Lonmin Share Discussion Threads

[elvisrocks] 21/11/2015 10:27

Yes Chris, I agree on Post 6466.

This is why everything is all over the place. You "could" have picked up the whole of Lonmin for £60m on Wednesday according to the market price, never going to happen of course. The question is what is old equity worth on top of the $400m IPO? £30m, £60m, £900m? Nobody knows. Yesterday old equity LMI was £7m and it got traded to 30% of it's issued capital.

[elvisrocks] 21/11/2015 10:20

Kirk re post 6461 and Robert re 6462.

Kirk, watch out not 1.01p but 1.10p. Old shares and rights now decoupled from a trading perspective. Agree there is significant potential here either your POG numbers or Macquarie, get back to same ish answer.

Robert, there is confusion. Without boring you there is arbitrage between LMIN and LMI. LIMIN+1p = 1.10p versus LMI 1.27p. We don't know why that arbitrage exists.

Spreads were wild yesterday on LMIN. Regularly 10-20%, sometimes as high as 30%.

[chrisbr777] 21/11/2015 10:19

I will try be as respectful as possible here - but you are still getting this wrong. ""The whole of Lonmin for £30m at today prices (in theory)."". You need to add to the GBP 30m an amount of +/- US$400m. A right only has value in that someone will eventually exercise it. Hence the forced $400m injection (whether through shareholders or underwriters). So the value of Lonmin today is the combined amount of the above two.

[elvisrocks] 21/11/2015 10:11

Chris and Kirk

Perhaps that 'perfect equilibrium' I was speaking about does slightly confuse but it is also easy to get mixed up with the decimalisation here.

The TERP on Thursday based on the 10p close price and was estimated at 1.19p or 0.19p per right. That right fell to 0.10p yesterday, so it halved. Buyers are now apparently here in their droves. Why would they be, the rights dropped by 50% and the so called TERP to 5p. The whole of Lonmin for £30m at today prices (in theory).

What I suggest is probably what Macquarie are suggesting, they are the only people to put a price on the rights of 0.40p, four times yesterday or Lonmins rights at a 60% discount not 90%.



The point I was trying to establish on POG was how far from the 5p rights it traded. Some people say 4.5p to 5.5p, others say it went as high as 20p. I don't know I wasn't there just trying to establish the range the nil paid rights traded at in the subscription period.

Either way, my position is that 90% discount at the moment is way over cooked, only 0.5% of the rights were traded yesterday. Try 60% discount or 0.40p per right of Macquarie. That's seems more logical for something that is do heavily underwritten.

[robertfaulkner] 21/11/2015 10:06

Also, I'm with Selftrade and they are quoteing 0.102p to buy and sell. That is today when you can only place limit buy or sells.

Was there a spread on the LMIN price when market was open?

I can't find a live price on ADVFN or IG Index (LMIN)

[bernieboy] 21/11/2015 10:03

Sorry for not being up on all this at the moment. I sold out at 18 a few weeks back cos I just couldn't work out how the share price would react although I expected it to go down as it indeed did. But what is the score now? If I buy on Monday for example? Is it ex rights? What has 10th Dec got to do with it? Thanks for the help! :-)

[robertfaulkner] 21/11/2015 10:02

I bought on 10th Nov to buy £1k worth, so with taking up rights to invest a total(inc RIs) just over £5k

What I can't understand is the difference between the LMI share price and LMIN SP

It looks as if I could sell my LMI for £114 and buy the same number of LMIN for £9.17 then pay the 1p to convert them to fully paid and still only pay £99.11

OK not much of a saving for me(£14 and wiped out by dealing costs x 2)), but for larger holders who want to take up all their RI's it must be significant and should lower the LMI share price and raise the LMIN share price to be nearer LMIn = LMI - 1p

[kirk 6] 21/11/2015 09:52

Chris is right regarding the rights calculation as the price is 0.01p against 1p Rights prices so 1.01p the valuation of the company then needs to be added at 1.27p and then the new shares on the 10th. Düsseldorf POG traded just above the rights price of 5p then shot up to 18-19p before the rights were paid. My mistake not 22p however was a great trade and shows the potently here.I think 2-4p rise possible pre the 10th

[chrisbr777] 21/11/2015 09:02

Elvis -- lets use simple accounting (you are an accountant you say). We currently have circa 586m shares in play and 27 Bn rights. The market value of this is There are as at this date GBP 7m for the shares above @1.27 and GBP 27m for the 27Bn rights at 0.1. SO far so good. This give a cap of GBP 34m.

