With so much great football on the tele, I was able to multi-task. Stp asked me to provide at least five misleading, incomplete, or misleading press releases that IOC has issued over time. Here is that list. Now, keep in mind that the company's website has faulty links, so many of the older press releases are unavailable...and I found several of those to be problematic. But I cannot access them now. In addition, I am not saying that IOC has lied in these press releases, and Stp is confused about that. Lying is one thing, while being misleading, incomplete, and/or inaccurate is another. Here goes:
1) http://www.interoil.com/newsrelease/2010-08-11_Credit_Facility_Final.pdf This is misleading because the 10% rate ignores the $1.0 million finance fee, which was buried in the quarterly report, and it brought up the APR on the debt to over 20%. I think you even conceded this was inappropriate. Well, you said it looked to be a “favor” from the company to Civelli, which kills me.
2) http://www.interoil.com/newsrelease/2010-03-29_Response_PR_final_.pdf coupled with http://www.interoil.com/newsrelease/2010-08-31_Settlement_Final.pdf . Note that in first release, the company states that “InterOil and its subsidiaries were not party to, nor otherwise involved in, the Nikiski Partners filing referenced in the article.” How curious and incomplete that initial press release must be since the later press release indicates that “it has entered into an agreement to settle all claims against it and its subsidiaries”. Wait a sec! They were not involved? Oops. Well, as the latter press release goes on to state, the Company “will issue 199,667 common shares to the plaintiffs,valued at $12 million based on a volume weighted average price calculated over the ten trading days prior to execution of the settlement agreement.” What a joke.
3) http://www.interoil.com/newsrelease/2008-08-13_Second_Quarter_2008_Financial_Results_NEWS_RELEASE_FILING.pdf coupled with any number of other quarterly financial press releases. Note that when the company reports a net profit, they mention it in the press release title. Not so, when they report a loss. While factually correct, this is misleading for a couple reasons. One is let’s face it. IOC reporting a nominal net profit is simply not a big deal. It’s meant to make a big deal out of something, which is a big “who cares”. That’s not too material, in my view. The bigger issue is that the net profit highlighted in the press release includes non-recurring gains, which distort the results (which they pump big time by stating that the results are a company “record”). There was a $10.2 million gain on the sale of certain property and a foreign exchange gain of $3.5 million. The latter was interesting because it appears nowhere in the initial press release, but then shows up in the financial statements. They buried it in the press release. Gotta love that! Anyhow, the sum of these two things materially changes the picture of the reported results.
4) http://www.interoil.com/newsrelease/2010-05-25_OperUpdate_final_.pdf This is misleading because they characterize – on several occasions – the funds received from Mitsui as a “payment to fund the Front-End Engineering and Design of the proposed condensate stripping plant. An initial payment of $2.2 million was recently received and is representative of the commitment by Mitsui to further the FEED process. InterOil expects further instalments in the near future to cover costs already incurred by InterOil on the project” when they are really an “advance”. That is the word they should have used to indicate that the funds are really a loan until FID is reached. The way they have worded it in the whole paragraph is incomplete and misleading.
5) This is a doozie. On September 27 of 2011, the company issued this press release: http://www.interoil.com/newsrelease/2011-09-27_Project_Update.pdf, which states in its header that “INTEROIL’S GULF LNG PROJECT IN LINE WITH PROJECT AGREEMENT.” And yet, a mere three days later, they issued a completely different press release: http://www.interoil.com/newsrelease/2011-09-30_Financial_Advisors_Final.pdf. This release is a clear acknowledgement that the company was not in compliance with the Project Agreement.
6) http://www.interoil.com/newsrelease/2011-06-21_OPIC_Loan_Ammendment_Final.pdf This press release really puzzles me on a whole host of levels, and is incomplete and misleading. One issue is that the entire release is about a release obtained by PIE Group LLC, an entity controlled by Mr. Mulacek, related to the OPIC Loan. There was no change in IOC’s continuing obligations or guarantee, so why this needed to be disclosed via a press release is beyond me. The financial statement footnotes make no mention of this fact, that certain PIE assets acted as additional security for the loan. If anything, this is a negative vis a vis IOC, since they are now the sole collateral for the loan. Then, the press release says PIE Group LLC has informed InterOil that” it will distribute the common shares to its individual members and will be dissolved. The effect of this distribution will be a reduction in the number of InterOil’s common shares controlled by Mr. Mulacek and a less than corresponding increase in his personal holdings.” Hmm. If it is to be dissolved, that can be done very quickly, and yet, the company continues to pay PIE consulting fees? And where did the shares go? To others who can sell? There are as many questions than answers. And, finally, Collin Visaggio, InterOil Chief Financial Officer, commented, “I am pleased that we have restructured the existing debt arrangement in preparation for further investment in the Gulf LNG Project.” But, this is not true, as indicated above. IOC does not benefit one iota from this change, but only Phil.
7) http://www.interoil.com/newsrelease/2011-04-11_Floating_LNG_Final.pdf. Bonk has written extensively about the conditional guarantee required by Samsung, and I believe he found it elsewhere, in the Flex press release. The press release makes it sound like a no-brainer, a done deal, and we now know it is anything but.
I give you that. I hounded you for the best part of two years to substantiate your claim that IOC has a 'history of misleading PR's'
And you finally provided some substantiation, thanks for that.
But it's now quite clear why you were so reluctant to do this, because as I expected (as I've been reading these PR's for five years myself), not much of a history of 'misleading' is uncovered, even by someone absolutely determined to find stuff and magnify it.
Apart from the Civelli loan, there really isn't much beef, if any. And since you blasted Morgan Stanley for using a 12% discount rate in their valuations, perhaps you're not the most obvious person to blast them about the rate, even if I agree with you on that (not the MS discount rate though).
And even the Civelli loan PR, one could say that the rate itself wasn't so high and perhaps the writer of the PR wasn't aware of the $1M fee attached to the loan.
But let people judge these PR's for themselves.
"199,667 common shares to the plaintiffs,valued at $12 million"
Those shares may have been trading at $60, but per cell O13 on Sam's spreadsheet they are really worth $500 per share ($515.89 specifically), which means it was really $100 million in value they gave up.
Interesting, Bonk. Well, as you can see, as I went through the press releases, I found similar inconsistencies. The most telling was the one about the Texas lawsuit, where in just a few months, they did a total 180, and from stating that there was no liability, that the company was not a party or a defendant, the next release was that Interoil had issued a boatload of shares to settle. This sounds bogus to me, and I believe was likely done as a favor to Phil.
All you can say is that nothing is as it seems with this company, and that is why I become more certain every day that this company ain't seeing $100 or anything even close anytime soon...
Dear Binck. Just wanted to update you on Carl Caserta and Lighthouse Capital. 2011 filing:
see note (18) for details
SEC bans obviously don't mean much, huh?