Burford Capital Share Discussion Threads

[time_traveller] 25/9/2023 16:18

That Cairn dispute has been going on even longer than Argentina!

[extrader] 25/9/2023 15:57

Hat tip to JammyC

Artem Fokin discusses Burford winning the YPF case + fundamental thesis post-trial $BURToday 13:48


This is an example Artem quoted (Burford-financed) :


Cairn, Indian govt, $ 1.7Bn judgment, Paris properties...

Analysts say New Delhi’s unwillingness to honour the international award follows a pattern of the Modi government’s refusal to acknowledge errors in governance.

with this outcome



India Update

Cairn is pleased to announce that it has entered into undertakings with the Government of India in order to participate in the scheme introduced by recent Indian legislation, the Taxation Laws (Amendment) Bill 2021 (the "Taxation Amendment Act"), allowing the refund of taxes previously collected from Cairn in India.

Subject to certain conditions, the Taxation Amendment Act nullifies the tax assessment originally levied against Cairn in January 2016 and orders the refund of INR 79bn (approximately US$1.06bn*) which was collected from Cairn in respect of that assessment...."

Let's see if history rhymes...

[stentorian] 25/9/2023 11:33

There was certainly a lot of "double-entry" going on between married directors :-)

[tomtrudgian] 25/9/2023 09:40

I hope this is wholly irrelevant, Extrader: I just wonder if the answer may be that Burford have too many very experienced lawyers, and too few qualified accountants and bankers.

We have had three Chief Financial Officers (CFO) in less than six years. Neither was a qualified US Certified Public Accountant (CPO), nor a qualified UK Chartered Accountant, nor any other type of accountant.

None of the Burford executive directors are qualified accountants either.

[extrader] 24/9/2023 15:10

Hi Tomtrudgian,

I joined in the conversation at an advanced stage and may have (strike that - obviously) misunderstood.

On the more general issue of pricing, it may (only half joking mode) be that bankers welcome the (rare) opportunity to get one back on the lawyers;-> !

ATB

[tomtrudgian] 24/9/2023 13:46

Thanks Extrader. Your posts are always informative and often about matters I had not even thought about.

However I cannot answer your post timed 17.53 as I did not understand it. My posts about the 9.25% bond were trying to introduce a fresh discussion. They would have been followed by why the bond was required, why did it need to be accepted at nearly 3% above the preceding bonds, and in particular why was it for 8 years fixed to 2031 without any break clause?

Followed by why do litigation financiers have such a poor credit rating, and is their market maxed out?

Burford is not alone. You may have read the Full Year 22/23 LCM results announced on 19 Sept 23:
Their new debt is at 8% plus an unstated ‘lender profit participation fee’, plus a 1% non utilisation fee, all capped at 13%. Oh yes, plus a AUS dollar facility fee of 1.613m.

The notes also state that the LCM AUS tax will increase to 30% in 2023 from 25% in 2022. Why? Solely because the LCM turnover is now above a 50m statutory watershed. Always read the small print guys, it’s audited unlike the director’s reports.

[extrader] 24/9/2023 08:52

Meanwhile, on a surely more positive note, SaudiArabia's Aramco oilco has closed its first major deal in S America, in neighbouring Chile, see

hxxps://newsrnd.com/news/2023-09-15-aramco--the-world-s-largest-oil-company--lands-in-south-america-with-the-purchase-of-chile-s-esmax.Sk5CkBMyT.html

.."Esmax's presence in Chile includes retail fuel stations, airport operations, fuel distribution terminals and a lubricant blending plant.

Aramco's entry into the South American country marks the Saudi giant's entry into the region, with a view to continuing to expand in other countries..."

Starting with traditional hydrocarbon-related industries that it knows well, Saudi Arabia is also interested in investments in green industries eg green (renewable-sourced) hydrogen and lithium, as well as conventional agriculture goods and services, where Argentina has a lot to offer.

[extrader] 24/9/2023 08:32

Interesting exchange on the lse board :

BlueWiley asks
Mr Marroc - As someone with a deeper understanding of Argentina can I ask the following questions

Will Milei win the election?

Do you think he will work with Burford to find a solution?

What do the general public think about the YPF award and is the subject being discussed during the election campaign?

