Burford Capital Share Discussion Threads

[galatea99] 31/3/2021 11:07

A couple of snippets here which may be of interest:

Firstly, one of the cases in which Burford is reported as having an interest seems to be coming to a successful conclusion. This is the Steinhoff case in South Africa.



(Good place to have a corporate HQ, Stellenbosch, best white wines in RSA)

The second is that in a case unrelated to Petersen, Judge Preska seems to have come down very hard on Argentina which may show that she is a tough woman not afraid to call out carp. This is a case where Argentina seems to have fiddled their measure of GDP in order to save themselves about $3bn.



(Judge Preska must be fed up to the teeth with Argentina!)

[williamcooper104] 31/3/2021 01:37

Buy back near half market cap and have c$300m extra cash for investment

[williamcooper104] 31/3/2021 01:34

Against that $2bn you need to take away what Bur sold and the carrying value of Peterson to get to the incremental profit which would then just be a few hundred million However in cash terms it would be around a clean $1bn, which would allow Bur to buy back near half their market cap

[williamcooper104] 31/3/2021 01:31

I think the minimum settlement price would be one that gave a 15 IRR to the funds that bought Peterson - so at a guess c30 percent higher than current carrying value That would be an incremental cash gain of only c$220m but it would allow a material share buy back and would cause share price to soar

[maddox] 30/3/2021 22:14

Tradertrev,

The best security is to insist on delivery of cold hard cash on an agreed time frame - everything else is a discount. If Argentina lose in court they will lose far more in value - but BUR will then have the headache of recovering the funds. No point in reaching a settlement and then giving yourself more problems.

[tradertrev] 30/3/2021 19:06

In the case of Repsol's holding in YPF, Argentina issued $5bn worth of bonds to Repsol who then sold them (I think) to JP Morgan. I think that was during one of those brief periods when Argentina was not in default. Now, the plaintiffs would require some form of security - something like the proceeds of x no. of oil tanker deliveries sold for y Dollars in the international markets.

[maddox] 30/3/2021 18:20

Hi Ptolemy,

The benefit of a settlement is the payment terms and delivering on them can be set within the terms of settlement. And if they fail to honor the terms this then make the agreement null and void.

[ptolemy] 30/3/2021 17:22

How would they pay - buy USD in the open market? And over what timeframe? Days, months, years...? Any precedents?

[maddox] 30/3/2021 16:50

Whilst we're kicking about some hypothetical numbers, it's probably wise to set expectations correctly. BUR have already declared a profit on the, yet to be decided, value of the YPF case and thus have a carrying value of $773m in their balance sheet.

So, if BUR win the case they will need to recover gross proceeds of c. $1.7bn in order to match what has already been put through the P&L. This is taking account of legal fees and expenses. This is also the value the external investors need to break-even on their purchase of an entitlement to the Petersen claim.

Clearly, those 'sophisticated' investors didn't invest to just break-even, they will be looking for a multiple of their investment. Let's assume they were looking to double their money when they put their hard cash down, they would then be looking for not less than $3,400 in gross proceeds. This would then leave BUR with an estimate net entitlement of $1.5bn (~£1.09bn).

To put this into perspective current BUR's mkt cap is £1.32bn.

[stentorian] 30/3/2021 13:22

DP, I'd settle for $3bn+ cash plus 50% of Vaca Muerta put through a net take-out agreement with a US oil & gas operator like Chevron over 10 years. That'll keep BUr in pencils and notebooks.

[donald pond] 30/3/2021 12:11

I think the accounting here is so complex the market discounts it. What they can't argue with is billions coming back as cash. If this settled for a bit above say $3bn that would be £10 a share in cash, plus the ongoing BUR business. The share price would react to that

[bogman1] 30/3/2021 12:04

No mention of how much of this has already been reflected so it will need to be a fairly meaty settlement to impact earnings surely. Not so long ago we were discussing a 500m write off..

[maddox] 30/3/2021 11:47

That's an interesting point Donald - if I was buying an interest in a case I'd certainly want to be assured that an agreed settlement delivered a return that justified the risk involved. Presumably, these investors have a veto?

If par value is a $1bn what would you be prepared to accept - where there is a risk of a total loss?

[lomax99] 30/3/2021 11:35

Hoping for $3bn+

[donald pond] 30/3/2021 11:31

But $2bn is around current market cap. Can only dream of what would happen if an RNS landed that we'd been paid more than that

[lomax99] 30/3/2021 10:44

For the pain endured, realisable settlement really needs to be some way north of $2bn.

[donald pond] 30/3/2021 10:07

There have been whispers on twitter of settlement discussions. I suspect a lot of shareholders would be quite happy to settle for $1-2bn and be rid of the YPF "millstone". But raising $400m suggests BUR is not likely to settle at any cost. And having sold some of the claim they will probably have a duty to consult those stakeholders. That all amounts to BUR being able to argue that they don't need to settle cheaply and in fact wouldn't be able to

[ptolemy] 30/3/2021 09:53

I don't know whether it's a good thing or not but Judge Preska is 72-years old. She's also working the Ghislaine Maxwell case. Anyway, I think this is a list of the 300 documents currently submitted to the court in the Petersen case; it may interest someone!

[donald pond] 30/3/2021 08:33

Here's an even better one from Seb. Interesting that Judge Preska seems to be the US judge for matters Argentine and she seems to have their measure

[donald pond] 29/3/2021 22:01

Interesting https://twitter.com/sebastianmaril/status/1376640023999754240?s=21

[maddox] 29/3/2021 10:11

Good demand for the debt will also reflect in the availability and pricing - so very good news. Widening the list of funders by meeting that XS demand is a good move.

It will go some way towards resolving the tight liquidity position William has identified ;-)

[bogman1] 29/3/2021 09:29

Is this starting to turn around at long last?

[tradertrev] 29/3/2021 09:17

Using extra bond issuance to pay down some of the debt closer to maturity results in some lengthening of overall debt maturity profile, some recycling of capital and demonstrates good access to capital. These are all matters of interest to rating agencies and will build the case towards gaining investment grade status at some stage. At that point the cost of debt reduces markedly. All good stuff and as usual the company is playing the long game.