Opg Power Ventures Share Discussion Threads

[divinausa1] 01/8/2016 08:06

stupid valuation

[divinausa1] 01/8/2016 08:05

SP should be over a pound... and head for 4 pounds next 2 years

[chalky] 01/8/2016 08:01

looks like the chairman is retiring to probably run the new company from lanco distressed asset sale which has not been mentioned,which says to me that it has nothing to do with opg as such. also good revenue announcement which looks like it could double turnover for 2017 that is a big change.

[igoe104] 01/8/2016 07:32

Yes should be a good day, eddie will still have something to moan about.

[owenga] 01/8/2016 07:31

57m revenue in first qtr 17. Equates to well over 220m for full year and still ramping. Looking at potentially 100 % revenue growth next year. Current share price is crazy!

[tipster29] 01/8/2016 07:12

On first scan, I'd say that today will be a good day...!

[azalea] 31/7/2016 08:21

The Prelims on Monday, will be one of the most important results in OPG financial history, with more to come from the 2017 Interims in November.

[plasybryn] 30/7/2016 18:05

Interims on Monday??

[source] 30/7/2016 13:56

More evidence of the Basket case that OPG may/may-not be getting in bed with...Doesnt fill you ith confidence. I'd prefer they steered well clear unless the advantages are clear, transparent and compelling (they arent at the moment!).

Regards,
Source.

+++++++++++++

Hyderabad, July 29:

Lanco Infratech Ltd has seen certain audit qualifications with regard to its step-down subsidiary Lanco Kondapalli Power Ltd, which has resulted in a revision of its annual financial statement.

In a regulatory statement filed with the stock exchanges, the auditors have drawn attention to Note 52 of the consolidated statement, where Lanco Kondapalli has capitalised borrowing costs amounting to ₹159.63 crore and ₹601.36 crore for the year ended March 2016.

However, the auditors said the capitalisation of such expenses is not in accordance with the relevant accounting standards.

Further, they noted that the depreciation expense for the year ended March 2016 is higher by ₹8.21 crore. Had the expenditure not been capitalised and depreciation not charged, the loss of the group for the year ended March 2016, and cumulatively up to March 31, 2016, would have been higher by ₹89.20 crore and ₹349.42 crore, respectively.

Non-availability of gas

Responding to the qualifications, the company management stated that due to non availability of gas the asset was eligible for capitalisation and the lenders of the project had approved the interest during construction. Further, referring to Note 38 of the results, the auditors have said Lanco Resources International Pte Ltd and its subsidiaries, whose consolidated assets reflect ₹11,022 crore as of March 31, 2016, registered total revenue of ₹1185 crore and profit of ₹5.92 crore.

[ballychan] 28/7/2016 10:40

Owenga, I sent the weblink so everyone can read it for themselves.As they chose to use OPG's name, they could have easily just referenced a news article, and then later said meetings are taking place, I interpret that as indirectly agreeing it is OPG. Like I said, i shared the link so everyone makes their own decision.

[source] 28/7/2016 08:37

OPG should clearly be announcing something given the story is clearly out and price sensitive (for the good or bad not yet known). Regards,Source.

[owenga] 27/7/2016 18:53

Ballychan. They didn't confirm it at all. They referred to speculation about OPG taking a stake, but doesn't say in the second paragraph that they are actually talking to OPG, just that they are discussing proposals with lenders/advisors.

[eddie1980] 26/7/2016 13:06

Fun comment for the day / Conspiracy theory..... if it has been known for a while in financial circles that OPG might/would need to raise new funds for this acquisition, a little bit of short selling would drive down price easily, especially on such an illiquid stock........likely meaning a lower placing price if company went for that option for raising money..... thus cheap stock to be bought by funds to cover their borrowed stock.

[marvelman] 26/7/2016 09:03

Some chunky buys again today (showing as sells)but still not moving the share price Surely the seller in the background must emerge soon.

[ballychan] 25/7/2016 23:02

Goldbug,This certainly isn't a rumour. I checked the Bombay Stock Exhange RNS feed and Lanco responded to the media story about OPG taking a majority stake, and they confirmed it. Full response here.....

[ballychan] 25/7/2016 22:47

Gents, for clarity I've copied the extract below and plugged in the £ figures:Under the plan for the power business, the OPG group was asked to immediately infuse Rs 150 crore (£17m) as equity with an assurance to bring in or arrange another Rs 1,500 crore (£169m) of equity required for completing its ongoing power projects........ About Rs 5,200 crore (£580m) of debt will be transferred to the power holding company, and Lanco Infratech will retain a 49 per cent stake in the business.So it's not the full £580m debt belonging to OPG but only 51%, so £296m. This venture allows OPG to increase output 5 fold, from 750mw to 3687mw with total cash outlay of £482m (17m+£169m+£296m) Considering Ernst&Young values OPG's 51% stake at £300m, this looks to be a very good deal on the face of it. Please shout if my numbers look incorrect

[the original goldbug] 25/7/2016 21:13

You make a good point Chalky and maybe a convertible bond will be a major part of any potential financing package.

