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that explains it, thanks. Maybe there's some "meat" left in the 20% margin to DC you assumed LOL.
why are your beef prices so low? I know it's uncut and wholesale but does CA pay $6/kg and resells it at $7.2/kg to its distributors? Shouldn't it sell it first to the abattoir for deboning, cutting and packaging before reselling? I mean Angus beef normally retails for $15-20/kg no?
no it looks like the MF stickie shows an increase of 25M to 35M in consultancy profit, right RD?
1 2014 0 0 0 0 25 25 16 1.56 50 $79
2 2015 2,300 2,000 1,633 25 35 60 18 3.34 114 33 $110
he's looking only at increases vs 2014, they get the same consultancy profit from MF in 2014 and 2015 I think.
thanks for the update RD. So the by far largest profit increase comes from that single Aussie beef contract, at 29M (import) vs 11M (CA). Contributes $1.5+ eps by itself. Did you assume an ASP of $10/kg (only?) for Angus beef at 26% NM I guess:
11,000 MT x 10 x 0.26 = 29M
The shares must be deposited in an escrow account. Until Oct the shares are owned by Siaf, after Oct they are owned by ECAB but held in the escrow acct until new loan has been fully paid off ( within 3 years).
Exactly. Locked up in a third-party escrow account that the new lender can assess to in case Siaf defaults on its obligations until principal has been paid off.
Right. ECAB has nothing to lose in this deal unless it doesn't want to hold shares for more than 2-3 years? It's a win-win for all parties involved. It doesn't cost ECAB anything but the greater credibility and financial flexibility that Siaf gains thru this deal only benefits ECAB in the long run since it is willing to pay $9.90 per share converted anyway. If Siaf fails so will ECAB... Doing so helps not only Siaf (lesser dilution means higher eps in the LT) but ECAB is helping itself imo.
You think none of the chinese companies is top notch? How about Siaf? They are pretty selective though. Not sure if they would take Siaf...
After what i went thru with Siaf and KNDI over the past 4-5 years ANY is a walk thru the park (as long as you donot lose faith in your DD)...
Empty: do you think the Piacente Group, KNDI's new IR firm, would be the right one for Siaf? More than half of their clients are Chinese companies and CEO is fluent in Mandarin. Not sure how they would fit with Siaf's Nordic angle though...
http://thepiacentegroup.com/about/
Why do you think they should acquire single small farms like PF1 and CF2 before central distro centers like WC1 and SDC? Especially with all the Aussie meat (40MT per day!) going through the DCs this year why should they acquire CF2 first? Even with just 10% DC margin it's still a large profit but more importantly the rev generated at the distro level will make our top line look yummy right?
Even if we own only 10 or 20% of MF?
No he cannot disclose any material info like a quarterly rev to a limited audience and orally in a CC like that. But he can do a PR with estimates or guidance.
Pay off the loan now with cash? The 95m profit will be gone before you know it. We are not cash flow positive yet. And have dozens of big projects to finance. They need every dollar cash they can get. Did you forget that?
Stock market will be closed tomorrow in the US.
very creative financing here (if theory is correct), using shares from one loan to secure another loan at much better terms. Kudos to Yap etal.
yup I forgot to include the 25% discount. This is even better b/c the 0.9M shares issued in March to secure the new loan is an even smaller portion of the shares to be issued for the convertible note.
TF: the more bizarre thing is the millions of shares the large investor pledges as a collateral for the loan are not shares he "owns" but shares he "owes" Siaf. How can an investor pledge shares that are not his to start with but shares he "owes" and must return to Company? The only large investor that I can think of in this case who "owes" shares to Siaf but can still pledge these as a collateral is ECAB. In October ECAB stands to convert the first tranche of loan to shares at a rate of $9.90 per share I believe. Acc. to 10K page F-34:
Yup that's what RD was assuming. Maybe Solly advanced them the shares which aren't due until October hence the word "owed". I also thought they meant "owned" instead but now it all makes more sense now. JMO
If you trust RD's numbers 2015 is still a good gain in eps. $8 vs 5.5? What to complain about ?
