|Oops! Can't be too good...
|Half year report due next week and we've had more volume in the last week than we've had all year.|
|from Crystal Amber's february 2017 newsletter:
"Leaf Clean Energy Co. (“Leaf Clean”)
Crystal Amber continues to support the board of Leaf and its realisation strategy. Leaf is currently litigating with its largest holding, Invenergy. Leaf is
seeking payment of $126 million (pre-tax), equating to 79.4p per share (pre-tax), which compares to Leaf’s share price at 31 January 2017 of 40p. We
also note that whilst this litigation is ongoing, the claim accrues a 6% interest, which we feel adequately compensates our position given the
confidence we have in Leaf’s position. We believe the company will be able to generate resources needed to see through the litigation, from the
orderly realisation of other assets, maximising the value of the legal case against Invenergy.
Over the month, Leaf’s share price increased by 13.6%."|
|And LEAF annual results out today.
|From Crystal Amber results issued today.
In July 2016, Leaf announced a favourable preliminary decision in its lawsuit
against Invenergy for breach of contract. Leaf is seeking payment of $126
million, equating to 79.4p per share, which compares to Leaf's share price at
30 June 2016 of 34.5p.
The Fund remains confident in the value of the Invenergy investment, despite
the disappointing valuations announced in May 2016. The average of the two
fair value appraisals was $55 million, short of the $97 million carrying value.
In its Interim Report, the company declared its NAV at 31 December 2015 to be
US$109 million or 92c (c.71p) per share. Using the average of the two
appraisals, Leaf's NAV at 31 December stood at US$74.4 million or 63c (c.49p)
per share which compares to the Fund's average cost per share of 34p. The Fund
holds 35.3 million shares in Leaf.
We remain confident that Leaf will successfully realise the value in its core
holdings and return cash to shareholders. According to recent valuations, this
has the potential to be well in excess of the current share price.|
|The December 15th amendment to the sale agreement provide a new '' agreement to sell'' date in any event, by which time Leaf was an equity holder and the company should have sought consent under the operating agreement.
The defense fails on that point and also on the definition of sale date meaning closing.
The compensation agreement for the breach of contract seem pretty clear and, as written, provides LEAF with a return on investment at a set irr to give $126m as referred to by LEAF previously.
Presumably the horse trading will now begin, possibly with the threat of a counter claim for misuse of confidential information.|
|That judgement looks quite conclusive to me. The company's defence is, I think, that Leaf acted so that it would be in a position that it had to benefit from one of the sell (closing) clauses. The judge has basically said, yes, the clauses mean what they say, and secondly the company cannot claim that LEAF acted in bad faith for taking advantage of the contract as written. The company contested that the the word "sell" should be extended to include agree to sell, and that the use of the word "closing" in addition creates ambiguity. The judge argues that "sell" is almost always used for consummation, and even if it did not both the language in the contract, and the terms, can only mean at closing.|
|lawyers making a bomb|
|The court ruling.
|Given the disparity of the appraisers valuations, it does not seem to be an easy task in guessing the quantum of the final outcome. It is however safe to say that recent currency movements have assisted us shareholders and yesterday's legal finding is very welcome news. However the appraisal process could be halted/irrelevant if Leaf pursue the litigation route.
Personally as long as I can get ~40p or above I shall be a tad disappointed; but timing is also an issue as I don't feel like waiting a few years for the final outcome!|
|The court ruling seems to come at a good time for leaf, with third party appraisers due to conclude the invenergy stake valuation shortly. Is it likely that a negotiated settlement will now be reached at the point of sale of invenergy.
Also I recollect leaf putting the quantum of the claim at $126m a while ago, approximately 80p per share, which is a multiple of the current s/p.
Would anyone be able to hazard a guess of the final outcome.|
"23. This ruling does not determine the amount of damages to which Leaf is entitled for the Company's breach of the Series B Consent Provision. That issue will require further proceedings.
Vice Chancellor Laster
Dated: June 30, 2016"|
|30 50 20 et al, I suspect given the timing of yesterday's announcement that they wanted to get the raw data with the assessments out to the market as soon as possible as that looks like quite leaky information. The speed will what be caused the screw up. They should have left out the NAV calculation, though to some complaint I expect.
Thanks for your detailed calculation. I figured approximately getting my money back in a short horizon, with a decent chance of a 20% return sometime, and a small chance of a substantial return with a medium time horizon. If our complaint case has merit then I would expect a negotiated agreement to close out quickly. I am somewhat suspicious of the complaint action, but I do know that contract law and litigation in the US tends to the literal and not the interpretive.|
Good to see your analysis.
I managed to sell a few on the ST tip at over 42p which was pleasing, and even bought a few back at 35p yesterday, but if I see 42p again, I think I will be out if liquidity allows.|
|LEAF announced ths morning that they got the figures wrong yesterday and actually NAV is 43p!! So now it is 43p with good chance of realisation of 35p+ within 6 mths, and a stake in a litigation claim of 100p!
*all figures in USD
at 31 December
other 4m (investments less tax)
shares 124m, FX 1.462 = NAV GBP 35p
dividend from invenergy 4m
no need for mgt bonus provision 2.4m
reduction of deferred tax liability 4.6m (seems low??)
shares 118m, FX 1.462 = NAV GBP 43p
notes: Invenergy 73m and 36m - average = 55m
so its incredible that mgt made FIVE errors!!
(INV divi, no of shares, tax, mgt fee provision,
general non realisation of the balance sheet items link to INV valuation )
thinking of the actual content of the RNS....
it is NOT good news that the valuations are so low,
but it is good news that getting updates (all indicates that repayments within 6 months)
and it is good news that we have confirmed a stake in litigation for 75p a share
so whats it worth.....
on this information I think the next payout will be invenergy + spare CASH = 36p
litigation at 10% = 8p
(assumes no refund of litigation fees)
(assumes NIL value in other investments)
So I think 44p is fair value by the end of 2016 - that's worth paying 38p for now given risks.
6p upside is invenergy,
2p to 4p upside in other investmetns
3p downside on invenergy valuation
and the litigation is just a wild card!
all IMHO, DYOR + BoL
LEAF is in my top5 hldgs|
thirty fifty twenty
|jhan, $16.2m at year end.|
|From the full year accounts, ''The Company has provided for tax on the basis of its carrying value of its investment in Invenergy''
So, if invenergy is sold at below book there should be a reduction in the tax provision and also in the incentive bonus provision.|
|nav was 62.51p + approx 2.3p tax gain post year end.
Three remaining investments. VREC, Lehigh & Escalona, some cash plus 43p or thereabouts for Invenergy.
Sorry if I'm being lazy but does anyone have a value to hand for the other holdings?|
"Bank error in your favour.."
Let's hope they don't throw 3 doubles.|
|Well I've taken advantage of that information anomally post announcement.|
No, because you expect the guys that make this announcement can actually add up. How embarrassing!|
|Rofl - interesting error! Had you spotted this @tilts?
"For illustrative purposes, if the average of the two existing appraisals was used to determine NAV as at 31st December 2015 then the resultant NAV for Leaf as at this date would have been US$74.4million or 62.96 cents per share (43.07 pence per share at today's exchange rate). "|
|At this price the price now the legal action is in for free. I wouldn't be at all surprised if the independent assessment is very close the the average.|
|Missed that the final price will be the average of the 3 valuations - and this 3rd valuer appointed jointly. Guessing an average of the current two won't be too far out then, and at least should lead to resolution & payout.
Don't think I'll buy back until nearer 25p tho ;)|