Mr M replies

.."1) The primaries showed us that 30% of those elegible to vote, didn’t. This proved to be beneficial for Milei who ended as the most voted candidate with 29% of the vote (27.8 Bullrich, 27.3 Massa). Too tight. For a country who usually votes center-left or left, the fact that a Libertarian won in August hints that Argentina is ready to make a complete U-Turn. Yes, Milei could win but it is too soon to tell whether he will need a runoff or he will win next Oct. 22.

2) The award has had unprecedented coverage in Argentina for a case that, throughout 8 years, has only been in the spotlight whenever a major ruling was out. Only a handful of individuals made sure that the public remained aware of the government’s past mistakes by covering this litigation at every single step. Honestly, this case as well as others, unfortunately won’t switch anybody’s vote. It’s too technical for most of the population.

3) Collecting is the 16 billion dollar question. I am not allowed to comment on that in much depth. But, let me say a couple of things. What BUR did on Friday, was a mistake in my opinion. Burford should have waited until we knew the identity of the new president and then start official talks with him or her. Then, if you don’t see any willingness to work out a deal, then you can enforce. Waiting a few more weeks to enforce a judgment after an 8-year long litigation will not harm anyone. I can tell you that both Bullrich and Milei have these cases in their radars and they are both individuals willing to sit down and produce a healthy exchange of opinions and ideas to resolve this thing..."

Some helpful insights into the complexities there !

If the local pols make YPF and who's responsible an electoral issue, that's one thing.
BUR as an outsider raising its profile as an issue is another - is it seeking to influence the outcome?

And what if 'its' preferred candidate/candidates do(es)n't win?

This telenovela could run for a while yet.

[extrader] 23/9/2023 19:53

Isn't that implied in the quote above ?

.."also "we don't need this capital today, but we're being opportunistic in pursuing an attractive market condition" he then went on to say they would either use it for investment or retire other bonds.

Isn't the 24 March 2021 RNS for the 6.25%, not 9.25% bond?

Or are you asking for the source article in confirmation?

[tomtrudgian] 23/9/2023 17:54

Thanks Maddox. We are all aware of the reasonable (but not ‘excellentR17;), Burford liquidity position in March 2021. We are all aware that the then cheap UK interest rates were increasing. Few, including myself, realised that the interest on UK bonds would be largely disallowed against UK tax.

Nobody could foresee the low Burford 2021/2 cash realisations, volatile UK interest & exchange rates, and prime ministerial changes.

My question remains unanswered. Where at the time of the 9.25% 400m dollar bond issue did Burford say the debt was not needed?

Tom Trudgian

[maddox] 23/9/2023 12:51

Hi Tom,

24 March 2021 - the day of the RNS 'BURFORD CAPITAL ANNOUNCES PRIVATE OFFERING OF SENIOR NOTES' initially for $350m.

Chris Bogart said "We have an excellent liquidity position and the strongest balance position we've ever been in, with a lot of incremental capacity....' and

"I also just want to comment on the announcement this morning of our launch of a $350m debt offering...we're an opportunistic issuer that would take advantage of attractive terms .....and we have strong liquidity without it"

also "we don't need this capital today, but we're being opportunistic in pursuing an attractive market condition" he then went on to say they would either use it for investment or retire other bonds.

I've edited out the extraneous detail for the sake of brevity.

Regards Maddox

[papy02] 23/9/2023 12:40

Tt, a minor side note - I think Bur3 is a sterling bond and is still trading?

[tomtrudgian] 23/9/2023 10:55

Where, Maddox, did Burford say they ‘did not need’ the 400m US dollar bond at the time of borrowing it @ 9.25% fixed for 8 years fixed? Even the commissions payable to internal and external lawyers & stakeholders following the superb YPF judgement had to be paid in Q2, after receipt of the 400m dollars.

The notes to the 2021 and 2022 results show that they wished to redeem all of their remaining Sterling bonds. So they did, before the Liz Truss budget debacle, the exchange rate volatility, and so unfortunately before the 400m dollar bond was agreed.

The small print (see my posts of 10 & 11 Sept) shows the penalties they had to pay to the bond issuers, and the consequent exchange rate costs.

Why, when the UK bonds had lower interest, did they agree to 9.25%?
The 2017 UK Corporate Interest Restriction Act removed the previous UK tax deductibility of sterling interest paid on activities. The Burford Sterling bonds were mostly recent and fixed, so Burford had few options.

Just bad unforeseeable timing. Burford’s cash flow must be a nightmare to predict. Nobody’s fault.

