Ft Tre Discussion Threads

[saud2237] 09/12/2011 13:22

jezza I know alot about carbon trading and you are basing your opinion on the assumption that Kyoto Protocol will be allowed to expire - that is where the risk is.

I personally think that wont happen and even if it did it will be replaced by another protocol (more effective one) to curb emissions. Carbon emissions is too big a problem in this day and age for it to be not tackled.

[imabastard] 09/12/2011 13:11

Quite true ....

"One other comment - to be fair to TRE, the former of those risks I have mentioned isn't unique to TRE, its relevant to the whole stock market."

[papy02] 09/12/2011 13:05

Simon Shaw is no doubt the genius who casued the offer in the summer to be rejected as not high enough ;-(

Yes he's a lot closer then we are to the facts but I would follow his investment actions with great caution (if at all).

[imabastard] 09/12/2011 12:58

On the flip side Jezza ....

"The Company was also notified on 8 December 2011 that, on 7 December 2011, Simon Shaw of EEA Fund Management Limited (Investment Adviser to the Company) purchased 250,000 shares in the Company at a price of 26.5 pence each."

Spending £66k .... just a punter ? Doesn't appear so ....

[jezza123] 09/12/2011 12:19

SteMIS - yes, you have repeated my earlier point - namely that considerable liabilities will be a possibility between now and year end 2012, if CER prices fall much lower than they currently are (which is near break-even) - those liabilities would create a liquidity squeeze, because the company doesn't have enough cash to cover (the PE portfolio is irrelevant in this case). To my mind the CER market is just like the CDO/CDS market of 07-08 - the same potential dynamic applies. Hence my comment that buying shares in TRE is like buying a call option on Dec 2012 CERs are current prices.

I am writing all this for the possibility that people who understand basic things like liquidity risk - and who may be coming onto this board to see whats what with TRE. I doubt they'll be many of those kinds of people, judging by what I see on ADVFN boards these days - but hey, what the hell.

[jezza123] 09/12/2011 12:10

saud2237 - with the greatest of respect, can I ask why you think they will 'bounce' - do you know anything about carbon trading? I only ask because I wonder if you are familiar with what happened to the US carbon trading scheme (i.e., the Chicago climate exchange)



the point is, if the Kyoto protocol is allowed to expire next year (and that's a genuine possibility) - all bets could be off. So I ask you, on what basis do you think a recovery is likely, or are you just a punter like that other guy?

[stemis] 09/12/2011 12:07

All of those questioning why I was buying yesterday PLEASE SPEAK NOW

You managed to pick up a few pennies from the railway track without looking to see if there was a train coming.

From today's announcement

The Investment Adviser to the Company estimates that the unhedged exposure to carbon obligations is c.13.5m tonnes of pre Dec 2012 delivery CERs, with a maximum theoretical liability to the Company of GBP77.3m in the unlikely event that the price of carbon was to fall to zero.

So that's an average price of £5.73/tonne CER or Eur 6.72. So any price above this and there is no net liability to the company.

I suppose the big unknown is the valuation of the PE portfolio.

[saud2237] 09/12/2011 11:25

jezza.....the carbon prices CERs will bounce back in 3-6 months time and anyone with enough cash to see out the current gloom will do well.

With a cash of 50 mill TRE are well placed in that sense and are confident to see off the current carbon price gloom.

On assets alone this should be trading in excess of 50p ! If they were to sell the CERs now they would be left with up to 150 mill cash !

Its a no brainer !

