Pan Euro Share Discussion Threads

[cjohn] 26/2/2014 10:42

Hi AAA,

I'm well aware that Baltic Top is separate from Rosbunker and that profit margins in Kalingrad are high - potentially in the case of Baltic Top: it's not made headway yet.

But there are extra risks involved in doing any business in Russia. Property rights are not as clearly established as in the UK to put it mildly; business culture is cut-throat; there's widespread corruption of pólice and the legal system; the government itself is rent-seeking and rapacious.

All these facts mean that potential lenders will discount assets in Kalingrad as a source of security against capital and rightly so. This increases PAN's cost of capital.

Baltic Top is a very exciting installation with clear possiblities. I would develop it, then sell it. In my view, this is a much less risky way of realising its value to shareholders.

[aaainvestment] 26/2/2014 10:07

CJohn - even if we sell Rosbunker and Baltic Top, we still have assets in Russia that could have future development potential and trading opportunities.

Baltic Top is good little stand alone business and we must be careful not to categorise it with Rosbunker - it's now a totally separate entity(unlike when we had the initial problems and they seemed to share management and accounting processes). So I think retaining Baltic Top allows PAN a presence in Kaliningrad to manage a nice little group of local businesses. Also bear in mind that the potential for growth at Baltic Top is huge as the region is being developed e.g. world cup, tourism, deepwater port, airport (possibly aviation fuel)


cyfran101 - I'm not sure about your negatives list comment about Rosbunker.

The Rosbunker update is very positive IMO and there is only one options mentioned - no options mentioned.

[cjohn] 26/2/2014 09:16

A very interesting and encouraging update.

1.A buy out, then immediate sale of Rosbunker IS a feasible solution. We're unlikely to get the funding to simply buy out the other 50% of Rosbunker. Or put it another way, the cost of that capital would be exorbitant. (Please, please, no more convertible loans: surely that lesson has been learnt.)

2. I think it's very unlikely we recover our share of past profits at Rosbunker that have gone into our "partner's" pockets.

3. Beware: there is still scope for skulduggery in the posible transactions outlined.

4. The update suggests to me that PAN will once again have absorbed cash. We are not at cash breakeven. This means we are still dependent on a favourable resolution of Rosbunker.


In my view, if we buy then sell Rosbunker, a subsequent sale of Baltic Top would be the icing on the cake. Realise assets and get out of Russia. At every stage of business, there are transactional risks. Getting out of Russia would decrease the risk profile of PAN and allow us to raise capital much more cheaply, if it were required.


Conclusión: I have a smile on my face. A rarity. But do not count chickens. Things can still go wrong here. I have added to my very modest position, but I still regrd this as a risky share.

[pantastic] 26/2/2014 06:52

Westhouse issued a brief note yesterday: -

PAN EUROPEAN TERMINALS*
Under Review
PAN.L / 16.50p / 17.54m

Operational update

Today's operational update from Pan European Terminals is reassuring in that the company is trading in line with management's expectations and the group has confirmed that it continues to assess new opportunities, though none have been concluded recently.

Further capacity expansion of 10% is planned for Baltic Top from the end of Q1 2013 that is to be funded via existing cash reserves, having recently experienced a c.10% capacity increase to over 12,000 MT. Further expansion to facilitate receiving marine gas oil from sea going vessels and bunker barges is also outlined in today's release.

PBI has continued to trade at maximum capacity since September 2013 and is exploring new tanking projects. Dan Balt is reported as operating well and the evidence of the impact of its expansion programme should become evident from Q2 this year.

Most significantly is that the company has received an offer for it to purchase the 50% interest in Rosbunker that it does not currently own. Any transaction is likely to involve a third party and, therefore, the company does not foresee the need for additional financing should a transaction be concluded.

Our forecasts remain under review and, therefore, we do not have a target price and recommendation for Pan European Terminals.

[cyfran101] 26/2/2014 00:21

In a nutshell.

Positives:
- Baltic Top Improvements by Q2
- PBI possible expansion and operating at max cap
- "currently in advanced discussions on one project"

Negatives:
- Don't expect much positive impact from Dan Balt for a while due to clients being "nurtured"
- Rosbunker statement does flesh out possibilities but does not indicate strongly which one is more likely and arguably although some events have taken place the stalemate will continue.

