Helius Eng Share Discussion Threads

[julcester] 28/2/2011 17:03

good to see it recover at the end there.

[julcester] 28/2/2011 16:02

The article says that RWE is in financial doo-doo and will be selling £8bn worth of assets over the next 3 years, including unnamed UK assets.

[julcester] 28/2/2011 16:01

RWE bought Stallingborough off HEGY after HEGY matured the asset to consent. Hegy got Got £23m plus a 13% royalty on all future revenue from the project. This royalty was renegotiated for an £8m fee, to be paid as soon as the first supply contracts on the project had been signed.

For every Q that the first supply contract is not signed, RWE pay HEGY £100,000. Should RWE fail to sign first supply contract within a defined period of time, the contract returns to the 13% royalty on all future revenue.

[asparks] 28/2/2011 15:46

what does that article say. And what has RWE got to do with HEGY?

[spaceparallax] 28/2/2011 15:15

interesting

[julcester] 28/2/2011 14:57

What's the betting that Stallinborough is sold?



...including unnamed assets in the UK...

[spaceparallax] 28/2/2011 12:28

Only a guess, but the pattern does follow what I've seen elsewhere. That said, I don't really seem them needing a placing - time will tell.

[julcester] 28/2/2011 11:03

wish they'd just get on with the placing then

[spaceparallax] 28/2/2011 10:28

To me it's looking like a mid teen placing

[rajaster] 25/2/2011 14:10

my reasoning is the 10% spread.. which means MMs want your stock but dont want to sell you their stock.. i think theres a behind the scenes buyer.. watch for late transactions at close of play.. could even show as sells.. we'll see.

[rajaster] 25/2/2011 14:09

could be stop losses?? why drop it on a few sells.. or why would anyone sell at such low prices??

[spaceparallax] 25/2/2011 13:54

The modest sells have really hammered the share price

[spaceparallax] 18/2/2011 12:20

BB,

Unfortunately, your reasoning most probably falls at the initial assumption. Although economic times are tight, to assume that our appetite for energy will dissipate (sadly, as I see a substantial economy in consumption being the answer to many of our energy focussed inflationary woes) is I think flawed, especially given the Country's commitment to increasingly renewable energy. As I mentioned recently, anaerobic digestion is being keenly examined by the authorities and it is fair to assume that all other sources of renewable will be similarly scrutinised.

The more that we in the UK and other developed countries can focus on self-sufficiency, renewables and energy efficiency the more this will contribute to a reduction in demand for oil and gas. Consequently, falling demand (even a small amount) leads to falling prices or at worst an alleviation of the increase in prices that could be driven by growing World demand due to the massive expansion of countries such as China and India.

Hence, such renewable sources that are within our control will come to play an increasingly important role and should be neglected at great peril to the economy.

[julcester] 17/2/2011 17:34

What about the asset value of Avonmouth?

The value of that is well over £15m, if not £20m

[bookiebuster] 17/2/2011 17:15

The £8.8m is an airy fairy receivable only awarded if RWE give the go-ahead to construct the plant by Sept 2012, which is unlikely in the current climate imho

The main benefit of the 2 year amendment as I see it is for HEGY to receive up to £0.5m recompense for the delay, paid in quarterly installments up to mid-2012

If it's still not a goer by Oct 2012 the deal reverts to 13% of any post-tax profits and a likely reduced carrying value due to the uncertainty:

"In the event a project start-date is not established, the timing of earn-out payments will be uncertain and this will be reflected in the carrying value"

13% post-tax was estimated at an average £0.5m/year for 24 years but if the plant doesn't turn a profit HEGY receives nil so I don't think the earn-in can be taken into account. The market hasn't really been taking it into account so far:

SP around 30p for most of H2 2009
= £25m market cap with £17m cash (+£14m proposed earn-in)

around 25p for most of 2010
= £22m market cap with £13m cash (+£12m proposed earn-in)

18p in 2011
= £16m market cap with estimated £8m cash (+£8.8m proposed earn-in)

Tends to be priced at 150% cash value with the earn-in ignored. So with an estimated £6m cash left by October the market cap may fall to £10m (12p) over the next 6 months. The funding situation will get worse as the cash runs down so no need to buy early imho

[julcester] 17/2/2011 16:09

Also, how much will the Rothes plant cost to construct?

Its only 7.5MW (1/10th of the size of Stallinbough)and 75% of that is being met by project finance.

I recknon Hegy will only have to find c.£2.5m

[spaceparallax] 17/2/2011 16:02

I think your point about mkt appreciation of 'clean' companies is fair, although from recent weeks we have heard of the Govt switching onto anaerobic digestion, which bodes well.

On the funding front, a placing is always an option albeit not the only one. Borrowing shouldn't present a problem and we mustn't forget the recent RNS concerning the reduced but earlier payment.

[julcester] 17/2/2011 16:00

Exactly. From a Pi's perspective it is vulnerable.

[adam] 17/2/2011 15:58

How can it be vulnerable? Can't get a cheap takeover when directors own so much... except from the directors themselves.

[julcester] 17/2/2011 15:55

An additional problem is that the market still does no appreciate clean-fuel companies. Novera got taken out on the cheap, REH is still undervalued, SEA is vastly undervalued and so is HEGY. It is only when the raw number get exposed through asset sales or takeovers or shrewd investors that the true value gets realised.

[julcester] 17/2/2011 15:53

A lot of small caps face similar challenges, but I appreciate your posts Adam, we don't get a lot of discussion on this board.

One thing I do know and that is Avonmouth underpins the share price and then some. If there is a fundraising, I hope they get on with it, because the company is very undervalued and is vulnerable as it is.

[adam] 17/2/2011 15:47

spaceparallax - thanks. Somehow this has been my only job for nearly 15 years, so I have learnt the meaning of risk/reward. Our job as investors is to assess both the risks and the reward.

So I take it form the lack of responses that nobody knows who David Sonnerberg is?

It appears they have reduced their shareholding in recent years



from 7758242 to 5768500

my concern is if it is left with no truly independent major shareholders.

[spaceparallax] 17/2/2011 15:14

Adam,

If you remain nervous and still invest then you're breaking your own 'Fight Club' style rules. That would be foolish.

Life is full of risks and imponderables - one must make reasoned judgements all of the time, otherwise best not to go out or perhaps even dare to step out of bed!

[giant steps] 17/2/2011 15:06

adam, yes i agree the recent deal announcement looked positive but the 25%
"funding gap" draws only one conclusion imo (and the price is reflecting this)


The ongoing "12.5p" option stock has been a share price depresser imo.