You are saying that the rights could be closer to 1p. You are saying that this is an opportunity for the traders (in this period of the rights offer). Why are they not buying this anywhere close to 1p? Because if they buy rights for 1p, they would still need to buy the share for 1p on the 10th Dec. So an outlay of 2p.

So here is the accounting for you ---- there are NOT 27bn shares currently in play, nor have the shareholders paid the $400m yet, nor have the Underwriters paid the $400m yet. So if the company does not yet have this new capital, the market cap is not going to be increased until the NEW SHARES are issued.

Coming back to my earlier post, the rights are pretty much worthless. whether you buy for 0.1p or 0.2p is almost irrelevant. This is not a 100% premium. You need to see it as 1.1p versus 1.2p.

The only time the rights will drastically increase in value is if there are a change in the underlying fundamentals of the LONMIN business as a whole. In other words if platinum prices suddenly spike, you will see value in the post consolidation share price. If the post consol mkt cap is $450m and the market sees the company doubling its market cap to $900m for example. This is when it becomes very lucrative to hold the rights, because you can buy shares for 1p but the true value might be 2p. SO the only hope you have of realising any value to your rights would be market fundamentals between now and 10 Dec.

[elvisrocks] 21/11/2015 08:44

chrisbr777. If you want to help, Peteropavolsk did a 157:10 (essentially 15:1) RI a few years ago of 3.1bn shares at 5p, raising c. £150m, 99%+ underwritten. They also did a convertible bond at the same time.

Those 3.1bn shares "or rights" at 5p from what I understand from Lazy traded fairly close to, some above/below, that 5p during the RI subscription period. Compare that to Lonmin's 1p rights/shares that are trading at the moment at a 90% discount of 0.10p, which is why there is a lot of interest from buyers wanting to go "long"

[elvisrocks] 21/11/2015 08:11

Chrisbr777, I don't know if your little highlighting and USE OF CAPITALS refers to the difference of views we had earlier this week (example Post 6101/08) and your nose is put out by that, but thank you. As an illustration of your outright naivety, this share is fully underwritten to the tune of $400m by 10 banks and sub-underwritten by others, which means Lonmin is guaranteed to get that amount.

The market is now "valuing" those rights and trader strategies are at play. My point on the "perfect equilibrium" was to illustrate for the purpose of discussion and to draw a comparison to POG's deeply discounted rights issue, Peteropavolsk Plc.

No true values of the Company are available at present and this share is currently at the mercy of day traders until after 100:1 consolidation occurs when strong capital is in.

[chrisbr777] 21/11/2015 07:52

Wow Elvis. You STILL don't get it.....how can Lonmin be valued at $400m+ yet if the MONEY is still in the bank accounts of the SHAREHOLDERS !! It can ONLY be valued at this $400+ after the new SHARES are issued. Not the RIGHTS!!!! So the RIGHTS will NEVER get to 1p "perfect equilibrium" It needs an additional CASH INJECTION from the shareholders which to date hasn't occurred yet.

[elvisrocks] 21/11/2015 07:23

Lazy, just to follow my Post 6450 and why Kojak sees opportunistic and others value on these rights.
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Rights issued were 27bn shares at whatever nominal value, but 27bn shares at the 1p = £270m ($400m). However you cut this, Lonmin will get their $400m either from subscribers to the rights or underwriters. It's new or re-IPOd share capital will be $400m. The market will value accordingly. It sort of is now, but has written off 90% of this cash (27bn shares at 0.1p = £27m or $40m).

Yesterday, MM's opened this "1p" at 0.25p against a TERP of 0.19p based on Thursday's close of 10p. It closed at 0.10p, a stunning 90% discount to what it will "get".
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A few weeks ago many did say rights would be cheap because there would be "billions of these things", but only 0.5% volumes traded or $2m worth. I suppose we can't expect the "0.10p to recover to the 1p", perfect equilibrium, but there is super-discount available here, already on a (fully underwritten) discounted offer etc, hence why people are seeing value in these rights and going "long"
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Where I am getting to on this, I was never around on POG, but did you say it did x number of shares issued at 5.5p, the RI hovered during the subscription period at 4.4p-6.6p, and settled back at the 5.5p (or something like that).
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Lonmin (0.1p for 1p) is way off POG RI trading levels if that is the case.
Is my POG comparision reading correct?

[elvisrocks] 21/11/2015 07:03

Chrisbr777. Thanks for your Post 6453. I'll disagree if you don't mind, will put out a following post to Lazy to explain.