[pantastic] 25/2/2014 17:17

Thats just the rns with one sentence added to say the shareprice rose slightly???

[loobrush] 25/2/2014 16:45

THIS IS A BETTER WRITE UP


Oil & Gas Sector: Pan European Terminals up as unit increases capacity




By StockMarketWire | Tue, 25th February 2014 - 16:11


Pan European Terminals (LON:PAN) was one of the sector's bigget risers after it reported that Baltic Top, its 100%-owned subsidiary, had recently increased capacity by about 10%, through an extension to its storage facilities to over 12,000 metric tonnes.

The new tanks, which are arranged horizontally, are able to carry all products required by the local market, including additives, which now allows the Company to blend products specifically required by certain customers.

A further 10% capacity increase is planned, through the installation of new vertical tanks, for general storage. These will be installed once the weather improves later in the first quarter.

Both projects will be financed out of Baltic Top's cash reserves. In December 2013, Baltic Top saw over 18,000 MTs of throughput, its second highest monthly rate since 2010.

Pan European also intends to install a 350-metre, 8-inch pipeline allowing access to the waterside jetties in conjunction with the neighbouring shipyard.

The pipeline has reversible flow capabilities and will allow Baltic Top, for the first time, to receive Marine Gas Oil by sea and also bunker barges and sea-going vessels from the government owned shipyard adjacent to the Baltic Top property.

This crucial improvement is a major development for Baltic Top and, together with the increase in storage capacity and blending facilities, provides the board with high expectations for the continued growth and success of its 100% owned asset.

In the Netherlands, Petro Bunker International, a 100%-owned facility that leases storage tanks in Rotterdam, has been trading at maximum capacity since last September. The Company is in discussions over new tanking projects and will update the market when these have been concluded.

Dan Balt, at Aabenraa in Denmark, continues to operate well, although the programme to expand its product range and increase profit per ton is still in its early stages.

The Board is confident that by Q2 2014 it will be able to report the results of this exciting new programme to shareholders. Dan Balt is a large ongoing project for the Company and shareholders are reminded that this is a long-term development plan, the results of which are expected to have a positive impact on cash generation for years to come.

It is essential that Dan Balt's client base is nurtured so as to allow the terminal to service a variety of clients and products.

Pan European also said it has received an offer from its partners in Rosbunker, for the Company to acquire the remaining 50% of the asset.

The Board is considering this offer and will update shareholders as and when a binding contract has been agreed. Until this time, the asset will remain frozen under a legal order.

Should this transaction progress to conclusion, the Pan European would expect to involve a local third party through back-to-back sale and purchase agreements, and at this time, the Company does not foresee the need for additional financing and/or financial support secured on assets outside of Rosbunker or in the form of equity, in order to complete the acquisition.

[pantastic] 25/2/2014 13:46

Pretty pictures to accompany the RNS this morning are available in the "press releases" section of the web site, direct link below: -

hxxp://www.peterminals.com/~/media/Files/B/Baltic-Petroleum/press-release/25Feb2014.pdf

[pantastic] 25/2/2014 13:37

You called...?

[loobrush] 25/2/2014 11:49

Well Rivaldo and you seem to agree with me -if that's the deal this would remove the Russian risk and Pan would probably end up debt free or cash in the bank ! Pantastic
and share price double ( at least) todays

FANTASTIC PANTASTIC

[aaainvestment] 25/2/2014 11:34

loobrush - that's how it reads to me, in theory they could sell just half but that wouldn't make any sense, what's in it for PAN? Or the buyer as PAN would be safer to simply sit back and let the partner negotiate and everyone would have less costs.

Buying the partners half effectively sets the price for PAN's share, I can assure you our partner Allinos, will not be done down - if it's a good deal for them then it will be a good deal for PAN.

[loobrush] 25/2/2014 10:57

Could it be that the money owed to Pan by Rosbunker is now so large that the price that Pan would have to pay for the other 50% of Rosbunker is really quite small ?
Also Pan eludes to "back to back deal", does this mean that if they purchase the other 50% that they have lined up a deal to sell the lot ?
Any views.

