Just flying a kite perhaps, but with EdS presumably now in receipt of their Insurance settlement of c US$2.5m gross (per recent RNS), then seeking alternative finance (to that anticipated from the cash-strapped Argentinian Authorities) to repair the long damaged turbine should be that bit easier one would have thought.
We have to assume the repair costs are however significant and exceed the Insurance settlement which was, we were told previously, possibly available to recommence EdS loan repayments to RUR. This was possible as EdS were, we were also told, still able to cover all of their Operating costs despite their lower generating income. If this has changed, we have not been informed.
Nevertheless, EdS may not quite be in the position they once were when fully operational, but RUR's 50% owned JV now having some hard cash in US$ is significantly better placed than it was.
Now even if it doesn't interest our BoD, then it might just interest one Peter Earl who used the excuse of EdS' falling down on their Loan repayments to RUR as the main reason for terminating his potential take over discussions with RUR last year.
There is in my view now an opportunity here with the Insurance settlement being the catalyst. The fact that P Earl's 6 month embargo on reviving his interest in RUR expires next week is of course purely coincidental here....
Well, this RNS at least started with some very positive news.
The almost mythical Business Interuption Insurance cover held by EdS does in fact exist and, more importantly, has paid out with a US $2.5m settlement expected within days.
Now that should have been our 'starter for 10' but RUR being what it is has contrived to become victim (well EdS has) of the significant geo-political risks of operating in South America (again).
The fact the Argentinian authorities look to be running out of cash is nothing new when we look back over history but we had hoped matters had improved following Gov change in recent times.
So, RUR look to be still waiting with its begging bowl (for its already reduced loan repayments), as there is no clear idea of when EdS damaged turbine can be fixed and they can recommence loan repayments so we are desperately short of cash. And we have no clear idea of what RUR's monthly cash burn is either.
However, EdS will shortly be in receipt of c$2.5m in cash so RUR should get themselves a Partner with some know how, seek to take remaining control of EdS and get us out of this log jam without messing about any longer!
We have been here before G or S of course, but active (share) buying however modest is nevertheless welcome particularly given the information vacuum in which we PI's have to operate.
I have tried contacting our BoD again in an attempt to get them to update the Market, at least, to clarify if we still need Short Term Facilities and / or if appropriate Facilities are in place, even on a Standby basis.
I shall update here should I get a response.
Given the 7 Dec RNS stated the BoD were 'actively examining funding options etc' ., we might have thought coming up for a month on, we would have received some sort of clarity on the subject.
Then again this is Rurelec.
Hopefully todays upward movement in SP (thus far) presages some sort of news on Funding and everything else that the BoD have been up to during the latest 'news blackout' for shareholders. We can but hope.
With the continued cessation of repayments from EdS, RUR are once again strapped for cash and facing a crisis.
Clearly the other assets for sale have not made any progress (well we have to assume thats the case), so once again RUR are hanging by their fingernails scrambling about seeking expensive short term debt until (it is hoped) loan repayments recommence sometime around May 2018 onwards.
The uncertainty surrounding EdS business interuption insurance is surely a joke given this would have been explored at the time of the previous incident preventing loan repayments to be made in full to RUR last year.
Now as we have been here before, it rather confirms our BoD despite perhaps their best intentions, are simply not up to the task. We need a more dynamic approach but given our position I concede that a degree of ownership in our various assets will have to be 'traded'. Continuing on with the 'bookkeeper' approach is not the role of a BoD.
Failing any change at best we will continue as a 'zombie' Co or at worst fail to secure w/cap facilities and be wound up.
Then of course we dont need to be too imaginitive to foresee which vultures would appear to get RUR for buttons.
If we set aside PE's interest in RUR for the moment (which may stretch to 6 months if there is no other manufactured interest in RUR to comply with UK's Takeover Code), shareholders should rather look to the situation where next year at this time, we could be entirely debt free wuth a surplus cash flow being generated from EdS.
I accept that this assumes the recent damage to the turbines of EdS generator can be repaired and the current sutuation whereby generating capacity is compromised can be repaired eithin a reasonable timescale. As a consequence, the loan repayments to RUR are also compromised but only to a relatively short / temporary period.
