Pantheon Resources Share Discussion Threads

[officerdigby] 09/12/2021 11:51

Micheal, why does it say CBS can convert at any time in the RNS.

[michaelsadvfn] 09/12/2021 11:48

You are correct re. the $55m cezuan, the $55m is available immediately, perhaps i should have rephrased that. Works at T/TW/Alkaid will cost $50m so there’s plenty extra to utilise.
It is up to PANR when the bondholders convert, 5% quarterly in cash or shares so it’s not the bondholder who decides when and how much/many.

[ngms27] 09/12/2021 11:38

The other thing they don't get is that bondholders make at least 20% risk free and potentially much more in the upside case.

In the downside case PANR would have to pay in shares the full $50m which could entail large dilution and cede control to Convertible Bond Holders, which is nearly what happened at HUR and was only stopped by court action.

[ngms27] 09/12/2021 11:33

cezuan and johnswan193, well said, I don't understand why some don't get how Convertible Bonds work, despite the clue being in the name...

[johnswan193] 09/12/2021 11:30

Michaels, wrong again. They can convert at any time. It is not restricted to 5% per quarter. In success case and assume share price of £2 in April, they could convert all shares at 78p and sell on open market.

[cezuan] 09/12/2021 11:26

@michael I thought that 50m worth of bonds are issued immediately? Thereafter it is not up to PANR when the bondholders convert. Reaching 78p the bondholders are able to convert which at any price above 78p also pays more than the bonds would.* & that goes for the whole 50m USD as long as the price holds above 78p(?).

*Always ignoring risk free rates, etc.

[michaelsadvfn] 09/12/2021 11:22

Well, cezuan, we have the luxury of having $41m from the equity raise to play with first.

[cezuan] 09/12/2021 11:15

@michael Ok, though I disagree. The 3 drillings are what makes PANR's case or breaks it. Granted, in a worst case scenario where they still have Kuparuk, you may not dilute early. But I expect that pretty much no one now invested in PANR will then still be invested to find out^^

@michael Why would the bondholders only convert 5% per quarter? The bondholders' conversions rights aren't limited to the amortization amount, or am I missing something?

[michaelsadvfn] 09/12/2021 11:11

johnswan1939 Dec '21 - 10:37 - 20267 of 20268
0 3 0
Michaels are you stupid? In success case the bond holder (prior to the reset date) would convert at 78p and sell at profit on the market rather than wait to be repaid cash.

Of course they would, but only 5% per quarter. There are 20 of those in a 5 year period!
Obviously PANR won’t have a choice even in a success case to repay in cash probably until the end of next year but thereafter, who knows?

[michaelsadvfn] 09/12/2021 11:01

No, cezuan, i don’t think there’s any tacit agreement in place. I have no idea how much of the $55m they will need but it has been structured to allow the company to minimise dilution if they are in a position to do so.
There are too many unknowns going forward(Oil price, drilling results, service costs(was it not Haliburton that stated an increase of 35-40%?)) to claim anything will happen one way or the other.

[johnswan193] 09/12/2021 10:37

Michaels are you stupid? In success case the bond holder (prior to the reset date) would convert at 78p and sell at profit on the market rather than wait to be repaid cash.

[cezuan] 09/12/2021 10:36

Why @michael? Do you think that is a tacit agreement between them and PANR? Or is that a convention for these kinds of bonds?

Economically, the 50m USD bonds are worth 60m ignoring rf rates and inflation and if they can convert the 50m to stocks at a share price >= 78p, then financially - ignoring the quarterly 5% amort. - they should convert >=78p - which imo everybody here hopes to be easily achieved post drilling -, or? 78p includes the 5y 4% coupon rate payments.

That would be ~49m new shares, I think, though I don't care btw.

[probabilityofsuccess] 09/12/2021 10:31

Can’t see the former happening michaels because in that case the bond holder would convert……;…….but the price at that point would be materially above 78p so nobody will be that bothered (because it’s been a success!)

[michaelsadvfn] 09/12/2021 10:24

Imo the CB will not run the full 5 years but will be repaid either from production revenue in the event of successful drilling, or from lump sum proceeds from a farmout, if one is negotiated.

