Petropavlovsk Share Discussion Threads

[cl2201] 28/12/2016 12:53

Who are they selling to is the question.

[tsmith2] 28/12/2016 12:35

Polo/lamest out?

[grbaker] 23/12/2016 12:28

Good find Seppsuess.

Here's a Google translation of that article:

"
Lars Windhorst prescribes a savings program
By Thomas Werres 4.677

Sapinda's financial hardship has forced Lars Windhorst (40) to invest in savings. As the manager magazine reported in its new issue (release date: 16 December), the CEO and principal owner has introduced a cost reduction of 25 million euros at Sapinda. The measures are mainly taken by outsourcing offices in Hong Kong and Moscow.

In addition, according to the report, Windhorst had to accept a short-term loan of 200 million euros from long-term financiers. Half of the loan is invested in a capital increase at Sapinda Holding, the company's management company. The remaining 100 million are intended for the holding company in the form of a shareholder loan. This allows them to keep their investment companies running smoothly.

The actions had become necessary because, at the end of November, Abu Dhabi Capital, Windhorst's most important sponsor, had surprisingly withdrawn the pledge for a large deal.

etc.
"

[seppsuess] 22/12/2016 13:16

Founder of Sapinda is the German Lars Windhorst
hxxp://www.manager-magazin.de/koepfe/lars-windhorst-sparprogramm-bei-sapinda-gruppe-a-1126213.html
a guy who is a professional fundraiser for all the companies, he has founded up
to now since his teens and then went bankrupt.
A bancruptcy genius.
Now he runs out of money again.
At the moment this should not be a danger.

[galeforce1] 22/12/2016 12:03

If Renova get to 30% they have to make a cash offer for all shares they don't own.

Presumably the convertible bonds are considered as shares under LSE rules.

So Renova has 4% headroom before that happens.

[grbaker] 22/12/2016 11:54

P.P.P.S. It's also worth noting that a Default or Cross-Default Event can cause the Bonds to immediately become due...

Should POG default, e.g. due to issues at IRC (that being a Cross-Default Event), then the bonds become due (POG must pay up for them all).

In this event, a large bondholder (or group of Bondholders) can step in an take control of the Company.

I don't know if this is what Renova are up to, either.

We do know that some of the Bondholders (and, in particular one Company called Sapinda) did their level best to cause POG to default on their bonds in early 2015. Many other Companies fail to fight off their Bondholders; and either total equity loss for shareholders or dramatic dilution can be the result.

At present, save for a default event, POG is OK until 2020.

Another possible approach/bid for control of POG might occur if a large group of bonds were converted at once and POG was forced to issue shares (being unable to elect to pay said bondholders cash instead).

AIMHO, NIAI etc.

Of course, it could all simply be that Renova is showing support for POG and nothing more, by buying POG shares...

[grbaker] 22/12/2016 11:45

Something must be afoot Wally. Renova keep adding and are now the largest shareholder. Frankly their holding make me nervous.

[grbaker] 22/12/2016 11:44

P.P.S. The Bonds can't be used to vote at e.g. POG General or Extraordinary General Meetings, as far as I am aware: unless they are converted into shares first. (The process is, the bonds are first converted into preference shares and then immediately into actual, vote-able, POG shares).

See:

"
5. Voting and General Meetings

(a) Founders’ Shares shall entitle the holders thereof to receive notice of and to attend and vote at general meetings of the Issuer. Preference Shares shall entitle the holders thereof to receive notice of general meetings of the Issuer but not to attend and vote thereat.

(b) On a poll every holder of Founders’ Shares who (being an individual) is present in person or by proxy or (being a corporation) is present by representative or by proxy shall have one vote in respect of each Founders’ Share registered in the name of such holder.
"
Page 80 (PDF page 83):


Either the Issuer (effectively POG, Petropavlovsk 2010 Limited to be precise) or the Bondholders can ask for the Bonds to be Converted into actual POG shares (and the Guarantor - also POG, Petropavlovsk PLC. - has the option to pay a Cash Value in lieu of delivering POG Shares following Conversion).

