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I'm glad to hear that Jim is stating there won't be any reverse splits. Issuing new shares is still a possibility but as you mention that would only hurt the minimum listing price. I'm not sure how this will all play out but the uncertainty is what needs to be resolved for me.
Phillip
That is good news and should get some more eyes looking at us. Once the lease is signed, financing will be the news that gets many of us off of the fence (including me). Two phases of 1.6 million tons is huge for people who know the market. I haven't added to my position in some time due to the risk of dilution once we move to the TSX. Then again, part of my past profits on this position was set aside in cash to hedge my risk against dilution and I would have the money to put back in when and if that time ever came. The other negative we have going for us is that no one thinks about a pellet plant being all that exciting of an investment. An announcement from a big power producer announcing a contract however would be more than welcome news that would offset any thoughts about "boring" pellet investments.
Phillip
Have you be contacting the Port for public information as well? My last request seemed like they were mad that I was asking and said that their Board hadn't approved the previous month's Board Meeting Minutes. That seemed odd. I thought maybe they were trying to avoid creating public records.
Phillip
Thanks for the update. I had noticed a few more shares being traded today and wondered why.
Phillip
Drax Wins Appeal on Subsidy Eligibility of Biomass Conversion
(I wonder if this is good news for BMSPF? - Phillip)
Drax Group Plc (DRX) said a decision by the U.K. government not to award one of its biomass conversion units a guaranteed power price had been overturned.
A High Court judge said the move by the Department of Energy and Climate Change must be quashed and reconsidered, Drax said in a statement from its headquarters in Selby, North Yorkshire. DECC in December shortlisted two conversion projects to receive subsidies. In April it said only one was eligible, despite no changes to Drax’s project plans.
The contracts are precursors to the government’s contracts for difference, or CFDs. Those form part of a new assistance program for renewables that guarantees the price generators will get for their power for 15 years. Under CFDs, utilities will receive a guaranteed price per megawatt-hour of power they produce over a fixed number of years, regardless of the market price.
DECC has been given the option to appeal, according to the statement. Drax shares closed up almost 5 percent in London at 710 pence.
The government said it may appeal the ruling.
“We believe that we ran a fair and robust bidding process for renewable generators seeking early contracts for difference,” DECC said in a statement.“We have been granted permission to appeal, and will now consider the decision carefully.”
I would anticipate the leasee being responsible for the bond. It may be funneled through the Port, but for the Port to issue bonds for the benefit of a private development, it would be a gift of public funds. I would be more concerned about finding enough buyers for the bonds. $130+ million is a tall order but perhaps some of the big utilities buying pellets will also be buying their bonds. Electric utilities have deep pockets and they have financial motives to see this get off the ground.
Phillip
Not surprised. Construction schedule is pubshed back once again until late 2014 instead of early summer 2014. I'm not sure why they bother publishing start dates. Next it will be early summer 2015 at a different port.
Phillip
I hope you're right. From a business sense I don't see them going to the TSX just for the sake of existing shareholders. I see this as a funding mechanism to raise capital which translates into dilution one way or another. The bond, if successful, may cover construction costs, but it won't cover operating costs. The good news is that operating costs aren't nearly the amount of construction costs.
Phillip
A reverse split want mentioned in this filling, but was mentioned in previous press releases under the previous financing plan. Issuing new shares has also been mentioned. What I wish they would do is make their announcements let their stock price stabilize based on the news and then allow current shareholders the first dibs at buying those shares. I had another stock do this when they needed to raise capital for expansion.
Phillip
Material Change Report filed 6/9/14. My only question is whether the $0.09 conversion price is a post reverse split price. If it was based on no split, that means there is confidence the price will go above that. This reverse split is the key to everything.
51-102F3 MATERIAL CHANGE REPORT [F]
Item 1 Name and Address of Company
Biomass Secure Power Inc. (the “Company”)
40218 Wellsline Road
Abbotsford, BC V3G 2K7
Item 2 Date of Material Change
June 4, 2014
Item 3 News Release
Not Applicable.
