Author Topic: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?  (Read 141896 times)

petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #540 on: April 12, 2019, 03:00:43 AM »
Just updating my NAVPS. As a common holder I love the conversion of the prefs - materially reduces risk while still leaving multibagger potential (although that's increasingly dependant on UHIC). My NAVPS for the common now ranges between $0.90 and $7, so I quite like the risk/reward. The $0.90 assumes virtually all the investments bar DPM are a 0, but does value the prefs at market not par - in other words it basically assumes they sell DPM and buy back the prefs, or swap DPM for prefs at market. The $7 is mainly driven by current BV less TauRx plus something for Parq, with the big driver being UHIC finding oil and the probability assumptions in that DCF going to 100%.

I am intrigued by Parq - they have written off the entire equity and pref equity position, and a third of their (small) debt position. Downside risk is very limited here unless they pour more capital in. But when I play around with scenarios based on ebitda, refinancing rates, and FFO cap rates it wouldn't surprise me if there is some value in the prefs at least. And just about the only good thing about this investment is that Dundee has moved further up the cap structure with every additional investment so they get more of any upside than the other owners do.

Question: has anyone seen a call transcript?



petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #542 on: April 12, 2019, 06:16:33 AM »
I do - thanks.

petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #543 on: April 15, 2019, 06:03:15 AM »
An accounting question...

Blue Goose is consolidated (Dundee own 89%). It has external debt but it also has $29m of intercompany liabilities that reduce minority equity. I assume this includes the $15m convertible debenture that Dundee owns. Does anyone know what the rest is?

Also how are the intercompany liability and the $15m convertible pref accounted for at Dundee? Are they eliminated as an intercompany asset? (They're not in private debt - that's $25m, split $15m Eight Capital and $10m Parq).

NB BG is on Dundee's books for $27m, just below the value of the intercompany asset/liability.

I'm mainly asking because I don't want to double count, but it's also interesting to think about sale scenarios. The good thing is BG doesn't have to have equity value for Dundee to get some cash back. The bad thing is if Dundee only sell the equity, and there's no concurrent refinancing, they may be stuck with the debt.
 

Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #544 on: April 16, 2019, 09:28:44 AM »
An accounting question...

Blue Goose is consolidated (Dundee own 89%). It has external debt but it also has $29m of intercompany liabilities that reduce minority equity. I assume this includes the $15m convertible debenture that Dundee owns. Does anyone know what the rest is?

Also how are the intercompany liability and the $15m convertible pref accounted for at Dundee? Are they eliminated as an intercompany asset? (They're not in private debt - that's $25m, split $15m Eight Capital and $10m Parq).

NB BG is on Dundee's books for $27m, just below the value of the intercompany asset/liability.

I'm mainly asking because I don't want to double count, but it's also interesting to think about sale scenarios. The good thing is BG doesn't have to have equity value for Dundee to get some cash back. The bad thing is if Dundee only sell the equity, and there's no concurrent refinancing, they may be stuck with the debt.

You might want to email the CFO to get an answer. I haven't tried to figure out Blue Goose to that degree because I am just assuming it's worth zero to be conservative.

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #545 on: April 18, 2019, 09:04:31 AM »
Beacon...

Dundee Precious Metals Inc. (DPM-T)
12 Month Target: $7.40 (was $6.65) | Buy (unch)

Site Visit Update


Last week we attended a site visit to evaluate both of the company's operating mines in Bulgaria; Chelopech and Krumovgrad.  We were extremely pleased with all aspects of both operations.  At Krumovgrad, DPM has already won an award for the environmentally responsible mine design and we expect there will be many more awards to come.  The process plant should be 100% finished by month end and will likely end up being $10m under budget.  Despite being under budget, the plant utilizes the latest and greatest technology and we now expect the life of mine recoveries will be above forecast in the feasibility study.  The gold concentrate produced could possibly even grade as high as 500 g/t once the mine is fully ramped up.

At Chelopech, we were even more impressed.  This is absolutely the best looking underground mine we've ever and seen and is why it has won so many awards.  Additionally, the management structure and buy-in from the mining unions is unparalleled.  This is reflected in its cost performance.  The mine runs at about 6,100 tonnes a day and has mining costs of $14/t, processing costs of $8/t and all in costs (before royalties - which the company can't control) of about $32/t.  Simply put, that is fantastic.  There is also loads of available capacity throughout the mine and plant and thus the company is focusing a great deal of effort on in mine (and near mine) exploration.  As a reminder, Chelopech has operated uninterrupted for over 65 years and currently has eight to nine years of life in reserves.

