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"The Company is rather confident that Triway will be successful in its fundraising program to self-finance its CapEx requirements...Thus, the Company should be positioned to repurchase both collateral shares from its lenders as well as from the market itself to help improve overall share
value."
From a quarterly report last year.
They've always had a plan, they just haven't been able to execute it because it starts with Tri-way financing. Recently they've at least moved towards having SIAF secure conventional financing to pay off the collateral share loans early. They didn't see a problem with the collateral shares before but at least have recognized it now after all this share price damage.
Because people let Mr. Market determine what is real and what isn't, and the stock price is currently at an all time low. The first loan with collateral shares will be paid off next month (that means 2 million+ shares will be returned back to the company/have to be bought back from the market if they were sold). I think this will give us a good idea of how many collateral shares have been sold onto the market. After the shareholder count TS has speculated that there are about 5 million collateral shares that have been sold (likely into strong hands like Garrett) that will be held onto for years and unavailable when the lenders have to buy them back.
It is so clear not only from reading this board but watching the intraday price action that there are short sellers and market makers attempting to "scare" investors and manipulate the price. Unfortunately, I think the collateral shares have helped them play this game but it is quickly coming to an end.
Solomon usually works through Chinese New Year and everyone is assuming the bank syndicate is made up of Chinese Banks.
I doubt anything has changed from the week before. As of last week the large Tri-way loan is still ongoing and wrapping up, and Dan still expressed the same confidence as he did on the CC in a positive outcome. My guess is that the banks probably had another request (hopefully this is the last one) but he did not give a timeline. They specifically do not want to announce anything (updates etc) until they have substantial news to announce like when the loan is officially closed. I thought Dan was pretty clear setting timeline expectations on the last CC saying he cannot provide a timeline since it is up to the banks. Aside from all ihub opinions, all evidence I've seen points to a positive outcome on the loan, which also means the subsequent shareholder friendly actions everyone has been waiting for from the company but that is my opinion.
Appreciate all the really good info you've been posting. Thanks.
Short term, most shareholders are waiting for news about the large Tri-way loan from the bank syndicate that will hopefully be announced within a few weeks, though the timing is completely up to the banks. Such a financing announcement would lead to an assortment of shareholder friendly actions that many have been sitting on the sidelines waiting for before buying. I am also looking forward to a potential conventional financing announcement for SIAF to pay off the collateral share loans early and get shares off the market and returned back to the company.
"In light of the fact that the Company does not look toward this method of financing as the optimal or cheapest means of obtaining credit, it does continue to pursue, and already has garnered more conventional means of financing to cover its ever-growing business.
It’s my view that the outstanding balances owed on the above debt will be repaid through more conventional means in the not-too-distant future, hopefully relieving us from the constant insinuation that it’s because of collateral shares that the share price is dropping, and secondly, that short-traders are no longer able to rely on the negative sentiment assumed by you and other shareholders that provides them every opportunity to successfully apply downward pressure on the market."
This was Solomon who wrote this weeks ago.
When did I say that? I said I would expect IR to have more answers after the weekend. I also mentioned updating shareholders on progress made at the Mega Farm. This can be done online through the company page with pictures/explanations and could happen in the next day or two. I did not mention anything about a PR; though as I've already stated before I wish they would do one. They won't, however, because they only want to release tangible milestone accomplishments once they are completed. It's not fun short term, but I believe it is the right move long term, especially since Dan has said the loan is still wrapping up and he is just as confident.
So whoever has been using CDEL recently has continuously been at the ask several cents and unnecessarily below the next ask price. Most sellers want to get the highest price they can..What is the purpose of this besides to blatantly push the share price down? I am perfectly content buying from short sellers.
What would you want them to say? I have already told them that a statement to reiterate things that have already been said would instill some confidence but I doubt they will do this since I have suggested this before. They are obviously very confident (and still are even as recent as this past weekend) in closing the Tri-way loan and think that will be the first catalyst towards building trust again with shareholders. As I said before, I mentioned at least keeping shareholders updated with pictures of the Mega Farm and small things like this to at least keep some communication going with shareholders who are just waiting for news.
