Iofina Share Discussion Threads

[microcline] 12/12/2013 19:21

Anyway I'm still buying

[frog1] 12/12/2013 19:15

Bogg1e

The conversion price was set at 10% above the SP, which was quite a good deal at the time as long as IOF execute and the share price rises or they have the cash to repay. It means Stenna can have $15 million of shares at the strike price instead of the loan repayment. They are protected to the downside in that they can take their cash back and in the mean time they get the interest. If the share price is below the strike price, Stenna would take cash and if they still wanted shares would buy them in the market at the then current share price there by obtaining more shares. More likely they would require their cash and then renegotiate on the terms for extending the loan.

Micocline

Stenna would be in control and renegotiate the best deal for them, not the other share holders. So suppose they went for something like 10% of the company in new shares for the sake of example. This 10% would come from the existing share holders of which Stenna are one, so their existing holding would go down by 10%, but in exchange they would get 10% of the whole company. So all other share holders would effectively give Stenna 10% of their holding. IOF could then look for better terms elsewhere, but it would be a lenders' market that would dilute the other share holders and although terms may be improved, they would not be good for IOF holders.

[jpsmithson] 12/12/2013 19:10

Amazing the turnaround in sentiment here.
As for the loan, if production does end up leaving them short they could forward sell iodine at a discounted price to secure the funds.

[freshvoice] 12/12/2013 18:54

Hit sha
We'll sell now then.

[microcline] 12/12/2013 18:53

In a worst case scenario how would punitive repayment terms of the loan affect the substantial shareholding held by Stena ie, the lender?

[bogg1e] 12/12/2013 18:41

frog thanks. Regarding the loan, surely the lender has to accept the shares if IOF can't pay them in cash? Although the price first agreed upon may be lower than the current price, surely the 10% premium accounts for the risk factor? Is the lender contractually obliged to accept the shares or can they refuse and insist on cash? Thanks.

[greatgiginthesky] 12/12/2013 18:35

frog,
your reply to my earlier post is spot on. Why on earth the loan note had a 2 year repayment term is quite difficult to understand. It will be dilution come 2015 for sure.
And - the auditors will have to sign off the accounts on a going concern basis. Will that be possible, I ask myself?

[frog1] 12/12/2013 18:25

Bag

Agree, but with a share like this risk perception is one of the main drivers. The loan increased risk and was taken to speed roll out. If that doesn't happen or is perceived not to be happening as at the moment the share price will go down and we should not be surprise or think its manipulation or something.

[frog1] 12/12/2013 18:20

che,

I regret my timing, but I still like the company. All I'm doing is pointing out the perceptions that are influencing the share price today. The perception changes the current share price not the long term result for which I am optimistic. If all is well, most issues are easily addressed by a proper IMS from the company, which should be given at an appropriate time to show management control. I have been concerned by some RNS's which seem to have been given in response to market movements but actually do nothing to address the concerns that are causing those movements. With the right info I will be increasing my stake significantly as I don't see the lower Iodine price lasting and one IOF deliver this will be the main factor determing SP>

[hurricane.] 12/12/2013 18:17

Seems sentiment is low. While the business grows aggressively.
This can only end one way.

[baguette] 12/12/2013 18:11

Frog 1 totally agree on the loan status. Fortunately there is a further 18 months or so to get to grips with this roll out and get the share price up into the £2.50 or more range. I sincerely hope we do not need to rely on water revenue (the "bit on the side" of everyones posts until recently)

Its absolutely clear that we are currently is a truly critical phase which, within the next 3-6 months, will determine whether this company is successful or has some underlying issue which has not been made public - in which case we are in deep doo doo as managements credibility will be shot.

[che7win] 12/12/2013 18:09

Frog, It's amazing what a 15p fall does to shareholders perception of their investment.

[frog1] 12/12/2013 18:04

Another 'non information' RNS will do more harm than good. If there's nothing to say they should say nothing and get on with delivery.

[escapetohome] 12/12/2013 18:02

Surely surely there must be news soon - Please tommorrow!

Stop the rot!

[frog1] 12/12/2013 17:59

che7win

That's my point, fail on this convertible and the cost of taking on debt will be much higher as the company will be perceived as higher risk. The loan was a gamble with downside for failure to meet its terms. As you say it's not a problem at this stage, but believe me it is an issue for prospective investors looking at a falling iodine price and delayed roll out. To get the share price up, this needs to be addresses and the best way is by increasing production and revenue. As soon as the market sees some hard data on that the issue goes away, until they do the issue is there.

[frog1] 12/12/2013 17:57

Bogg1e

"The conversion price was set at a price of [US$3.21 (GBP 2.06 converted into US dollars at the GBP:USD exchange rate as of 3 May 2013) (the "Conversion Price") representing a 10 per cent. premium to the closing price of GBP 1.8725 on 3 May 2013]. "

The shares will only be acceptable if they are above $3.21 or the lender will be better off having cash and if they want the equivalent shares in value buying them in the market. They would get more shares than by taling the shares at $3.21. Don't get me wrong, the deal for the money was pretty good as long as they can execute the roll out. My issue is that they said took the loan to accelerate the roll out rather than fund it from profits, but so far it does not appear to be making much difference. Thus they appear to have taken on an extra risk without thinking through all the pitfalls with suppliers and contractors. Now if they continue to have problems and the Iodine price stays low, the share price suffers but in addition they cannot repay the loan and that puts the whole company at risk. The slower, loan free route was lower risk, but of course potentially slower or lower return.