[aaainvestment] 25/2/2014 10:40

loobrush - I believe Rosbunker is far and away the most lucrative operation and I looked at the accumulated profits in Rosbunker a while ago and it is a lot of money probably £10m+ by now, PAN should realise that cash once they clear all court action associated with it.

That's the frustrating thing, PAN are doing very well operationally and had the fraud against Rosbunker not occurred we would probably not needed the loan for Dan Balt

However, if our partner doesn't want to pay out(though they are a multi £billion outfit and can afford to pay they may still want to cash out) then that may explain why they are negotiating a deal, why PAN will not need to raise cash to finance the deal.

If PAN also manage to negotiate a back to back deal at the same price(or even a premium) then is will liberate the value of the cash and the terminal in one transaction - hopefully a lot of money.

[rivaldo] 25/2/2014 10:17

My view on this is that PAN have a buyer lined up for Rosbunker, and (1) it's much easier to sell it as a 100% owned entity, and (2) they would not of course comment on this in an RNS prior to obtaining the remaining 50%.

The comments on trading throughout the Group look extremely encouraging.

[smokyjoe] 25/2/2014 09:30

Well it appears someone has had a word about the lack of news effecting the share price - about time too, perhaps next time it wont be necessary to suffer a 20% share price drop before someone in charge pulls their finger out and addresses the problem.

[loobrush] 25/2/2014 09:27

I've been looking at last 6 months accounts and it appears to say that appx £ 2.1 million would have been included in last 6 months accounts from Rosbunker but wasn't as Rosbunker had now been included in the accounts as an "investment".
If it was included this implies that this would add an extra 2x £2.1 mill=£4.2 million to the profits.
Have I READ THIS CORRECTLY?

[pantastic] 25/2/2014 09:13

What a lovely username!

Welcome Loobrush. Your thoughts are not a million miles from my own.

Pant-elastic

[loobrush] 25/2/2014 09:01

Well the RNS does not spell it out very clearly but I think this is brilliant news. From my understanding of the accounts Rosbunker owe a lot of money to Pan that has not been recognised in the accounts so if the deal is sorted out this would flow into PAN'S account and show a considerable increase in annual profitability.
The shares are rated below half the current asset value mainly due the Rosbunker situation and at least should be trading at the Belphar offer value of 20p odd. But if Rosbunker is solved should be nearer the asset value of 40 p. The market has not cottoned on to this yet. Maybe their brokers will put out a note pointing this out, they should earn their keep. however price very cheap, am considering adding at this level

[bangers for bucks] 25/2/2014 08:46

Why don't market makers actually make a market!! how can you deal with a 2p spread... 16-18p

[aaainvestment] 25/2/2014 08:23

Excellent RNS, and about time - do not be concerned by the lack-lustre response to the news we can all read and interpret to content so hopefully we'll see a steady rise(best sort).

The mere mention of a specific Rosbunker deal indicates the deal is much closer to completion than indicated in the RNS IMO - anyone hoping to buy in later/cheaper may well miss a major rise in share price if a deal is announced.

A deal on Rosbunker will remove a long shadow from over the company and Belphar's chances of making another low ball offer will be dead in the water - great news all round.

[pantastic] 25/2/2014 08:17

bangers - that sounds feasible too. I like that idea, although the numbers aren't great, it's £8.5m and PAN debt free. I prefer the taste of a bigger sum of money but as the share price has Rosbunker in at most at £0.00, anything is better than the current situation.

Interesting thinking. The possibilities are numerous.

[pantastic] 25/2/2014 08:14

That's very cynical indeed.

The more optimistic man might suggest that once you have 100% of something, you are much more free to do what you like with it. Selling 50% of something is trickier as the new buyer would have to get on with the other part owner.

I'm happy to sit this one out. This RNS was good news that doesn't appear to have been reflected by the MMs this morning - sneaky pesky MMs.

[bangers for bucks] 25/2/2014 08:10

Or the local third party is Belphar.. who will then pay us good money for our 50% which as share holders it would make sense to be paying the correct money? or maybe we simply swap our 50% for the outstanding loan note and become debt free with 3 good terminals all cash generative ??

[oli12] 25/2/2014 08:00

That's how I read it... we are going big... rather than 50% risk we want 100% if it.