They won't PR anything about the loan until it is 100% officially closed. They don't want to "dangle carrots" as they have been accused of before. I fully believe this is the right policy to take. Over the weekend Dan has again reiterated confidence in the Tri-way loan closing, and they are still in talks with the syndicate banks. They have not "lost" the loan as some uninformed have claimed/assumed. Like yourself, I do wish the company would put out a statement to just instill some confidence in shaken shareholders but the company believes this will be viewed as trying to "cheerlead" the stock price and would rather let the facts and tangible milestones speak for themselves once they are completed and PR'd. IR has said they will try to keep shareholders updated by posting pictures more frequently on the website about progress being made at the Mega Farm. I think for those who continuously call the company a fraud, pictures speak a thousand words for those who can't visit the operations themselves.
I fully agree and have been told IR will have some answers hopefully early next week. Although there is reason to believe collateral shares have played a part and its clear short sellers are playing around intraday, I am certain some of the selling pressure simply comes from shareholders hitting the sell button from exhaustion since I commonly see shareholders on this board coming forth saying they have sold out, they sold shares today etc.
I'm not being facetious when I ask this but what would you expect from management to show that they are taking the stock price decline seriously? Buyback shares? Pay off collateral debt to have collateral shares bought back? Carve out parts of their business like Tri-way to receive independent financing, distribute shares to shareholders, IPO on an appropriate market to receive a more fair valuation? They are working on this but it is unfortunately taking time. Taking time is not the same as never going to happen as angry shareholders have been shouting recently.
I am just as unsatisfied with the price as anyone else but am happy they have finally acknowledge the problem (financing problems like collateral shares and lack of shareholder friendly actions) and are very close to solutions (conventional financing to pay off collateral shares, closing Tri-way financing to pay back debt owed to SIAF to initiate buyback program and expand earnings). It is never fun waiting for things to materialize but fundamentals have not changed, only the price.
I am probably one of the few that agrees with you as well. The fundamentals haven't changed much from even a few months ago, and in fact have likely strengthened with the loan prospects for both Tri-way and more recently SIAF (conventional financing to pay off collateral shares) yet the price is significantly cheaper. There is very little liquidity in this stock so when anyone tries to sell quickly it obviously takes a hit, but I know there's money on the sidelines just waiting for news and the same will happen on the upside once good news is released since no one seems to believe it is coming. A belief I might add that is held without much rational reasoning besides simply not trusting what the company has told us, which I think is mainly a belief that exists because the price has been going down.
And if the price has been going down because of the selling that has come from collateral shares pushing the price down and pushing exhausted shareholders to sell as well then the situation should dramatically improve once it is announced that funds are closed to pay off the collateral shares. I think it's a big deal, considering how obstinate Solomon has been in the past, to have him now focusing on paying off the collateral shares early.
Email from Solomon: "In light of the fact that the Company does not look toward this method of financing as the optimal or cheapest means of obtaining credit, it does continue to pursue, and already has garnered more conventional means of financing to cover its ever-growing business.
It’s my view that the outstanding balances owed on the above debt will be repaid through more conventional means in the not-too-distant future, hopefully relieving us from the constant insinuation that it’s because of collateral shares that the share price is dropping, and secondly, that short-traders are no longer able to rely on the negative sentiment assumed by you and other shareholders that provides them every opportunity to successfully apply downward pressure on the market."
As I stated before, I believe the board has likely made another request, similar to when they made a request for the Tri-way full year audit. That's why Dan was very clear in my opinion about not providing a timeline. Listening to estimates by other posters on this board and using that as a timeline for your investment decisions is very foolish in my opinion but to each their own. By the way the Agricultural Bank of China loan for $15M (which by the way I think should add credibility to Dan and Solomon's ability to procure financing) took a total of 8 months from start to finish. This is obviously a much larger and complicated loan that involves several different parties so we are still within a reasonable timeline with this being considered. If you form expectations based on what people on this board say then yes you could be very disappointed.
And yes I am positive because at this price it is essentially a venture capital investment offering enormous returns in a very short period of time for a company that has already proven their concept and is profitable year after year. They aren't selling another cell phone app, they are selling seafood..to the Chinese middle class..where demand literally grows every day and is very durable.