Now we have considerable risks, be they geo-political, foreign currency exposure both transactional and translational, differing legal regimes etc., but the point is that we (ie RUR) will then be a 'shell' Co but one which has contractual income, no debt and a platform on which someone (other than PE) could seek to expand and become an effective Regional Player in energy generation in S America.
Surely our Dickensian BoD can finally wake up and exploit, or at least invite others, to exploit the position RUR has found itself in?
There really could be a significant opportunity here if it could only be recognised (and of course no further damage occurs to our only source of income ie EdS). 12 months from now, really could alter RUR's position qiuite fundamentally.
I accept it will be high risk, but there must be significant players out there who can identify a serious opportunity when it presents itself.
Its difficult for PI's to look at PE's approach for RUR with any sirt of perspective given that we are kept in the dark by a BoD intent on pretending they don't exist.
So that 'modus operandi' has now provided PE with an excuse to abandon his approach and at the same time win some cheap points at our expense by highlighting their inability to quantify the impact of EdS' recent problems as far as their loan repayments to RUR.
To be fair this is info all shareholders have also been asking for and its a disgrace that c3 weeks after the RNS (re EdS) we are still awaiting clarity on an issue as central as cash flow and viability of our invested Co.
As for PE, we haven't seen the last of him but what we shouldn't expect is any sort of realistic value for shareholders.
With time running out for PE to make an offer or withdraw, it seems finally that recent share trading activity is finally reacting to the considerably greater number of purchases than sales.
I'm not normally one to speculate on MM's activities, but the increase (at time of writing) of c23% on moderate buying does tend to suggest the MM's may be short of stock despite their previous efforts in holding the SP as low as possible .......for whatever reason.
Perhaps we LT holders are finally going to see some fireworks, with the SP going up like a rocket etc............sorry!
Regretably the Market seems to be taking the view (in the form of an ever reducing SP), that PE is the only game in town and history suggests he certainly wont be paying top dollar or anything like it.
RUR shareholders are very limited in what actions we can take here, unless of course, the Administrators of Sterling Trust are onside and compliant with any strategy suggested etc.
This in my view looks increasingly unlikely and whilst given their controlling interest in RUR, they dont technically need the wider shareholder support, I would have thought a coordinated reposte to PE would better serve us all. YF Finance with their 17% holding surely must be looking to secure an acceptable position.
The nagging doubt I have here is that a deal will be struck with the Administrators which legally they may have to accept (given the absence of any other offer within a reasonable time) but which may fall well below many of our expectations.
Quite honestly, legalities apart, any 'normal' shareholder which owns c54% of the Ordinary shareholding should themselves be looking to acquire RUR. This would clearly involve a considerable fund raise and probably be beyond an Administrator's remit, but not only would it stuff PE but equally raise the possiblity if maximising the return on their investment.
In looking at RUR's 'business model' as it is today, this is not totally wishful thinking. It could be commercially sustainable and provide control over the asset disposal programme. It would have then have its exit.
Unless of course their (i.e. ST's Administrator) 'appointee' made some months ago to the RUR BoD has fed back some contrarian information on how realistic these mooted disposals actually are.
As it is we are in danger of 'ball watching' when there is every possibility PE will walk the ball into the empty net.
Yes, all part of PE's quest for world domination.....at least as far as power generation in under-developed countries are concerned.
Unfortunately for RUR shareholders IMO, is that there appears to be only PE actively looking to aggressively grow his exposure to the power generation sector in high risk political locations such as South America and now sub-Saharan Africa.
I say unfortunately, because of course our BoD will be no match for the street-smart PE who will happily now adopt similar tactics to those employed by Bolivia in procuring RUR assets for next to nothing.
Can't imagine our BoD are in the same league as PE and that must be a worry for shareholders as we seem to rely on our proxy 'champion' in the form of the Administrator of our largest shareholder, Sterling Trust to somehow ensure the inevitable fire sale of RUR doesn't totally incinerate our investment.
11 April 2017 Independent Power Corporation PLC (IPC) is proud to announce the establishment of a new power development company, QG Power Africa (QGPA). This joint venture, with engineering consultancy Tomé International and the US$250 million Quantum Global Mezzanine Fund, has been set up to develop power plants across countries in the sub-Saharan Africa region. It will focus, during its initial phase, on Angola, Botswana, Mozambique, Uganda, Nigeria, Kenya and Ghana. QGPA will expand its development capabilities to meet Africas fast growing demand for power.