Item 4 Summary of Material Change
On June 4, 2014, the Company completed a private placement of Convertible Debentures (each,
a “Debenture”) in the aggregate principal amount of $130,000. The Debentures will mature
(“Maturity”) on the first day of the calendar month that is eight (8) months from Closing and
will not accrue interest. Pursuant to the terms of the Debentures, and subject to adjustment, the
subscriber may convert all or any part of the principal amount outstanding under the
Debentures into common shares in the capital of the Company (each, a “Share”) on the earlier of
(a) Maturity and (b) the date the Shares are listed on the TSX Venture Exchange at a conversion
price of $0.10 per Share unless conversion is effected at Maturity, in which even the principal
amount will be converted at a conversion price of $0.09 per Share.
Item 5 Full Description of Material Change
5.1 Full Description of Material Change
See Item 4 for a full description of the material change.
5.2 Disclosure for Restructuring Transactions
Not Applicable.
Item 6 Reliance on subsection 7.1(2) of National Instrument 51-102
Not Applicable.
Item 7 Omitted Information
None
Item 8 Executive Officer
James Carroll President, CEO, Chief Financial Officer, and Director, 604 807-4957
Item 9 Date of Report
June 9, 2014
Nothing I'm aware of. I suspect the update on moving to the TSX will be timed with their financing and construction activities (if any). If they are raising capital with this move, they likely want to time a share issuance with news that will make it more attractive to push the share price up.
Phillip
I keep a direct link to the Company's Sedar filings in the Ibox. scroll to the top and look under:
SEC Filings:
All Company Filings on Sedar
Phillip
These end of day paint jobs at 500 shares are almost predictable. I logged into my broker at 12:55 PM Pacific time and watched it happen in front of my eyes today.
BTW, new MD&A is out on Sedar.
Phillip
There's definitely been a run up to the low 0.03's, but this $0.04 is just an end of day paint job with hardly any shares being bought. Still, I'm not going to complain about the 0.03's. I even sold a few shares this week to use the proceeds to hopefully buy some more on some dips.
Phillip
New offering out today. Not much ($5,500), but new Form D:
Form D - 5/7/2014
Phillip
Ask on Level II looks pretty good. To bad there isn't any news to push the volume up.
Phillip
I've never seen any good come from a reverse split and the price never increases inversely proportional to the split. If it did, there would be nothing to worry about. The other factor is the perception, which often comes to fruition, that the split will be followed by a new share issuance. They reduce your number of shares and then issue new ones for sale to someone else. This has already been proposed by the Company once and it's the only thing keeping me from buying any more shares.
Phillip
Thanks for the post.
Below is a link to Form D:
http://app.quotemedia.com/quotetools/showFiling.go?webmasterId=101020&name=BIOMASS SECURE POWER INC: D, Sub-Doc 1&link=http%3A//quotemedia.10kwizard.com/filing.xml%3Frid%3D23%26ipage%3D9503762%26DSEQ%3D1%26SQDESC%3DSECTION_BODY%26doc%3D1&cp=off&type=TEXT
Phillip
I'll play devil's advocate and do some more speculating . . .
- Maybe once the fiber suppliers were identified it made financial sense to move up river closer to the supply source to avoid costly barging.
- Maybe the Port of Natchitoches had more land available and was more willing to work with the Company than Baton Rouge was.
- Maybe Baton Rouge was getting too tight with all of their other tenants and rail projects that BMSPF was looking for more room to grow.
- Maybe there were delays at Baton Rouge that couldn't be avoided so they moved up river.
- Maybe there are enough fiber supplies at Natchitoches and Baton Rouge that both projects are still feasible.
- Maybe the bonds being issued for Drax put too much debt out there through Baton Rouge and Natchitoches was better able to absorb the bond issuance required for BMSPF.
Yes, all speculation.
Phillip
I don't disagree with anything you said. My issue though is there has been a number of locations that never came to fruition. Is this just another one? I don't know. It looks just as promising as Baton Rouge did. All of the "telling" information is the same information they had for Baton Rouge. My point is that this has been the MO for 10+ years. Kick something around for a while and then "poof" everything moves in a new direction or site. I can understand business deals falling through or better opportunities coming along. What I can't understand is why absolutly no explanation is given to shareholders.
Phillip
And now the chipping plant is at the Port of Shreveport on the Red River. No explanation, just another project that disappears without any word from the Company. Of all the things they do to gain credibility, this is one of the things they do to lose credibility. Power plants for Indian tribes, pellet plants at Lake Cowichan, pellet plants at Baton Rouge, etc. They come and go like the coulds passing by. At least recent meeting minutes for the Port of Natchitoches imply their project is still moving there. Now I need to investigate Shreveport.