I didn't think they could even get discussions started on such a large loan and now they are on the brink of closing. The original plan was to do a larger pre-IPO so obviously I am in favor of debt financing compared to equity financing, I just didn't think they could do it. The fact that Tri-way can even have these talks proves the COSO strategy is already working. Tri-way is officially carved out and registered, and people didn't think we would even have significant ownership in the MegaFarm and now we have 36.6% which is official now and will be reflected in ongoing quarterly reports. I was always skeptical about buybacks ever being on the table and then Solomon made it clear how serious he was about enacting a plan once debt was repaid from Tri-way. This is also a value investment of mine and I believe I understand the true valuation of this company which is far greater than $30M even without a "Mega Loan". I think most shareholders clearly understand it is undervalued but are just sick and tired of the constant share pressure which seems like we now know has been coming from collateral shares. So if this is a financing problem, then once SIAF announces conventional financing to pay off collateral shares, which is their intention and could happen very shortly, then this will solve the real problem people are tired of which is the continuous price pressure. In fact it could significantly cause the price to move up as aggressively as it fell, at exactly a point in time where fundamentals are also increasing with the Mega Farm expansion, CA back on and SJAP bottoming. I understand selling to keep your sanity though and hope to see you back when the price is back on track. I was really looking forward to the drinks on you. Good luck and good luck finding better a better investment in today's frothy market. Let me know if you find one. Best.
I would expect IR to have more answers next week. Dan/Solomon aren't available on 24/7 speed dial for IR. I also expect IR to be stepping up in terms of providing updates on the MegaFarm. I think the boiler should be installed by now, which if you read the last memo from the company would be very exciting news. Details/pictures are always great to read/see about the progress being made on tangible assets. People forget Tri-way is very profitable and capital investment through these profits is still continuously being made (though will pick up dramatically once loan financing is eventually closed).
I have always been confused by your timeline expectations and where you got them from because it wasn't from Dan. Just so everyone is aware I will post again exactly what Dan said on the conference call:
"Well I’m always reluctant to advise a time frame because the banks are the ones who drive the time table. We do what we’re asked to do, we provide what’s necessary, we meet with who we need to, and in the end we work off of their schedule.
As for what constitutes significant progress, there has been. Tri-way has submitted all relevant documents now to 5 lending institutions which have formed a syndicated bank facility, probably better known as a syndicated loan. And Tri-way’s principles have met with each of the bank’s CEOs, they’ve settled on a lending structure consisting of X number of dollars per each vehicle and the vehicles namely are stand by letter of credit, trust receipt, and a line of credit. Which all total just under $100M USD as of right now. And again this is based on what the 5 bank’s willingness to spread the risk are willing to accept. Now the reason why Tri-way has taken this approach is because of the size of the loan and by allowing lenders to spread their risk allows Tri-way the opportunity to secure the higher dollar amount especially in light of the fact that Tri-way’s collateral resources are very limited. Our assets are primarily on Chinese owned land. In the U.S. that is obviously different but with respect to what the company has built, unfortunately much of that is not available to be used as collateral against these loans but we still have a lot going on which is providing the security needed by these 5 banking institutions to take this process further. The lead bank in coordination with each of the other 4 bank creditors has already performed their due diligence, as you’ve seen we’ve had the D&B review and other due diligence, legal and otherwise. And they’ve already submitted their proposal to their board of directors which has deliberated the proposal and submitted a follow-up request for Tri-way’s 2017 audit. Now remember Tri-way’s fiscal year ends September 30th. And the independent audit, just to let you know, has been completed, it was completed this past week. And now it’s been submitted to the lead bank for further review. Since all creditors are working in conjunction with the lead bank, the proposal once having met the conditions and approval of the lead bank’s board of directors, it is then taken to the other 4 creditors for final consideration. That for all intents and purposes is to review and endorse the lead bank’s recommendation on the loan. Considering again that since all 5 banks have been working in concert throughout the process, the final proposal under consideration by the lead bank has already met whatever conditions each of the other 4 banks require to approve final sign off on the loan. This is the most recent update that I can provide so far and as usual we’ll provide details of the debt financing once the funding is secured and closing is in place."
I would say it is likely the board has made another request since we haven't received a PR about the loan yet, or Dan is trying to increase the amount since he seemed to allude to that, who knows. I am not happy with the delays either but that's part of business and those expectations have been clearly explained to me so I am fine waiting particularly knowing Solomon has also been working on garnering conventional financing to get collateral shares returned to the company early thanks to certain proactive shareholders.
