Bashers Bonk and Sussy were dwelling on the fact that cash would be low. Probably is, but with gearing level so low, IOC has plenty of loan capacity left. And with cash coming soon from Exxon, there is NO need for secondary.
Sorry Shorts, you wont be able to cover through the secondary....
Tarue: if and when IOC receives the gazillion dollar upfront and non-contingent payment, I will admit defeat and congratulate you and the others. I have some news for you, but this is not personal. If IOC does what it has promised since...let me see here, let me check my calendar....since 2006, I will willingly eat crow.
What amazes me, truly amazes me, is how all the sycophants and supporters were talking about imminent deals every single quarter for the past 7 years, and here we are. Stp continues to blab on and on at SA about how the only argument the shorts have left is lame, that just because there has not been a deal does not mean there won't be one. This is what I called the "pigs can't fly argument" back in 2008 or so. At what point, seriously, do you just scratch your head and say to yourself that something does not make sense here. This is supposedly a "world class" resource, with the lowest costs, with record-breaking flows (the Guinness Book no less), and we are still sitting here? What happened to the end of February bids? Now we "continue to hold exclusive negotiations with Exxon"? Really?
Again, please find out, or ask Stp, when Haley's comet is coming? I want to adequately prepare.
I don't get it glen, we have been told many times by experts here the refinery value was zero or close to zero. IOC has done it again! They sure can fool people.
Sentiment: Strong Buy
The refinery has already been mortgaged. It has little value - the value is in the contract IOC has to supply refined product on a monopoly basis at above-market prices. That is valuable, for now.
The lenders are lending against inventory and receivables.
P.S. where's my mooseknuckle sandwich?
Sentiment: Strong Sell
This is a SECURED loan facility with the oil INVENTORY as security.
It is not a loan on the refinery itself -- and therefore says ZERO about the value of the refinery.
Also, remember that virtually every financial analysis by the Wall St. geniuses places a minimal value on the refinery and associated facilities -- like $5 to $10 per share, say $250 -$500 million, against which there is a $100 million refinery facility loan.
Sentiment: Strong Buy
Cash was and is low. The key is your "cash coming soon from Exxon" - if that happens, and lord knows when it would come, who knows if it will just be enough for the delineation wells and recert - or something more. Regarding this increased line, I do not believe it can be used for upstream activity - my understanding is it is a working capital facility (the tipoff here is that they called it a working capital structured facility) and generally these are drawn down against inventory and accounts receivable.
My read of the PR is that the $240M working capital line is flexing up to $270M. Specifically for refinery operations. The other loan is secured against the refinery already - this one is just "inventory and working capital" - put another way, this money can be used to buy crude for the refinery.
The other $80M is a "discounting facility". If you are familiar with these, it is basically accounts receivable factoring - look up "Invoice Discounting" on Wikipedia.
IMHO this does practically nothing to plug IOC's massive upstream burn.
P.S. Ho Ho HO
Sentiment: Strong Sell
You ARE able to put a negative spin on everything, that's why you are a basher.
It is my belief that Exxon will pay for the delineation wells and according to IOC's newsrelease Exxon will pay upfront, during and after construction. During probably meaning during delineation drilling and after recertification.
With no concrete news, I will stick to my belief and you will stick to yours, which you have to believe in because you are short.
Funny how Sussy immediately shows up to second you. Fact is, no need for a secondary.
You are 100% correct, Bonk, and it is clear that many people here (and on SHU) do not understand much about financing. This does not help IOC's cash position or cash flow at all...other than if the line were not renewed, IOC would be in big trouble. I assume IOC has suspended virtually all upstream activities and continues to stretch payables to conserve cash, all while we wait the near-certain and virtually imminent cash payment from Exxon.
BTW, did I read correctly that Hession said that the company CONTINUES to conduct exclusive negotiations with Exxon? Boy, this sure is taking a long time, but as Stp says, these negotiations can take years and years and years and years. On an unrelated note, does anyone know when Haley's comment is set to make another appearance?