Phillip
Global pellet market to reach $9 billion by 2020
More news while we're waiting for news...
http://www.biomassmagazine.com/articles/10194/global-pellet-market-to-reach-9-billion-by-2020
How long it takes to get listed on the TSX:
http://www.tmx.com/en/listings/listing_with_us/faq/#2
Also take a look at the costs be listed on the TSX. This isn't a small step they're making. One other thought I had about my disappointment that there hasn't been any substantial news regarding takeoff agreements. If I were to release that news would I do it when the company was traded on the TSX or on the pink sheets? That could explain a part of any delays in releasing any news.
Phillip
I picked up some new information today that corroborates the recent press releases. Ask Jim if "Project Skate" means anything to him.
Phillip
Good to know they still have sufficient liquidity to attend. It instills confidence. The fact that they are attending also implies they still have a reason to attend.
Phillip
Good article..."A Giant Step"
The pellet industry will grow by nearly 33 percent during the next two years, as foreign demand drives investment in new capacity and distribution infrastructure.... (link to article below)
http://www.biomassmagazine.com/articles/10072/a-giant-step
You're welcome.
Phillip
So did the Port of Baton Rouge link in the iBox get removed because the project there is dead? I used that link to keep an eye on Board agendas.
Phillip
I have the shares of VMHIF spun off from FASC on 9/11/2002 in my Quicken account, but I don't know if I manually added that or if that was the original spin off date.
This is what the company says in their latest MD&A filing on Sedar:
I picked up on that also. There are still a lot of things that are potential road blocks and this is another potential maybe. In the context of all of the other press releases that never came to fruition it's hard to get one's hopes up, but if there is one thing that is different here it's the fact that someone had enough confidence to put up $250,000 of convertible debentures. These are unsecured and with a conversion price of $0.09. This means someone thinks the stock price will reach $0.09. What I don't know is if a reverse split will occur when/if listed on the TSX to cause the share price to go up that high. I'd be curious if that's legal, but I imagine if they do that, it's been chewed on by their Legal Counsel and received the okay.
Phillip
Private equity financing with a 5% issuance with Drax being the buyer would offset any dilution concerns. Right now who knows whether it is 5% or 25%? However a 7% interest rate on $2.5 million is only $175k. This is chump change and hard to argue that share issuance is a better option. To me it means they can't raise capital any other way.
Phillip
I think we need more eyes watching this stock before huge jumps in share price will occur. A move to the TSX will help. With the possibility of share dilution, that fact along will be like the Sword of Damocles hanging over our heads. If the company can raise operating capital by taking on additional debt, that would bet the best thing for share price, but debt servicing would then factor into the margins. $2.5 million in comparison with the captial construction costs of $140+ million is minimal though so I would hope it is an option they actively pursue.
Phillip
Thanks. Speculation is what we all do here. I find dialog more meaningful than just pumping the stock, but when there is news or hard data, I'll post that also.
Phillip
I had margins of about 15% in my valuation in the sticky. This was using the company's estimates. I came up with something higher using the metrics in this article. Richard, if you have any opinions on this article, I'd appreciate your industry insight.
If the bond issuance is successful, that will be a good thing, but the interest rate will influence their margins. The other benefit is the transporation costs associated with barging their product are purportedly 1/3 the cost of rail and 1/5 the cost of trucking. What is going on in New Orleans is a big question mark. How do they get their product from the barge to the ship for export? Are there existing facilities there or is there another project and storage cost there that aren't factored into the equation.
I'm happy about the news release, but as always, I don't just drink the Kool-Aid without asking more questions that we don't have answers to.
Phillip
Do you know if the company is at the conference?
I'm ready for facts also and post quite a few, but with 6-12 months between press releases the facts are few and far between. If you have facts on what is going on at Baton Rouge, please share them so I don't have to speculate.
Also, the majority of my last post WERE FACTS. Just because I threw in commentary does not mean that I can't voice an opinion just like you don't have to read my opinion.
Anyway, good luck. Hopefully this is the news that will move this stock after all of these years.
Phillip