is being replaced by a new investor. The failure to execute the CCC-Contract by July 1, 2016 did not relieve RCA of its continuing obligation under the Shareholder Agreement to make its approximately $20 million Deferred Investment into LLC. This $20 million cash Deferred Investment from RCA was due to be paid to LLC on July 2, 2016 and is now past-due (the “Past-Due RCA Investment”).
We have a written Investment Agreement from the local Omani investor mentioned below who has passed away and which investment we do not now expect to happen. We have a verbal commitment from a recently formed investment fund for MENA Region real-estate transactions (the “MENA-Venture Fund”) organized by the Kosovar managers of a European fund with which we have been dealing. We have a non-legally binding November 2017 signed letter of intent from a Southeast Asian-based real-estate investment group which is active in Singapore and Thailand and is seeking to expand in the MENA Region (the “Singapore Developer”). LLC is presently in final discussions with the MENA-Venture Fund and is in continuing discussions with the Singapore Developer. In addition RCA and OMAG are also in continuing discussions with a Dubai based developer which was previously active in Oman and well known to RCA (the “Dubai Developer”). Omagine LLC hopes and intends to close the most advantageous deal it deems possible with one or more of these potential investors and/or co-developers or with some other prospective investor with which the Company is in contact.
During the second and third quarter of 2017 and continuing up to the date hereof multifaceted discussions and correspondence between and among management, MOT and RCA occurred with respect to, among other things, the Past-Due RCA Investment which is now an almost 18 month past due obligation of RCA to invest its $20 million equity investment into LLC (which was due and payable to LLC in July 2016), the status of the possible new investors to replace CCC, the timelines for completion of the Omagine Project and the possibility that the DA may be amended, extended, replaced or terminated by MOT. These complex discussions continue as of the date hereof and involve at least two Omani government ministries as well as other Oman and U.S. governmental entities and authorities and more recently now, probably Sultan Qaboos, the ruler of Oman as well. The outcome of these multifaceted discussions is not yet clear or concluded but in all such similar prior events - of which there were a few - MOT has granted the reasonable requests of the Company for the time extensions required to perform certain tasks such as the closing of either the $20 Million Past-Due RCA Investment and/or a new investor to replace CCC. Management understands from the RCA representative that RCA and MOT are in contact and correspondence with respect to the Omagine Project and its development timelines, the DA, the UA, the $20 Million Past-Due RCA Investment, potential new investors and other matters and that RCA (which apparently is a continued strong supporter of the Omagine Project and of OMAG) is also in contact with His Majesty Sultan Qaboos regarding the Omagine Project’s timelines, developers, the $20 Million Past-Due RCA Investment, potential new investors and possible adjustments to any of the foregoing. As would be expected, management is not privy to the exact nature of these hi-level government discussions but LLC management is scheduled to meet with the RCA representative sometime before November 24th to be briefed on such ministerial and governmental discussions as are relevant to the Company and the Omagine Project.
The OMAG Common Stock is, and always has been, a proxy for the performance of LLC and the project delays to date have put downward pressure on the OMAG Common Stock. LLC can begin the masterplanning and development of the Omagine Project when and if RCA pays its $20 million Past-Due RCA Investment obligation, or when and if an investment transaction with one of LLC’s present investment prospects closes (which has not happened yet although we anticipate – but cannot guarantee - that it will occur soon). LLC management is presently in continuing intense discussions with:
Notwithstanding the foregoing, shareholders and investors are cautioned that until an equity investment transaction as generally described above actually closes LLC will not have the funding sufficient to begin design, masterplanning and initial site work on the Omagine Project and no assurance can be given at this time that any such investment transaction will be finally consummated.
_______________________
Management presently estimates that the total net positive cash flow from the development of the Omagine Project will be approximately $3 billion and the net present value of that cash flow is approximately $1.6 billion. A present estimate therefore of the portion of that projected cash flow allocable to OMAG would be in excess of $1 billion USD assuming an OMAG ownership percentage of LLC of between 60% to 75%.
Approximately $900 million to $1 billion USD would therefore be the expected damages to OMAG and the expected claim amount by OMAG in any potential lawsuit in the event of any untoward circumstances (which no one presently expects to occur) arising from LLC’s not receiving for any reason, its required $20 Million Past-Due RCA Investment to begin development of the Omagine Project as a result of RCA’s failure to fulfill its legally binding investment obligation pursuant to the Shareholder Agreement.
The financial architecture of real estate projects generally requires that the developer (in our case, LLC) finance and pay for all organizational costs (legal, accounting, administrative, etc.), concept design, land acquisition (i.e. purchasing the land for the project), initial feasibility and market studies, masterplanning, detailed design, financial advisory fees and/or other engineering & development consultancy costs (collectively, the “Soft Costs”). The Soft Costs are all financed from the developer’s (in our case LLC’s) own cash resources provided by its shareholders (in our case OMAG, RCA and CCC) and this is the reason that the receipt by LLC of the $20 Million Past-Due RCA Investment is so crucial to LLC’s success.