You can also ignore the 'Founders Shares'... Renova don't have any of those as far as I know (they were issued to PM and PH, if memory serves); and only 100 can be issued according to the T&Cs.

[wallywoo] 22/12/2016 11:33

Hmm. may be an attempt at trying to control POG going on. Might see a board shake up at some point. All very Russian !

[grbaker] 22/12/2016 11:32

P.S. Details of the Bonds mentioned above are here:

[grbaker] 22/12/2016 11:27

Here's the current data for Renova and co, as far as I know.

Renova Asset Holding Ltd / Renova Holding Ltd (TZ Columbus Services Ltd): 483,992,987 shares / 14.764%

+ Polo Company S.A. (Lamesa Group Holding S.A. / Lamesa Foundation):
145,075,249 shares / 4.4211%

And on top of that they now also control:

225,674,382 Convertible Bonds (ISIN: XS1201840326) / 6.8774%

Therefore, total shareholding controlled by Renova (that we know about):

629,068,236 / 19.1851%

( Plus the bonds (6.8774%) = 26.0625% )


The holdings data on POG's website is dated 9 November 2016:




It is still unexplained what Renova (via their various vehicles, such as Renova Asset Holding Ltd, Renova Holding Ltd (TZ Columbus Services Ltd), Polo Company S.A. (Lamesa Group Holding S.A. / Lamesa Foundation)) might want from POG. Could simply be they see a hudegly undervalued investment opportunity; could be a prelude to some kind of business deal, merger or offer.

GLA.

[galeforce1] 22/12/2016 11:13

Wallywoo

I was just trying to figure out the latest shareholdings document. They always seem designed to be as complicated as possible! It's all made even more complicated with POG by the existence of convertible bonds.

My understanding is that Viktor Velselberg now owns 26.05% of the voting shares, via:

Polo Company, Lamesa Group and Lamesa Foundation - 11.3%
Renova Asset Holding - 14.75%
According to the shareholdings info page on the POG website Polo/Lamesa hold 10.49% (344,252,151 shares. I guess that is now out of date. They now own just under 371m shares.

[wallywoo] 22/12/2016 10:48

18M extra shares purchased in the last holding RNS. Bodes well for 2017 IMO

[grbaker] 21/12/2016 11:26

Also might be worth a look:



(Pages 66 and 68)

(
)

[wallywoo] 21/12/2016 11:08

Personally I think IRC will be self sustaining from now on. As POG shareholders that is all we should care about (they will not be a burden).

The key points here are then the high grade underground and open pit gold coming on stream and POX start up, thus leading to higher production / lower cost. Thus leading to large cash inflow next year. This will rerate us IMO

[grbaker] 21/12/2016 11:00

Yes, and Iron Ore was much, much higher when IRC started the project in 2010.

OK, here's a small bit of info from IRC's last (From slide 13):

"
Low cash cost: US$ 34/t
(US$ 28/t with Amur River bridge)
"



The question is, is that their 'All-in' cost or not? I personally suspect that their all-in costs will be much higher; so I'm sticking with my guestimate of $50/t.

So, K&S should be viable with iron ore over $60/t; but we're not going to find out for sure until they've been mining for at least a year. Then there will have to wait for their results to be published.

So, as far as I can work out right this minute, the bi-annual interest payments are an excellent gage of how they are doing. (I.e. can they pay them without either amending their finance agreement or issuing shares to new investors).

Of course, if General Nasty would cough up for what they agreed to; IRC would be able to make the interest payments...

If anybody has any other useful (or contradictory) info related to any of the above; please post it!

[galeforce1] 21/12/2016 10:59

Grb

Thanks for all that v useful information.

A breakeven price of $50 for IRC sounds OK. I see the current spot price of iron ore is $73 per tonne.