[dhb368] 09/12/2021 10:14

I was surprised by the amount raised in total, BUT if we assume that the BoD decided that it was wise to ensure that they have enough funding to get to Alkaid production (in case of disappointment at Talitha/TW), which de-risks things to the downside significantly for me, then it all makes sense.

NGMS is right though. Whatever your opinion on the CB, it will be more dilution on success (SP will rise and bondholder will convert) or failure (PANR will have to pay in shares), BUT diluting at 78p is better than at 65p.

As has been mentioned a few times on here, the farm-out is not dead.
Whether a deal is struck before testing BFF at Talitha, or after Theta West TD I cannot imagine any agreement now that, in a success case, will not add significantly to the exit price for pre-raise shareholders compared to the terms on the table right now.

Worse case, we get to live another day on the hope of Alkaid production, best case, you look back at this raise as the reason you get say $5/bbl instead of $3.

[inteligentia8] 09/12/2021 10:09

Ngms in reply to you multiple posts of this morning : let me help you... remember seeing many years ago Oliver Twist and at one point comes a song:. "Boy...boy for sale...going cheap..."🎶🎶putting in your context l can sing "shares...shares for sale..." I must admit you never cease one minute an oil&gas expert, next a maths/numbers expert, is there anything except comments expertise that you do in life?! 🤔 Everyone has read you want to get out at 150p and 🧚‍a94;️your wish will be granted believe me so in the meantime 🙈🙉🙊

[michaelsadvfn] 09/12/2021 10:02

Then he tries to wriggle out of it by claiming that he’s been quoted ‘out of context’!

So, mr. ngms, is this in context or not...
‘In the success case there will be a whole raft of new shares @ 78p, in fact 70.5m.’

Factually incorrect, as someone i know would say.

Muppet.

[probabilityofsuccess] 09/12/2021 10:00

Indeed officerdigby - talking at cross purposes then!

[dlm2602] 09/12/2021 10:00

Chris0805.

My mistake, dilution is currently 6.9%. I'll try and correct earlier msg

[probabilityofsuccess] 09/12/2021 09:57

Amortisation:
5.00% of the Initial Amount each quarter (US$2.5 million to US$2.75 million) payable quarterly, in cash or new Ordinary Shares at the option of the Company

[officerdigby] 09/12/2021 09:56

Think NGMS is referring to this line in the bonds RNS.
Conversion Right: At any time at the option
of the Bondholders


CBonds: Senior, unsecured convertible 5-year bonds,
due December 2026; issued and redeemed at
par; subject to English law
Issue subject to successful completion of
the Equity Fundraise
Denominated and issued in $
Initial Amount: US$50 million, with Company option to upsize
to US$55 million subject to raising at least
US$25 million in the Equity Fundraise
---------------------------------------------------------------
Coupon: 4.00% per annum, payable quarterly in arrears,
in cash or new Ordinary Shares at the option
of the Company(1)
---------------------------------------------------------------
Amortisation: 5.00% of the Initial Amount each quarter (US$2.5
million to US$2.75 million) payable quarterly,
in cash or new Ordinary Shares at the option
of the Company(1)
---------------------------------------------------------------
Conversion Right: At any time at the option of the Bondholders
---------------------------------------------------------------
Conversion: Initial Conversion Price : 20% premium to
Issue Price
Reset Conversion Price : The Conversion Price
may reset down at 9, 18 and 30 months, depending
on Ordinary Share price performance, according
to a formula and subject to a hard floor of
65 pence ("Hard Floor")(2)
Reset Clawback : Following any reset, the
Company has the right to revert to the prior
Conversion Price, if the daily VWAP on each
of at least 20 trading days in any period
of 30 consecutive trading days is greater
than 150% of the Initial Conversion Price.
The Company may only exercise one Reset Clawback
during the term of the Bonds
----------------------------------

[ngms27] 09/12/2021 09:54

Chris0805, sure they can have mine for 150p in the next 6 weeks as I previously stated. Once testing commences the offers off the table.

As usual for Guilders I'm being quoted out of context...