Summary of my 2 h discussion with S last evening in Stockholm: (post 1 of 2)
Divest: I asked him if he would consider divesting some of his assets and use the money the support the stock. I interpret his answer that it would be difficult to find a buyer due to the condition/mess of the assets. After that I asked him why he didn’t write down the value, but he said that the auditors among others confirms the values. The truly great assets belong to Tri-way and they are closer than ever to obtain substantial founding. I’ll get back to this later. He emphasized that they have put all CAPEX on hold for the other assets.
I told him that the former CFO, Bertil, spoke of the land leases as hidden gems since the prices had increased a lot since SIAF signed up for it. So why don’t they sell it? The only industrial zoning is HAS and they have buildings there already. Rest of the land is agricultural land.
I asked him if they have plans to defend the stock after they announced the X-date regarding the Tri-way distribution. His answer was that there would be no need to protect the stock (I interpreted that he expects some of the additional game changers in addition to financing for Tri-Way would have occurred during within that time).
I asked him if they have signed any new board members in Tri-way but apparently, they only have that Indian guy (former CEO of a listed IT consultancy). The reason for signing him is that they have exiting stuff going on in India. Of course, they are engaged in discussions with other candidates.
What happens when Solomon decides to step down? I mentioned that I have been a shareholder since pink sheet and that I’m not very impressed of my returns so far and that it seems likely that I need to stick with this investment a few additional year until I’ll be rewarded for my patience. He told me that he will only be a regular board member in Tri-Way with no role in the operations. As a following up question on this, I pointed out that the potential value for the other assets won’t realize full value any time soon. Then he told me they have a few candidates that they are testing but it is tricky to find the right candidate (Solomon is an engineer, finance trained, almost a law degree and have a life time of experience in the fields that concerns SIAF).
I told him that shareholders have sold out due to that they don’t trust the communication from the company. I also pointed out that I sold some of my share due to the recent mess with Tri-way distribution and asked him how they could miss that they had to fil the form F-1. His answer was that that they have had discussions with five layers about this and 3 of them said that they would not need to fil the Form F-1, another didn’t have any clear answer. When they asked SEC, SEC told them that they didn’t have the fil the F-1. However, once they got back to SEC at a later stage, SEC refused to give them a free letter, hence, to not risk the company, the management team with advice from the advisors, decided to fil the F-1 anyway, hence the delay. My replay on this was why the hell don’t you tell the market about this, that the reason for the delay in not because you are incompetent but rather that SEC can’t give you straight answers. Then he replied that he is not interested in engaging in a conflict with SEC. Fair enough for me at least.
If anyone wonders, the weird item on the balance sheet, within the line construction in progress, fish pond USD 17m is work that SIAFA/CA performed for Tri-way. This receivable will be settled when Tri-way obtains financing (which I personally expect to happen within the next two months). Some of the money will be used the reduce the collateral shares but we won’t get rid of all the collateral shares until perhaps mid-2018.
I asked him, since Tri-Way will grow very heavily the coming years, is it CA that will provide SIAF with operational cash-flow that will be used for dividends? He said that due to the very high amount of the debt financing that they are negotiating for now, and due to the constructor deals that they are discussion with, and later pre-IPO money, Tri-Way will be able to both pay dividends and grow at the same time.
More coming in my next post (2-2).