But I'm sure the project was planned with the assumption that the Amur Bridge would now be finished - giving IRC a significant competitive advantage in selling to steelworks in northern China.

[grbaker] 21/12/2016 10:51

Hi Galeforce,

I'm honestly not sure about that. My gut feeling is that they need iron ore at somewhere around $50 to break even.

I'll do a bit of digging; and post back with what I can find...

The Amur Bridge has been much delayed; and is clearly key to IRC's future (assuming iron ore prices remain low).

[grbaker] 21/12/2016 10:48

Found this on the IRC (K&S) Project Finance Facility with ICBC (bold added by myself):

"
IRC: 2015 ANNUAL RESULTS
Thursday 31 March 2016: IRC Limited (“IRC” or the “Company”, together with its subsidiaries, the “Group”) is pleased to announce its Annual Results for 2015.

etc.

Bank loan from Industrial and Commercial Bank of China

On 6 December 2010, LLC KS GOK, a wholly owned subsidiary of the Company, entered into the HK$3.11 billion (equivalent to US$400 million) Engineering Procurement and Construction Contract (“EPC Contract”) with the China National Electric Engineering Corporation (“CNEEC”), contractor at the twin deposits of Kimkan and Sutara (“K&S”) project for the construction of the Group’s mining operations at K&S.

On 13 December 2010, the Group entered into a project finance facility agreement with ICBC (the “ICBC Facility Agreement”) pursuant to which ICBC would lend US$340,000,000 (equivalent to HK$2.64 billion) to LLC KS GOK to be used to fund the construction of the Group’s mining operations at K&S in time for the start of major construction works in early 2011. Interest under the facility was charged at 2.80% above London Interbank Offering rate (“LIBOR”) per annum. The whole facility amount is repayable semi-annually in 16 installments of US$21,250,000 each, starting from December 2014 and is fully repayable by June 2022 .

etc.
"




I think that's the pertinent info on IRC and the Project Finance repayments.

NIAI, please DYOR and, as always, GLA.

GRB.

[galeforce1] 21/12/2016 10:43

Grb

"The amount paid to ICBC comprised loan amounts received pursuant to certain loan agreements entered into by the Group with lenders who are third parties independent of the Group, and internal cash resources of the Group."

IRC obviously found a lender for the emergency $10m. They are not disclosing the terms.

Do you know whether IRC is economic before completion of the Amur Bridge?

[grbaker] 21/12/2016 10:24

On the IRC Project Facility payment, here's the text of the announcement from IRC:

"
UPDATE ON PROJECT FINANCE FACILITY

Wednesday, 21 December 2016: IRC Limited (“IRC” or the “Company”, together with its subsidiaries, the “Group”; Stock Code: 1029) makes this announcement pursuant to Rules 13.09(2)(a) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”) and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong).

As stated in the Company’s announcement dated 1 December 2016, a US$340 million project finance facility between the Company’s wholly-owned subsidiary, Kimkano-Sutarsky Mining and Beneficiation Plant LLC (“K&S”), and the Industrial and Commercial Bank of China Ltd (“ICBC”) was entered into on 13 December 2010 (the “Project Finance Facility”), with the amount outstanding under the Project Finance Facility being US$255 million and an instalment of principal and interest of approximately US$26 million due for payment by K&S to ICBC on 20 December 2016.

The payment of approximately US$26 million to ICBC was made on 20 December 2016, within the required time frame.

The amount paid to ICBC comprised loan amounts received pursuant to certain loan agreements entered into by the Group with lenders who are third parties independent of the Group, and internal cash resources of the Group.

The Group continues to be in discussions with ICBC regarding further proposals for a restructuring, amendment or waiver under the Project Finance Facility.

etc.
"

[grbaker] 21/12/2016 10:12

Bit more here also:



Looks like we'll have to wait until 2018 (assuming no construction overruns) for IRC's freight costs to decrease.

GLA.

[grbaker] 21/12/2016 09:49

Yes, good news out of IRC.

Now what we need is that Amur River bridge completed.