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #546 on: April 18, 2019, 10:26:29 AM »
Year end commentary from the Ravensource Fund...

https://www.ravensource.ca/financials.php?sub_name=2018

Dundee Corporation (“Dundee”)

Dundee (TSX: DC.A) is a publicly listed holding company headquartered in Toronto. Founded in
1991, Dundee became one of the largest independent asset managers in Canada.
In 2011, Dundee sharply pivoted from what worked in the past by selling its asset management
and real estate crown jewels only to hastily spend the proceeds on speculative new investments
across ~100 holdings mostly in industries in which Dundee had no expertise. These new
investments have performed abysmally, causing Dundee to write-down approximately 70% of its
invested capital only a few years after they were made. In turn, Dundee’s common shares has fallen
in value by over 95% since its peak in 2013 while its Series 2 & 3 preferred shares tumbled to
approximately 50 cents on the dollar despite being Dundee’s most senior securities. Across the
capital structure, Dundee’s investors lost confidence, panicked and fled.

Free of emotional baggage carried by existing investors, we worked to determine whether there
was opportunity within the chaos. With Dundee’s portfolio of ~100 names, we first performed
triage to cull the smaller and speculative investments and focused our analytical rigour on the
remaining few with tangible and obvious value. Our analysis concluded Dundee’s assets were
worth in excess of the face value and 3x the market value of its preferred shares. We were also
attracted to the preferred shares’ 12% dividend yield, equivalent to 15.7% interest on a bond
factoring in the tax advantages of dividends. In the third quarter of 2018 we began buying the Series
2 & 3 preferred shares, based on a large margin of safety, healthy yield and potential catalysts for
meaningful capital appreciation.

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #547 on: April 29, 2019, 12:34:16 PM »
https://www.bloomberg.com/news/articles/2019-04-29/vancouver-s-once-rollicking-casinos-hit-by-dirty-money-crackdown

Meanwhile, Dundee has said it’s seeking to bring in a new partner to Parq by Tuesday. All told, investors had pumped more than C$1 billion in long-term debt and equity into Parq by the end of 2018, according to filings. Dundee, which put in C$142 million of that   :o :o, has said it doesn’t expect to fully recover its investment and that it could take another year or two before Parq is closer to stable operations.

"They don’t necessarily think they’re going to get their money back," said Hood. "But they do think that they’ll get a substantial portion back and that’s why they don’t just give up and sell it."

bizaro86

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #548 on: April 30, 2019, 12:38:12 PM »
https://www.bloomberg.com/news/articles/2019-04-29/vancouver-s-once-rollicking-casinos-hit-by-dirty-money-crackdown

Meanwhile, Dundee has said it’s seeking to bring in a new partner to Parq by Tuesday. All told, investors had pumped more than C$1 billion in long-term debt and equity into Parq by the end of 2018, according to filings. Dundee, which put in C$142 million of that   :o :o, has said it doesn’t expect to fully recover its investment and that it could take another year or two before Parq is closer to stable operations.

"They don’t necessarily think they’re going to get their money back," said Hood. "But they do think that they’ll get a substantial portion back and that’s why they don’t just give up and sell it."

The first Parq reference in Dundee's filings is in their March 2015 AIF.

It must have taken some really impressive talent to lose dramatic amounts of money in a real estate development located in Vancouver over the past 4 years...

Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #549 on: April 30, 2019, 01:47:11 PM »
https://www.bloomberg.com/news/articles/2019-04-29/vancouver-s-once-rollicking-casinos-hit-by-dirty-money-crackdown

Meanwhile, Dundee has said it’s seeking to bring in a new partner to Parq by Tuesday. All told, investors had pumped more than C$1 billion in long-term debt and equity into Parq by the end of 2018, according to filings. Dundee, which put in C$142 million of that   :o :o, has said it doesn’t expect to fully recover its investment and that it could take another year or two before Parq is closer to stable operations.

"They don’t necessarily think they’re going to get their money back," said Hood. "But they do think that they’ll get a substantial portion back and that’s why they don’t just give up and sell it."

The first Parq reference in Dundee's filings is in their March 2015 AIF.

It must have taken some really impressive talent to lose dramatic amounts of money in a real estate development located in Vancouver over the past 4 years...

You'd think so, but Parq is not just a condo building. The size, complexity and uniqueness raise the uncertainty level dramatically. I think the mistake was doing something so far outside their circle of competence. These guys are not developers. They had no business getting involved. Parq has the fingerprint of Ned Goodman's later stage "Master of the Universe" persona that led to so much capital destruction. It's pretty sad that he succumbed to hubris after such a long and successful career and blew everything up.