Any idea on what a deal revised agreement between FD and SIAF would look like? Lower interest rate, lower conversion price? Or just paying him off completely and getting rid of the loan?
They decided not to do the memo because they thought it would simply be met with skepticism. They simply want to pay off the collateral shares with conventional financing. They don't want to talk about what they are going to do or are trying to do anymore, they simply want to announce things when they are done. I agree.
https://investorshub.advfn.com/boards/replies.aspx?msg=137316662
Phoenike posted this about a month ago in regards to the collateral shares.
"In light of the fact that the Company does not look toward this method of financing as the optimal or cheapest means of obtaining credit, it does continue to pursue, and already has garnered more conventional means of financing to cover its ever-growing business.
It’s my view that the outstanding balances owed on the above debt will be repaid through more conventional means in the not-too-distant future, hopefully relieving us from the constant insinuation that it’s because of collateral shares that the share price is dropping, and secondly, that short-traders are no longer able to rely on the negative sentiment assumed by you and other shareholders that provides them every opportunity to successfully apply downward pressure on the market."
There are other competent managers at the Mega Farm with much experience but Tony commands a level of trust for English speakers/investors and is very talented at explaining/expressing Solomon's overall vision of the MegaFarm as well as answering technical questions. I would be very pleased if he is made CEO of Capital Award and think the market would as well.
I meant those who bought at $17. I'm sure you old timers' (pre-Mega Farm or possibly even milk company?) had a lower cost basis.
Personally I don't think it's a long way back to $17 because valuation wise $17 is still very reasonable particularly if CA starts making progress on the ongoing contracts alongside the Tri-way expansion. People bought this stock for the MegaFarm story and the eventual cash dividends to come along with it. When neither happened everyone hit the sell button. My opinion is that with the loan this growth story is back on and people will return. People love to chase price; sell when others sell and buy and everyone else is buying. It has been years since the stock price has even moved sideways like this.
As always it all depends on management's ability to follow through on obvious milestones everyone wants to see happen which until this point have been delayed. The market has essentially priced that these milestones will never happen. It will only take one or two milestone announcements for the stock to rapidly and aggressively get repriced.
With the institutions coming out showing that they have actually been buyers and not sellers, the case for collateral shares being sold has grown much stronger in my opinion (I was always somewhat skeptical but have changed my mind based on the recent evidence I have seen including The Swede's proactive due diligence of the share count). So if Solomon can produce conventional financing to pay off some of the collateral shares, it will be interesting to see what happens to the share price. If nothing else, the lack of dumping of shares should be bullish for this stock even without a buyback program or any other triggers.
No one knows when the Tri-way loan will be announced. Dan repeatedly stated and emphasized on the conference call that the timing is not in their control. If the banks make requests they have to answer. And sometimes answering takes time. But he said he is confident, and the final proposal under consideration has already met the conditions required by the other 4 banks to give final approval. So it is just up to the lead bank at this point. The due diligence has also been very positive including the D&B report.
The factual evidence points to a very positive outcome, although I am prepared for delays along the way which we've already seen.
There is a good chance you will look back and realize you had sold your shares at literally the worst time, which is unfortunate considering how long you have waited but I would recommend selling so you can at least get your sanity back and we can stick to informative and constructive posts rather than your posts here lately just insulting management. Although, there seem to be several posters here that have claimed to have sold out and still hang around, which I'm not sure why.
Once you sell, would anything cause you to buy back shares again?
Dan, who is the CFO and part of the current management team bought shares when the price was around $9.
RealDutch, I am still on the fence on the buyback/cash dividend argument that has been prematurely and overly discussed on the board but since we are much closer to a loan announcement I believe the discussion is much more relevant, particularly in figuring out how to influence Solomon in any way if possible. I have recently been leaning towards your view of cash dividends to fix the credibility issue from the constant milestone delays from the company (though the Tri-way loan announcement will help with this) in order to attract institutions and retail investors that haven't had the luxury many current shareholders have had to visit the operations in person, have personal connections to management, or have connections in HK like other shareholders that have been able to verify SIAF sales for themselves.
