...and all is clear now....
Re: Contingency and working capital
in response to Contingency and working capital by Justin_a_lyesse
posted on Oct 14, 14 08:37PM (Log in to use the IP Check tool) [?]
This is how I'm seeing the working capital / contingency situation:
First off, let's assume that the total financing has increased to 700 million.
Farhad has said that they are seeking 65% debt which equals 455 million
He also stated in the investor's meeting that they can get another 100 million on top the 65% (maybe from African Development bank or Export Development corp or somewhere else). In any case we are now looking at 555 million of debt. It was also stated at the meeting that they currently have approximately 20 million in the bank. In addition, ICL has been issued warrants (106,000,000) which if they exercise, will bring Allana another 59 million. And one last item; if you read the agreement from Feb 2014 carefully, ICL can nominate a second board member if they invest another 15 million in Allana.
From the agreement: In addition, subject to ICL's investment of an additional $15 million in Allana (for an aggregate investment of $40 million), ICL shall have the right to nominate a second director to Allana's board.
So, this is how the math works out:
555 mil in debt (455 + 100 mil)
20 mil in the bank
59 mil from ICL for warrants (for 106 million shares)
15 mil from ICL to nominate another board member
Total: 649 million
So even if the CAPEX has increased to 700 mil, it looks like we have ~650 million of it already through debt and warrants (yes, that means more shares). So, it looks like we will have to raise about 50 million in equity. Will they have to raise that 50 mil at these ridiculously low share prices? I doubt it. Farhad has said that any equity raise didn't have to be done right away. Allana can wait for the share price to move up before raising equity.
But what about that pesky 35 mil for working capital you ask? Well, Allana already has ~20 mil and add to that the 15 mil from ICL to nominate another board member and - voila! - there's your 35 mil in working capital.
So when all is said and done, we will be fully financed and have 430 million shares outstanding (current 324 mil + 106 mil).
One last thing: The CAPEX already INCLUDES 15% for contingency. So there is no need for extra monies.
So all in all, not too bad. And this is not even taking into account the potential for SOP.
This is just my opinion and my take on the whole situation.
AI