Given EdS is 50% owned by RUR, then today's RNS could be deemed intentionally opaque as of course all the info including whether or not EdS actually have appropriate Business Interuption insurance etc etc will be available and perfectly clear to our BoD along with all the other 'missing' info that should have been provided to shareholders in today's RNS.
Perhaps we can rely on our Nomad, WH Ireland, to get things sorted out in between unwinding their Short position on RUR.
.........then again perhaps not! After all they know how useless current AIM Rules are.
At this time it is in all holders interests to see the s/p settling daily at a higher level, so it's a BUY to enhance and protect existing holdings. To sell now is only likely to reduce the value available to be received in the not too distant future.
Unlike so many AIM Cos when initial 'approaches' are received, there is often very little realistic prospect of a deal materialising.
However, in this case, PE has of course more than a little 'history' with RUR, and has always regarded it as akin to 'his' Co.
Since the calamatous Bolivian settlement really forced his exit, he has harboured notions of again regaining control.
So whether or not a realistic deal can be struck remains to be seen, but what we have is definitely a Party who can see oobvious potential in aquiring RUR particularly with the improved political climate in Argentina.
He is also likely to know better what the prospects for completing sale of the Peruvian assets and completing the Chilean development than many parties (including shareholders).
To have todays approach he will also had discussion with Sterling Trust's Admin and has doubtless been encouraged by the response he received (otherwise there would be little point in making any formal approach to RUR).
So, a deal looks to be in the making - lets hope it can be structured to recompense the long term shareholders who have witnessed value destruction under PE's previous tenure.
Well the upsurge in SP this morning was indeed a leaky ship as the subsequent RNS has just confirmed.
This approach was anticipated some time ago particularly when RUR was even more cash strapped than it is today, but arguably the exit route for any potential purchaser of RUR is now considerably clearer.
Well in that case, he can pay top dollar in my book but it will be all up to the Administrator of Sterling Trust who of course controls more than 50% of RUR's issued share capital.
Interesting times as they say as today's SP comes nowhere close even to the last quoted NAV of 5.5p far less the once dizzy heights this Co's SP has reached in the past.
At the time of writing, its refreshing to see c25% uplift in the SP indicating that some are taking the view that EdS will indeed continue meeting their loan repayments to RUR and as a consequence our Co could become debt fres next year with coninuing positive cash flow.
Added to that, there must be a chance however remote that might be that an asset sale can finally be concluded and if that is the case it would be genuinely transformational.
Well I guess with no Income whatsoever, losses were inevitable at least at Operating levels but this year ForEx losses emerged on the Group's Argentine operations in contrast to the gains of £2m made in the previous year combining to produce c £1.9m as an LBTax figure
However, the main risk to RUR's future is its precarious cash flow position. In fact, this continues to improve and provided EdS maintain their loan repayments, will enable RUR's current Working Cap loan facilities to be repaid next year.
That said, we are wholly reliant on EdS' ability to meet their loan instalments and the recent (2nd) outage they have suffered this year simply underscores how fragile RUR's cashflow (and future) really is.
So we limp on in the hope EdS keep making their payments and that a sale of the Peruvian assets can one day be achieved.
If you have real patience, you might just be rewarded eventually - just not sure I will live long enough to see it.
Whilst it may be overly critical of the Directors to expect them to determine the precise extent of cashflow disruption to RUR at this time, it would not be unreasonable to have expected definitive clarity on what exactly happened to EdS' apparent Business Interuption insurance cover.
This was mooted as a measure of comfort at the time of the previous incident but strangely received no comment when that particular problem was resolved. It also emerged that loan repayments (to RUR) were in fact deferred suggesting that particular claim had not been covered.
Again, not unreasonably, we could have expected the latest damage suffered to the turbines to have been covered with just such insurance but instead we are expecting a shortfall in funds from EdS......or did they (EdS) just forget to pay the premiums?
As is normal for our BoD, brevity is the watchword, so we can really only speculate on what the impact may be for RUR as the damage sufferred ealier this year at EdS got the same treatment.
A concluding statement then, indicated that (despite having business interuption insurance), as a consequence of lost income, EdS had missed some loan repayments and delayed others due to RUR. The extent of the shortfall was never disclosed albeit we were advised repayments did recommence.