Has phoenike already sent the letter? What do you all think is the best way to potentially convince Solomon to at least use some of the money he is planning to use for buybacks once they get the Tri-way loan for cash dividends as well? I believe even a small cash dividend would make a difference because the public would understand that this is a growth story and as the MegaFarm grows, cash dividends which may start out small would heavily increase over the years essentially making SIAF a uniquely high-growth and dividend aristocrat that is also highly undervalued..An easy sell to institutional and retail investors alike.
Why don't you just call Peter or KCSA?
Was this supposed to be written to someone else? I mean was meant to be a response to my post?
What questions did you have for them? They can be very difficult to get in contact with especially if you have never spoken with them before.
Once the loan is announced no one will care about the dual listing or AGM. The AGM was just supposed to be a nice way to officially announce the share buyback program, cash dividend policy (which I believe won't happen until at least late 2018 unless they start a nominal one, though setting an ex-dividend date will be beneficial), and the limit or formulation of outstanding share count guidelines.
The company thought there was a good chance the loan would close by December so they formulated the PR in early October to be put out once the loan was closed and announced, but it was accidentally released early by one of their new PR firms. The full year Tri-way audit the lead bank board requested delayed things and took some extra time but was submitted before the CC so that's why we're still waiting. And by the way, considering that the Tri-way FY audit was submitted about a month ago, and if you include time off for Holidays and New Year that the board of directors certainly took off, I don't think they are taking a long time by any means..Once the lead bank board approves everything they still have to go around and get approvals from the other banks as well. Dan made it clear that "since all 5 banks have been working in concert throughout the process, the final proposal under consideration by the lead bank has already met whatever conditions each of the other 4 banks require to approve final sign off on the loan".
Another poster phoenike said when he spoke with the company they told him they estimated it end of January beginning February but this estimate was back in December and obviously had the contingency that the banks could always come back and have further requests that could take longer. But as far as I know nothing else is currently needed like with the full year audit request so things should be wrapping up very shortly. So end of January, early February seems reasonable to me; I however, fully understand it could take longer and am prepared to wait as an investors and shareholder.
The idea of the letter is great phoenike but please find someone who is more familiar with writing in English. There are too many grammatical mistakes within the letter to go one by one and edit them, though I'd be happy to try to help.
I am extremely confident in them closing the loan based on the evidence I have seen and been told. Please provide one factual reason why the loan would not close at this point? You are just scared because you have obviously risked too much and been affected by the price volatility to rationally look at the situation anymore. Most companies don't spend time on a conference call to break down the details of a loan.. Nor do they take the time to write a 10 page memo addressing articles about the company. In fact, if Dan hadn't explained the loan, everyone would be the exclaiming how the loan must be completely made up. As I said before, no one believed Solomon when he said private financing was coming, and then the ECAB loan was announced. No one believed Solomon when he mentioned a potential lender in April, and then the Agricultural Bank of China loan was announced in July. They are terrible at setting timeline expectations, but all evidence points to financing being announced soon. Once they start delivering, everyone will begin to realize everything they've said is true, they have just been late on delivering it.
I believe this analyst report will become very relevant again once the Tri-way loan is announced. The price was $9 at the time with a base case price target of $15 and $45 PT (400% upside) with $80-100m USD loan...
https://www.docdroid.net/vQnDbqw/sino-agro-food-unparalleled-profitable-growth-opportunities.pdf
"In our view, growth and attractive returns on investment could unlock a potential of 400% in the shares. There is a catch however? We believe SIAF needs to raise 80-100M USD"
"Assuming no ownership in the megafarm and no spin off, we believe the company is worth 15 USD per share on a fully diluted basis. If SIAF raises capital, fast-tracks the development of the megafarm, and spins off Aquaculture as a separate entity, the upside is exceptional. We believe rolling out 50,000t capacity by 2020 will create more than 400% upside."
"We believe SIAF can reach a seafood production capacity of 50,000t by the end of 2020 and make a net profit of around 150m USD and become a share worth 1bn-dollar, representing 4-5x upside potential. The catch?" We believe SIAF needs to raise 80-100m USD during 2016 in order to unlock and fast track the potential."
The delay in closing that $80-100M in financing has been unfortunate to say the least but once it comes, sentiment will change very quickly. I'm very jealous of Garrett every time I think of how many shares he's been able to acquire around $1. He's going to be one very rich man in the years to come.