[chrisbr777] 21/11/2015 05:49

Elvis "---------------------------------------- By then, the market must surely value Lonmin at least at the $400m (8 times today) or $500m (400+100, being new RI plus yesterday's equity, or 10 times today value) ---------------------------------------- Crazy! "

YOU are making a basic error here. Not seeing the wood from the trees. It cannot be valued at 400m by COB - WHY? Because the holders STILL HAVE TO PAY FOR THE SHARES AT 1p AT SETTLEMENT DATE. IF IT WERE $400m TODAY THEN THE HOLDERS WOULD DOUBLE PAY!!! You need to ignore the current valuation. In essence the rights are almost worthless. The recapitalisation is still going to occur. This is where the 'pain' comes to the existing shareholders.

Up until earlier this week you got a company with a balance sheet of $1.5bn valued at a market cap of +/-$80m. Now because the vote went through as YES, the shareholders are forced to put in more capital to recapitalise to +/- $480m. The ratio of 20/1 Book/Cap now drops to +/- 4/1. All now depends on platinum price as to whether the Newco shareholders will make a windfall or lose.

[elvisrocks] 21/11/2015 02:40

Typo56, just looking back through some posst. Your Post 6263 is not correct that 1.5p LMI equivalent to 24.5p

It would have cost holders 56p per share (10p + 46p) to end up with 47 shares last night, not 46p to end up with 47 shares. That's why the "TERP" (for what value it has now) was 1.19p before all these rights came into issue or 0.19p per right.

Just trying to help given this share was already battered before the new shares came into issue.

[elvisrocks] 21/11/2015 01:53

Duplicate.

[elvisrocks] 21/11/2015 01:42

Kojak / Lazy
Just collected my thoughts again:
Crazy Situation
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What happened before today?
Share Price "held up at 10p" like Lazy said, 10 times 1p
or as Kojak said 1p TERP, 9p option value
586m shares at 10p = £60m ($100m) market cap last night
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What happened today? The "sub division"
Old share price got divided by 10, same no. shares, ended day at 1.27p
586m shares at 1.27p = £7m
New rights issued, 27bn, ended day at 0.102p (pre 4.30pm was 0.12p)
27bn shares at 0.102p = £27m
So total market cap added together = £34m or about $50m
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So today market valued Lonmin at £34m against £60m yesterday, dropped by c. half
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Shares Traded
Old Equity = 30% volume, £7m worth of market cap
New Equity / Rights = 0.5% volume, $2m (£3m) worth of market cap
So £10m market cap traded today
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Why is this crazy?
Market today valued Lonmin at $50m, when it knows it will get $400m cash!
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PS: Kojak, you mentioned in an earlier post, Lonmin will "get" any excess value above $400m. I'm not sure it will "get" this amount, who is going to pay it over? What it will get, eventually, is the $400m into its bank account as new share capital.
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The market will eventually correct this $50m value, either in LMIN+LMI or when LMIF happens, or when new shares are issued after the 100:1 consolidation.
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What will this consolidation be? 27bn shares into 270m shares only
The number of shares will go down by 100-fold, the share price should go up by 100-fold
I think by then LMIN+LMI should equal LMIF, then the 100:1 ratio happens
LNIF happens on Friday 11th Dec (same day as RI take up announced)
100:1 Consolidated Share happens on Friday 18th Dec
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By then, the market must surely value Lonmin at least at the $400m (8 times today) or $500m (400+100, being new RI plus yesterday's equity, or 10 times today value)
----------------------------------------
Crazy!

[dudishes] 21/11/2015 00:28

You lose money either way, wake up!

Any Lenigas is a slam dunk short, known in the City. Movement away from AIM a method of filchin

Why not private?

He needs feeders, he needs your Dosh!

You have been warned before, again, get real.

[kirk 6] 20/11/2015 23:10

You can get margin on the nil paid rights I did end bought in auction.

[n73] 20/11/2015 22:47

There is so much misunderstanding here.Get this: there's a reverse stock split. If you were a stock holder you have and option to buy in the discount. If were are not before ex date, it doesn't matter. Money is raised from existing stock holders, any unsold shares will be phased to public next month.Ahhhh

[elvisrocks] 20/11/2015 21:02

dealy

Now that the shares and rights have been de-coupled from a trading perspective, I'm not aware on the nil paids you can't buy/resell and repeat several times over as long as you complete by approx. Dec 10th otherwise you then have to exercise (if this is what you meant by exercising them).

The volatility was just as strong as LNIM / LMI today but on much different volumes of issued capital.

[dealy] 20/11/2015 20:04

because you can't get margin on the Nil paid rights and there are other restrictions such as either a) exercising them or b) selling them in a limited time period.

[typo56] 20/11/2015 19:50

Hmm. Why didn't you save yourself 12.5% and buy 700,000 LMIN shares at close for 0.102p?