What will happen this time? Who knows........probably our BoD doesn't know either.
Is surely a good sign that the last of Mr Earl`s Brigade ,with the IPSA connection have gone.
Let`s hope Rowbotham & Sterling have Our Interests at heart .
Could be quite a long haul though.
Best Of Luck All
Well I guess given the history of this Group, longtermers at least should not be too surprised by yet more bad news on just about all fronts.
The lack of informative updates inevitably has given rise to speculation on many aspects of Rur's activities and with recent political change in Argentina being positive to the Group in many ways, allowed some investors to suggest the 2016 figures could be close to being 'transformative', particularly as the recent cashflow crisis has abated somewhat.
However, the optimists have unfortunately been well wide of the mark with Rur now solely dependent on its Argentinian JV for income with trading conditions in Chile having deteriorated and the disposals hoped for in Peru having come to nought, despite previously advanced discussions etc.
So with the write-downs to its assets (including the ageing generators held in Venice in storage), we are once again looking at very substantial losses with cashflow hanging somewhat by a thread, albeit improving slightly.
The further impairments to asset values has impacted on the NAV per share which is now 5.6p (6.7p per share - 2015).
While disposal of the Peruvian assets or recovery of Capex already undertaken in Chile would materially alter Rur's position, there is no evidence to suggest either is around the corner and we can only conclude that Rur will at best continue to limp along provided Eds in Argentina can maintain or even improve its own operations and by consequence maintain or improve on its cash payments ultimately to Rur.
If we are to avoid criticising our Auditors or dare I say it, our BoD, I can only surmise it takes more than 6 months (almost) to produce FYE results for a Co such as Rurelec because the Chairman's Statement in the awaited Accounts must be almost Biblical in length.
There is, after all, rather a lot to tell - I just hope they remember!
The almost casual way in which the news of the extension in short term facilities is expressed in today's RNS does rather suggest a material improvement in RUR's cash flows (from the dark days of 2015/16).
A bit like reading tea leaves, PI's are left to speculate on the liquidity profile of our investee co, as we are with so many other aspects of their performance.
It really isn't good enough for a public company.
Without trying to sound over enthusiastic, things do appear to be on an improving trend but we are of course desperate to get more information on so many other topics in order that we can sensibly analyse risk here rather than speculate and guess, albeit we have had no other alternative but to do this for the past 18 months or so.
At the operating level in Argentina, and therefore based on 100 per cent. of EdS's activities, EdS's revenues increased to £27 million (AR$180 million) this year (2010: £21.7 million/AR$131 million). Gross operating profit also increased substantially, to £10.5 million (AR$70 million) (2010: £7.7 million/AR$47 million). Exchange losses of £2.6 million (2010: loss of £0.9 million) due to weakness of the Argentine Peso reduced operating profits to £1.5 million (2010: profit £2.3 million).
Thus the share price will eventually reflect this huge asset.
Encor Power plc appear to have reached agreement to aquire the shareholding of IPSA and as of course the approval of Sterling Trust is required it gives a glimpse of what appears to be happening behind the scenes for both IPSA and Rurelec
I'm sure if our current BoD were to report receipt of a £10m windfall, they would probably still contrive to issue an RNS that talked about nothing else other than the potentially huge Tax liability.
Today, we have positive news that what could have been catastrophic damage to EDS' power plant should in fact be fixable in relatively short order (given the extent of equipment damage).
Clearly, as yet, there are no guarantees etc everything will work and optimum capacity (at EDS) can be achieved but that is simply Operator risk.
Rurelec are of course are not even direct operators here, so even if payments from EDS are impacted, this should not be material, given the BoD's comments on the Operator's Business Interuption Insurance cover.
So it shouldn't be that bad at all unless we are being misled. So how about a general business update BoD?
Certainly, I have to concede that my view of PE has changed significantly since he left RUR as more of the muddier dealings have emerged.
Our latest BoD (which I view as akin to a de-facto Administration), has hopefully the integrity shareholders need, although they certainly arent the quickest out of the blocks as you say.
Much as before, RUR shareholders continue to have to scratch around for meaningful news and I guess thats not about to change anytime soon and its a surprise that the SP has held up so well but that appears as you know largely due to a particularly optimistic investor who posts on LSE.
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