[che7win] 12/12/2013 17:57

The other alternative is take on debt, it's not an issue at this stage.

If the water revenue happens, that will pay most of it.

[frog1] 12/12/2013 17:45

greatgiginsky

If we are below conversion price, the demand for cash or the equivalent will be forthcoming. The company may meet that in the ways you speak of but that will be at the cost of dilution of the existing share holders and will likely be on very unfavourable terms. Make no mistake, if the share price is below the conversion price and they don't have the cash, the market will not make it easy to raise the cash and will take their pound of flesh. The risk will be perceived to be higher as IOF will have failed to meet the terms of a previous loan which is never good. Why should the market think they will do better on a new loan?

[bogg1e] 12/12/2013 17:42

Isnt the loan a 2 year convertible loan? either pay back or issue shares (which have already been paid for with the loan)?

[frog1] 12/12/2013 17:35

Bobsworth

There are paid derampers, but they get paid for reasoned posts that produce replies and traffic for which they get paid. Their arguments lead the falls not follow and they would never make inane commentary on share price movements as it wrecks their credibility. These people do not come along after the event saying I told you so, as they'v gone by then onto their next job. Their interest is not winding people up, it's deramping for money.There was a superb poster deramping Soco a few years back who was found out. He made long well reasoned arguments that were slightly exgerated but close enough to cause uncertainty. No one would pay for 1 liners like "Ooo, price down again" and for people only appear after a fall. Just ignore them as they have no relevant information, just guesses.

[greatgiginthesky] 12/12/2013 17:35

supreme,
I do not care what percentage of the market IOF has/will have. I do care what price IOF sells its iodine for - the higher the better. In a market with deteriorating prices, it gives me no comfort to know that my (higher cost) competitors are hurting more than I am.

frog,
4. From Day 1 I never believed that IOF would have the cash to repay this 'loan'. And I do not believe that a demand for repayment will be forthcoming. The BoD clearly thought that the share price will become higher than the conversion price. If that is not the case, then the BoD will either negotiate a change to the conversion price (i.e. at a tempting discount to the share price then pertaining), or will have to raise fresh funds from an equity issue to repay that loan.

[baguette] 12/12/2013 17:25

Supreme mo you say people are selling in blind panic and that may be true for many but others may see that market confidence is shot at the moment and are making rational decisions based on the fact that the share price today is where it was in February (almost the lost year)
Management surely have the responsibility at this point to give the market some crumb of something or come clean if there is a bigger issue.

Look this is what I see as an investor of 8 months or so.
1. Lance gone and not even a Director now (still find that very strange)
2. Only 1 Plant built this year
3. New CEO (recruited apparently for his great work on plant development) already a bit tainted by having to announce plant delays.
4. A string of disappointing RNS's
5. No definitive information on plant outputs etc
6 No water news yet (and probably will go up to the very last day possible before we find out)

If Lance is too ill to participate as a Director then with his massive holding (worth around £10 million even at todays lowly price) it would not be unreasonable for his family wanting to cash in a bit. Not being a Director now he presumably would not have to declare his interest.That could be part of the reason there appears to be a solid seller.

All of this (apart from the Lance speculation) is fact and everything else is promises, speculation and hope.

You are holding and I am holding but crikey am I losing faith, not in the apparent opportunities but in the ability to deliver any piece of uplifting information. O.K. now a non -exec has left and you may say so what but its not the best news is it. They made an incorrect statement on their website and had to change it. They still have Stuart Eaton listed as a Director. Yes just a bit of Admin but months ago we were told there was a person taking charge of the company website - has not happened. Little things add up and I think thats what the market is taking into account.

There is no logical bottom to this price until some tangible information is produced and if the Directors cannot produce any very shortly that will be very telling.

In my opinion anyone not losing some faith at the moment is a fool but I hope like me they soon get something tangible to hold on to.

[bobsworth] 12/12/2013 17:22

Probably paid by Ennismore Fund Management Limited!

[che7win] 12/12/2013 17:22

supreme mo,
Trinity Mirror from 25p to 180p or so - I bought at 35p and sold at 25p from memory.

I suspect that a bit of weakness in the share price a few weeks ago was due to the missed roll out of plants.

Lets face it, rolling out 1 plant instead of 4 plants this year despite management reassurance up to a month ago should be laid firmly at the companies door.

However, it's not such a problem if the plants roll out from next month, just sloppy.

Back to the fall. A few sellers with a bit of shorting pressure from the likes of Ennis may have subdued the bulls. Then we have the falls exaserbated by margined holders and hey presto, falls like the past week.

When this turns, the rise will be swift IMHO, just a matter of timing. The likes of Shonny here signals that short-term traders are ready for a quick 30% profit on the swing.

Shonny graced us with his wisdom in June/July, his past one-liners are utter drivel but suprising that anyone takes any notice.