See also:

"
An Unfinished Bridge, and Partnership, Between Russia and China

By ANDREW HIGGINS
JULY 16, 2016

etc.

Tougher still was the question of who, on Russia’s side, would get construction contracts potentially worth hundreds of millions of dollars. The Chinese decided years ago to entrust the construction of their portion of the bridge to a state-owned engineering company, which quickly got to work and, according to Chinese state television, finished the job two years ago.

But in Russia, where state-funded projects invariably go far over budget and yield expansive opportunities for theft, it took until June to choose among different construction companies, each with powerful backers in Moscow. The winner was SK Most Group, a well-connected private Russian company known for its role in building a bridge in Vladivostok that ended up costing the state more than $1 billion.

The recent arrival in Nizhneleninskoye of heavy construction equipment has raised hopes that the bridge to China might finally be finished. The regional government, in response to written questions, said the delays were because “this project is unique with no analog in world practice and required the solving of a long list of questions.” The government said the Russian portion would cost 9 billion rubles (around $140 million) and would be finished by June 2018.

Chinese criticism has stung Russian pride. In a recent interview with a local television station, Dmitri Astafyev, the head of Rubicon, a state-controlled company supervising the project, urged China to curb its criticism.

“We’re being criticized because our partners in China have built two kilometers already while we’re not able to build as little as 309 meters,” Mr. Astafyev said.

“While the Chinese are, of course, talented, they have, for starters, built the easy part,” he said. “But the key point is the following: They say they’ve built the bridge. Good. But it’s not suitable for traffic.”
"



And:

"
Work on bridge linking Russia to China to start in summer
8 Apr, 2016 14:24

The construction of a bridge across the Amur River, which will connect the Russian city of Blagoveshchensk with China’s Heihe, will begin in the summer. It will be built from both banks simultaneously.

A railway bridge over River Amur in Khabarovsk. (RIA Novosti/Vyacheslav Reutov)China allocates $96mn for Sino-Russian Amur Rail Bridge
The project will be based on the principle of territoriality: Russia will build the bridge from Blagoveshchensk, while the Chinese will do it from Heihe. The connection will be made by Russian companies.

"We and our Chinese colleagues are ready to discuss all the remaining issues so that we could prepare concession and loan agreements by May or June," Amur region spokeswoman Marina Dedyushko told TASS.

The bridge is expected to cost $280 million at the current exchange rate. The regional authorities plan to finish the work within three years and open the bridge in 2019.

The first stage is to build a road bridge across the Amur River and next a railway bridge.

When the construction is finished, the Russian side of the bridge will become the property of the Amur region; the Chinese side will be owned by Heilongjiang Province.

The bridge is expected to reduce transport costs for business, stimulate the development of joint investment projects and help exports and imports in the neighboring regions to get to the destination point faster.
"



Plus:

"
Bridge Between Russia, China Across Amur River to be Built in 2018
© Sputnik/ Svetlana Mayorova

BUSINESS 16:45 14.09.2016Get short URL 21101121 The Amur Bridge Project connecting Russia and China will be completed by 2018.

MOSCOW (Sputnik) — The construction of the bridge across the Amur River connecting Russia and China is expected to be finished in 2018 since all the organizational difficulties are over, the "Izvestia" newspaper reported, citing Russian Transport Minister Maksim Sokolov.

According to the newspaper, the entire project was supposed to be commissioned in 2017 but stalled due to obstacles. The situation moved forward after Presidential Envoy to the Far Eastern Federal District Yury Trutnev instructed to determine contractors and deadlines.

The project involves the construction of two bridges between Russia’s Blagoveshchensk and China’s Heihe and the city of Tongjiang in China's Heilongjiang Province with Nizhneleninskoye in Russia’s Jewish Autonomous Region for freight traffic. The main bridge would increase the turnover of cargo by approximately 10 million tonnes and significantly shorten the distance for shipments through Heilongjiang to Moscow and Khabarovsk.
"