[jezza123] 09/12/2011 11:17

fair enough narindg - if you did really buy and sell well done, but then you are a punter and not an investor (as I suspected) - my questions to you were therefore irrelevant, since you don't have a clue about actual fundamentals

I am pleased that the company has done exactly what I was asking them to do, which is respond to the price falls, having read the RNS, the bit of the RNS that is most interesting is two fold -


The Investment Adviser to the Company estimates that the unhedged exposure to carbon obligations is c.13.5m tonnes of pre Dec 2012 delivery CERs, with a maximum theoretical liability to the Company of GBP77.3m in the unlikely event that the price of carbon was to fall to zero. The Company is not contractually obliged to purchase post Dec 2012 CERs. In addition to the cash balances described above the Company is also due to receive repayment of a loan of EUR17.7m from a portfolio company in early 2012. The Company therefore has sufficient cash resources to meet its current obligations and as previously announced the Board is overseeing the orderly realisation of the assets of the Company in line with its investment policy and will update shareholders in due course The Company was also notified on 8 December 2011 that, on 7 December 2011, Simon Shaw of EEA Fund Management Limited (Investment Adviser to the Company) purchased 250,000 shares in the Company at a price of 26.5 pence each.


- So Shaw has chucked in 66K of his own money (not insignificant) and the company has explained that a worse case scenario would result in a liability of 77million+ - so it's exactly what I was worried about, there is a potential for a liquidity risk in the event of a carbon price collapse. The company could get wiped out in such a scenario. Meaning, this really is like an option call on the state of the carbon market....

[saud2237] 09/12/2011 10:20

narindg well done....this is a definite buy at this price.....the one thing I have realised with the financial gloom at the moment is that you companies like TRE which are trading at a substantial discount which gives people like us an opp to dig in and make some profit !

[crosswire] 09/12/2011 10:15

The Company was also notified on 8 December 2011 that, on 7 December 2011, Simon Shaw of EEA Fund Management Limited (Investment Adviser to the Company) purchased 250,000 shares in the Company at a price of 26.5 pence each.

[narindg] 09/12/2011 10:11

Well I bought 50k yesterday sold 40k at around 23p and will hold 10k for a longer ride.

All of those questioning why I was buying yesterday PLEASE SPEAK NOW.

[saud2237] 09/12/2011 09:59

Doesnt make sense .... this should be trading well in excess of 30 p...I think we will see a huge surge later this afternoon as news spreads

[crosswire] 09/12/2011 09:41

In the cleantech sector, Trading Emissions (LON:TRE) responded the recent "material fall" in its share price by saying that its consolidated net asset value (NAV) at the end of June this year stood at 121.08 pence per share.

Adjusting for cash movements and valuing the carbon portfolio as at December 6, reduces the group NAV per share to approximately 76.7 pence.

At December 6, the company had £50.2 million or 20.1 pence per share in the bank.

In addition to the cash balances described above the Company is also due to receive repayment of a loan of €17.7 million from a portfolio company in early 2012.

"The company therefore has sufficient cash resources to meet its current obligations and as previously announced the Board is overseeing the orderly realisation of the assets of the company in line with its investment policy and will update shareholders in due course," said Trading Emissions.

[edwardt] 09/12/2011 09:33

er because this is not exactly copper bottomed!

[saud2237] 09/12/2011 09:32

As in why is it trading so low

[saud2237] 09/12/2011 09:32

76p NAV.....Why is it so low?

[edwardt] 09/12/2011 09:15

well - i think that at least i was right in they are partially hedged. good luck all. it seems to me that we are reliant on china coming to the table and at least committing to a binding agreement by 2015 at Durban. If they do this with Brazil already showing their hand in favour, this could back the US into a corner. Hence europe will have to commit to a rolling of the kyoto agreement and we could have a bounce of sorts.

[spectoacc] 09/12/2011 08:26

One positive is that they're not imminently bust on a cash crunch, but the co's a bit Schrodinger - either carbon zero & they're prob bust (since p/e portfolio also going to be stuffed on that) or else carbon price stabilises/picks up & they're worth much more.

[typo56] 09/12/2011 08:16

I don't see it changes things much. Same uncertainties. A good ball for traders to kick about. Still more inclined to short than long.

[esmith3] 09/12/2011 07:59

Any views on today's update?

My simplistic view is that it equates to net cash of 16.7p and PE portfolio of 60p per share but the PE Portfolio is valued with a March valuation and several of the projects will be worth considerably less with recent falls in CERS and solar tech overproduction.

That potential liability of 30p per share if carbon falls to zero looks pretty nasty but it's hard to know how linear the hedginbg effect is.