The bad news is that any bond issue will priced relative to the cost of equity which is sky high and will bring the incumbent assets in to play in the sense that they will be used as a guarantee for the bonds.

[chalky] 25/7/2016 19:37

They can issue bonds at a certain interest rate over a period of say 10 to 15 years

[oldboffy1] 25/7/2016 18:38

Goldbug.

The idea is that Lanco is split into 3 parts so OPG wouldn't be taking on the whole debt. One of the articles that Ballychan highlighted refers to criticism from some in India that OPG would be getting a bargain by only putting in 150 crore of capital. The other point that a poster on another site mentioned, having met Gupta a while back, was that the Company's management is inherently cautious and wouldn't take on anything that derailed the steady progress that is being made.

OPG's management has been criticised, in some quarters, for not being aggressive enough so this possibility with Lanco is indeed interesting.

[the original goldbug] 25/7/2016 18:00

Lots of good posts and keep them coming please.

Ballychan - your numbers are thought provoking, but a couple of points spring to mind. Firstly, in the posts when the Lanco news broke, it was suggested that the Lanco had gross debts of £4.4b and so one might assume that OPG would de facto be responsible for half of that, so I was confused by the £580m figure you mentioned. Secondly, do bear in mind when you are doing a comparison of installed MW to reflect the equity value of OPG.

If the £2.2b debt number is to believed the deal looks horrendous for an OPG shareholder. For this reason and because I do not believe that OPG can raise £300m, I still think the whole thing is a rumour.

[ballychan] 25/7/2016 14:47

Hi JJ, Even with the drop in revenue, Lanco Power made a profit for YE16 of 1,758 versus YE15 of 1,561.This could be by luck than judgement, as dropping revs is never a good sign.This company is ridiculous, it has over 40 subsidiaries and over £4bn debt! The big lenders must like what they see with OPG, giving them a provisional green light to take a majority stake. Chalky, I like your thought process - opg power operate as a serperate entity to the joint venture with Lanco. That would allow opg to continue with their boring plan of paying down debt and ramping up dividends. While the Lanco project continues delivering the high growth story. Not sure how feasible this is though.

[eddie1980] 25/7/2016 13:44

A couple of significant differences between OPG's current, and these supposed fire sale assets are:

location - OPG's were meant to have been strategically located where it wanted to sell to private industrial users, and close to ports etc for imported coal.

Design - OPG's are meant to be able to use local or imported coal to be able to avoid any shortage/price fluctuations if one source a problem.

Others differences may also be location distinction - one problem fuel producers have is some states basically can't afford to pay for the leccy being pumped into the system - big problem cashflow wise.

Funny the article on demand vs supply. I had also read in some areas, lack of demand for what was being produced.

[jjhbev] 25/7/2016 11:34

Hi Ballychan

Here are links to a couple of articles that may be of interest :-

The first is an article about Lanco which dates back to Aug last year & summarises the mess Lanco got into with its overleveraged growth attempts.

hxxp://www.livemint.com/Companies/3MJwTroXN1TQEvQyKPesNL/The-lessons-of-Lanco-Infratech.html

The second is an article from The Economic Times which includes a very interesting paragraph on debt restructuring by means of deep discount bonds (which, if yielding, 9.75%pa don't seem deep discount enough to me!)



Lanco is a real basket case and the performance in power is scarily bad. Look on their website for the last two quarterly figures and you will see the following (you will also see the most extensive set of accountants qualifications I have ever seen!!! - although I never looked at Quindell when it was disintegrating ;-)) There seem to be huge operational issues on the power side including issues with PPAs and so on - Revenue in the Dec 15 Qtr was 1450 Crore Rupess whereas it was only 1339 in the March 16 Qtr.

If this does go ahead lets sincerely hope it is done well. I thought we were just about to enter a nice boring period with increasing output, Solar development, positive cash flow leading to debt paydown & divis. Instead we have this!

If ever a deal could be described as transformational it would be this. Whether that is a good or bad thing we will have to wait and see.

[ballychan] 25/7/2016 09:36

I just went through the weblinks and pulled out the costs OPG will face;Immediate payment 150 crore (£17m)Fund to finish projects 1500crore (£169m)Take on debt 5,200 crore (£580m)So total £766m to gain 2,973 MW. This works out to be £258k debt per 1MW power.Curently opg has £240m debt with 750mw output, which is £320k debt per 1MW. From these very very basic figures, we can see why the banks are favourable with OPG.