One can readily see therefore the significant borrowing power advantage and financial leverage afforded to LLC by OMAG’s negotiating and arranging for the aforementioned $720 million of Land Rights to be added to LLC’s shareholder equity. Only after the developer (LLC) completes the land acquisition, the necessary engineering & development consultancy studies and the project masterplanning (all of which are Soft Cost tasks to be paid for by LLC), can LLC approach banks to arrange the debt facilities needed to finance the Hard Costs of construction. In the case of the Omagine Project, management estimates that such Soft Cost expenses will be approximately $25 million USD.
We are no longer relying on the conclusion of the estate settlement mentioned above and we are in final discussions with the MENA-Venture Fund with whom we have been holding discussions in parallel. We are also in an advanced state of discussions with the Singapore Developer and the Dubai Developer. Although we had expected to close an investment by now, that has not yet happened and we continue to be hopeful that such a financial investment with the MENA-Venture Fund can be closed by the end of November or early December 2017 and/or that a co-development transaction with either the Singapore Developer or the Dubai Developer can be arranged in early 2018 or before. Discussions continue with the MENA-Venture Fund and separately with the Singapore Developer who executed a Letter of Intent with LLC in November 2017. Separate discussions are also ongoing with RCA for the payment by RCA of the $20 Million Past-Due RCA Investment obligation.
LLC will not have the approximately $20 million of funding sufficient to begin the serious design, masterplanning and initial site activities on the Omagine Project until RCA pays LLC its $20 million equity investment as required by the Shareholder Agreement and/or until we close a transaction with a replacement investor for CCC. As mentioned above, the Soft Costs are typically paid for by the developer (LLC) out of equity as opposed to the much greater project finance costs which are typically paid for by the developer (LLC) via bank loans arranged by the developer. Management has also been conducting parallel project finance discussions with a bank and we expect a successful conclusion to that discussion to occur soon after RCA pays LLC the $20 Million Past-Due RCA Investment as required by the Shareholder Agreement or we close an equity investment with the MENA-Venture Fund, the Singapore Developer or the Dubai Developer.
Notwithstanding the foregoing, shareholders and investors are again cautioned that until an equity investment transaction as generally described above actually closes LLC will not have the funding sufficient to begin design, masterplanning and initial site work on the Omagine Project and no assurance can be given at this time that any such investment transaction will be finally consummated.
_______________________
If the market for our Common Shares is exhibiting low liquidity levels at the time we give YA an Advance Notice (a “Put”) and if YA sells Common Shares into the public market during the five Trading Day Pricing Period subsequent to our Put (as is YA’s customary practice), it is likely that the price of our Common Shares will decline. Any such price decline will immediately increase the number of Common Shares we would otherwise be required absent such price decline to deliver to YA subsequent to the Pricing Period in satisfaction of such Put. This is precisely what happened in early October 2017 when a severe liquidity crisis at the Company compelled OMAG to give YA a put for $100,000 which was ultimately satisfied by the issuance to YA of 940,740 Common Shares.
_______________________
In order to generate the cash needed to sustain the Company’s ongoing operations, OMAG has over the past many years relied on the proceeds from the YA Loans, other loans and from sales of Common Shares made pursuant to the 2014 SEDA and Prior SEDAs and the 2012 rights offering as well as from sales of restricted Common Shares and notes made pursuant to private placements. Management is hopeful that the Warrants will provide a future source of additional financing but it is not possible to predict if any of our Warrants will ever be exercised. Company management has continually pressed RCA during 2017 to pay the $20 Million Past-Due RCA Investment to LLC which is long overdue. As of the date hereof RCA has not yet done so. In spite of their present obligation to make such payment, RCA has indicated that they would do so when the new investor to replace CCC is secured. In order to maintain both OMAG and LLC in existence, OMAG took on substantially more bridge financing debt during 2017 in order to plug the financing gap caused by RCA’s lack of payment of its obligations. Much of this bridge financing debt carries onerous repayment terms and highly dilutive conversion features. The Company presently anticipates it will be able to repay this bridge financing debt in cash (and avoid any dilutive conversions) only if we are able to close all or a portion of the anticipated $20 million investment with the MENA-Venture Fund by no later than mid-December 2017 or if RCA pays the $20 Million Past-Due RCA Investment by such date (which seems unlikely). If RCA would pay such $20 Million Past-Due RCA Investment as they are obligated to then this bridge financing debt issue – and all other issues preventing the start of the project development – would be instantly resolved.
_______________________
The failure to receive funds from RCA or the MENA-Venture Fund as indicated above or the failure to arrange further bridge financing as necessary to sustain operations until such funds are received will have a materially significant adverse effect on the Company’s ability to continue operations.
Regards,
AGORACOM