[djderry] 23/9/2023 10:21

Thank you,I misread the court filing,perhaps it was the early hour of the posting! Yes,to be given permission to seize assets only after a thirty day period.
Let the games begin,after I've woken up.

[extrader] 23/9/2023 09:58

Hat tip to Renegade

Seb Maril is on the case:

hxxps://www.lanacion.com.ar/economia/ypf-piden-a-la-jueza-empezar-a-embargar-en-30-dias-nid22092023/

And:



I think that in fact Plaintiffs are suggesting there should ONLY be a 30 day embargo, BEFORE they can start seizing assets....

Let the games begin...

[three black crows] 23/9/2023 06:53

Seizing of Argentine assetsI would not be surprised if Burford start the process of seizing something in order to get them around the negotiating table.Burford will have drawn up a list of what they can get their hands on quickly. Let's face it, Burford have had many years to plan this. Execution is about to start.

[djderry] 23/9/2023 06:16

In the Petersen matter,it seems management and lawyers are playing ' good cop,bad cop'.In the latest filing,Plaintiffs are suggesting there should not be a 30 day embargo on seizing assets as the Republic has no intention of paying.
Contrast that with the soothing words of Mr.Molot on the results' call.
Let the dance begin.

[tnt99] 22/9/2023 19:33

How long till this share hits 20 pounds?

[nigelpm] 22/9/2023 18:49

Always happens with a falling share price. Punters neglect to realise that it isn't management that control the share price but the market and it can remain irrational for long periods of time.

[maddox] 22/9/2023 18:38

Agreed tt,

The first $400m bond issue they did in the US was done to establish their credentials in the US Bond Market - they actually stated that they didn't need the money at the time. Establishing a profile and track record that gives you access to cash when you do need it is important.

[tradertrev] 22/9/2023 13:30

Blimey, there are a lot of complaints about BUR management on here!
I guess investing roughly $30m to get to a judgment that's probably worth at least $3bn (on top of $200m cash already realised is something the detractors regard as a bit ho-hum.
On the specifics of "wasted cashflow" buying in shares to match share-based incentives, not only is this the gold-standard of non-dilutive behaviour, but also a huge saving if you think (as they probably do) that the shares are at least half the value they will be when they vest.
On the matter of the the $400m bond issue and retirement of some lower rate borrowing, if that UK interest was no longer tax deductible then the economics are much more comparable. Not only that but look at the bigger picture. There was the minor matter of them negotiating a $350m portfolio deal - do you think that was made easier or harder by the successful bond issue? Also, turning over the bond funding is seen as a good thing by rating agencies so should have some medium term benefit associated.
CEO and CIO own almost 9% of the company - do you seriously believe their interests aren't aligned with all of us with our piffling holdings?

[dagoberia] 22/9/2023 13:17

Looks like only Peterson news will support the share price in the short term.. does anyone know what the next likely step is? Official appeal from Argentina? I guess there's no chance of some sort of leak regarding possible negotiations between both parties. Thanks

[tomtrudgian] 21/9/2023 14:30

Entirely agree Ex and DDR. The new 400m dollar bond is both fixed and irredeemable, for 8 years not 6, too. Of course bonds can in practice be redeemed, but that would incur issuer penalties if US interest rates fell. The bond issuers will naturally not be prepared to lose out.

Burford’s credit rating is today much improved, and they can doubtless borrow at lower rates during the next 8 years in they need to. Rather unfortunate timing!

This problem started both with low Covid realisations and the UK Corporate Interest Restriction Act of 2017. (See my explanatory posts of 10 and 11 Sept). Burford had UK Sterling bonds, as UK interest rates were previously low. £29.729m of interest paid was disallowed for UK tax in 2021 and 2022 together.

Why? Because the UK debt was deemed to have been used for activities outside the UK.
In 2022, when the last UK issued bond was redeemed early, £0.875m in redemption penalties and 7.675m in exchange rate losses were incurred.

[time_traveller] 21/9/2023 13:49

Of course that ignores the Peterson elephant in the room, but yes, longer term, with them roundly congratulating themselves for just barely making their underlying ROCE target, one wonders if it's such a standout route to riches for investors.

[extrader] 21/9/2023 12:27

Hi DDR,

You make a fair point. Have you raised this with BUR IR?

Obv management interests aren't totally aligned with that of PI's, but institutional investors might also be 'less than gruntled', no?

Thanks and ATB