I look at it as a 10% dilution (2M shares issued on 19m o/s) plus 3-5% APR loan. Probably very accretive in this phase of growth if it helps boost eps by > 15% as compared with no loan case. More importantly it paves the way to uplisting and larger accretive loans if used toward buying 55% of MF and other critical JVs like WC1, SDC, PF1.... Imagine where this company would be if it owned 55% of MF and the DC network.
Challe: sorry I did not see your post yday. You may be right, I said it's a speculation of mine, a conspiracy theory if you want. I just found it odd that the o/s jumped by about the exact same amount of shares (that would be needed if Company had issued shares as collateral) at about the same time when they took that $10M loan, which was about Mid March. Also the total loan is $25M and would require a total of about 2M collateral shares. I donot know of too many "unrrelated" private investors who own that amount of shares (post split) and would be willing to lend them out. Do you? Nisse is the only one I know of who may own anything near 0.5M shares (post split) but he is not "unrelated" to the Company. It would not be the first time Solly concealed something to shareholders when it comes to share issuances and dilution. But I think you made a good point pointing out that this was about a SEC filing, not a verbal statement in a CC like before. I donot know why he would not choose to say openly the Company issued additional shares to secure the loans. Maybe he felt it was not a good thing to admit openly this close to a likely and critical FN listing that has failed in the past mainly b/c of the dilution issue?
The "Period" was meant in the context that it was most likely not Solly who had lent his shares, otherwise it would be another lie to SEC that he referred to himself as an "unrelated third-party" person.
NJM : that's the problem with Solly. When he thinks 450M he says 450M. Now we missed 10% of that in 2014. Mainly bc they could not hire enough deboners at the abattoir. Cause nothing in life goes 100% the way you think it will be. So Solly should learn to promise only 80% of what he thinks he could do. If he misses 10% he still over delivers 10%. Underpromise and overdeliver is an art that not every CEO masters. What does Solly do now? Not give out any guidance at all! Blame it on unforseeable events. Hah...
Ok so we donot have even a 25% initial stake in the SDC? Is it 50/50 owned by the seafood co. and Shanghai Vigour I suppose?
The fd share count may be a little higher than 19M in 2015 if they draw the whole 25M new loans this year. Maybe 19.5 to 20M. They will need to issue 80% x 25 / 10 = 2M collateral shares assuming avg pps of 10 to be safe. If my speculation is correct. Plus the first tranche of shares that EC may want to convert in Oct IIRC. Right?
RD: can you refresh my memory about the Shanghai DC? How much of it do we own? Will all the Aussie beef contract go thru it?
ah forgot about the ownership. Good point.
what about PF2? How much profit from 11.8M rev of BGP fingerling sales and that of other broodstock? about 6M?
Post Of The Day. Thanks Donk for the Kool Aid :)
Yes they are temporarily dilutive. But they donot circulate in the free float like real dilutive shares.
I asked myself the same question and my answer is: no one. I guess Solly feels he cannot just come out and tell s/h he issued millions of new shares kept in an escrow account to serve as collateral for some low interest loans . So he came up with some anonymous "unrelated third party persons" blablabla... It just means to me it's not him lending his shares. Period.
I found the word I was looking for: treasury shares. The collateral shares even though they increase the o/s temporarily and look like regular dilutive shares are not really dilution shares since they are "locked in" in some escrow account and are not freely tradeable like our vendor shares. Once they are returned to Company they become "treasury shares" or are often canceled.
Lenders are in the business of lending, not investing. Hence they require a collateral in order to give you good terms. Uncollaterized loans have much poorer terms, like credit cards, as you well know.
Empty: here's what Company said in the PR re. the two new loans:
Very good post Carog. I agree with you.