Author Topic: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?  (Read 175343 times)

SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #90 on: July 31, 2017, 06:07:02 PM »
Anyone looking at the E's? They have a YTM of over 12% and are putable but obviously don't have the same capital gain potential as the Ds and Bs.
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Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #91 on: July 31, 2017, 09:23:24 PM »
Anyone looking at the E's? They have a YTM of over 12% and are putable but obviously don't have the same capital gain potential as the Ds and Bs.

I haven't looked at them until now. But I think, at $23, the YTM is actually about 14.7% because holders have the option to redeem 17% on Jan 31, 2018 for $25. The potential catch is that there is an embedded put option that allows the company to convert to common at the higher of $2 and 95% of trading price. So if the common was below $2 at some point over the next two years, a conversion would be negative for the holder of the E's. I think the chance of a conversion at $2 is very low, however, unless things get very desperate at Dundee.

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #92 on: August 10, 2017, 10:54:58 AM »


http://www.intrepidcapitalfunds.com/media/pdfs/fsb0.nschmidt.xf00.193745.endurance_fund_commentary.pdf


"In our Dundee mea culpa in last quarter’s letter, we wrote: “We have urged management to sell Dundee’s public investments to pay off bank debt and preferred stock, which would reduce cash burn by half. If the company then catches a break on one of its major private investments, it could mark a turning point for the company’s fortunes.” On May 10th, Dundee announced that Delonex Energy will acquire United Hydrocarbon (UHIC), Dundee’s Chad energy venture/money pit. Delonex offered $35 million at close, another $50 million when first oil is achieved, and ongoing royalties ranging from 5%-10% of production unless Brent prices fall below $45 per barrel. Dundee has been spending $12 million per year to maintain UHIC while seeking an investor, and this cash drain will disappear upon a sale. It’s not a done deal, as Dundee is currently in negotiations with the Government of Chad to renew its Production Sharing Contract. On May 19th, Dundee sold its entire remaining stake in DREAM Unlimited for CAD $106 million. The proceeds will likely be used to pay down bank debt.

The sales of UHIC and the DREAM shares were exactly the type of positive catalysts we were seeking. The market has clearly shrugged, since Dundee’s shares are back down to all-time lows. Canadian small caps have traded weak this year, which could be a factor, but we think investors will need confirmation that the Delonex transaction closes before they bid up Dundee’s shares."


gokou3

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #93 on: August 11, 2017, 04:21:02 PM »
The Q2 report shows that the company is in a net cash position at the corporate level after its $100M+ sale in DREAM shares and repayment of some $60M in bank revolver.  Isn't this a huge plus for the preferred given a large portion of more senior claims has been wiped out?  Or is the market still waiting for 1) the deal that plug the cash drain aka UHIC to close and 2) Parq casino for a smooth opening?

https://web.tmxmoney.com/article.php?newsid=8504637627187082&qm_symbol=DC.A

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #94 on: August 14, 2017, 09:57:12 AM »
From GMP this morning....

Dundee Corporation1 BUY

DC.A-TSX

Last:

C$2.76

August 14, 2017 Target: C$8.00
Q2/17 - UHIC sale progressing

Undiscounted NAV $9.39

Dundee Corp. (DC.A-TSX) reported Q2/17 results on August 10th after the market close. Our NAV of $9.39 versus $9.79 previously, was slightly lower q/q largely due to a decline in the publicly traded investment portfolio. The discount to NAV remains wide at ~70%. We believe that some investors may be applying deep discounts to the private investments.

UHIC sale may close in Q3

The sale of UHIC assets continues to progress. In July, regulatory approvals for the transaction were approved from the Republic of Chad and UHIC shareholders. Certain other conditions are still required, including an extension from the Republic of Chad to the exploration period. Management now expects the transaction to close in the third quarter with an outside date by year end. GMP is advising on the UHIC transaction. In our view, this possibility of earlier closing than originally expected is positive for DC.A from a liquidity perspective. We assume the deal will close, but conservatively include only the initial US$35 million payment in our NAV (US$9.5mm to be held in escrow for three years). Payment on achievement of first oil (US$50 million) could add ~$1 to our NAV, plus an ongoing royalty.

Maintain BUY – liquidity position much improved

In our view, the DREAM sale has left the liquidity situation much improved. Net cash at the corporate level was ~$46 million exiting the quarter. With the debt paid down, annual corporate level cash needs (interest, dividends, op. expenses) are now ~$33 million. We believe this may be reduced in the coming quarters. Subsequent to the end of the quarter, DC advanced $5 million (along with $5 million from partners and $27.5 million additional debt) to fund any cost overruns and initial working capital requirements for the Parq Casino, which remains on track for a fall 2017 opening. Blue Goose also delivered a strengthened quarter of operating results.
Exiting the quarter, our NAV is now $9.39 (previously $9.79). The only material change to our NAV was the decline in public investments. The discount to NAV remains wide at ~70%. We apply a 20% discount to yield our price target of $8.00 (unchanged). We maintain our BUY rating. Please see Figure 1 for our NAV sensitivity analysis.

Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #95 on: August 14, 2017, 01:35:27 PM »
Thanks for this. I'm curious why the sale of Dream Unlimited shares is treated as some sort of wonderful catalyst creating liquidity. Haven't the Dream Unlimited shares been liquid all along given this is a publicly traded company?

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #96 on: August 14, 2017, 01:59:42 PM »
Blue Goose has significant land position that is most likely not fully reflected in the value of this asset. Especially now that it is growing and becoming operationally profitable....

Blue Goose owns over 45,000 acres of farm land in British Columbia, and is a recognized consumer brand with beef, chicken, and fish products distributed to over 640 retail locations across Canada, making Blue Goose well-positioned to capitalize on the high-growth organic food market.

From the conference call...

Well our land is appreciated nicely in value so we've been very happy with the investment. And it's used primarily to graze the cattle up and house the cattle operations in BC. We've had appraisal done of it which value at approximately $100 million. In the future, I mean we're looking actively at all of our businesses to evaluate what they're worth and what our best strategic opportunity is in accessing liquidity and maximizing the value of the underlying investments. So we would absolutely look at anything in that regard.

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #97 on: August 14, 2017, 02:03:22 PM »
Thanks for this. I'm curious why the sale of Dream Unlimited shares is treated as some sort of wonderful catalyst creating liquidity. Haven't the Dream Unlimited shares been liquid all along given this is a publicly traded company?

Any investment whether public or private is not seen as cash or fully liquid until it is sold. This was case with DC & Dream. Now its sale has allowed them to repay all bank debt, fund some needed liquidity into Parq completion and given them about $40mm cash liquidity on the balance sheet to fund operations for the next year or so.


sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #99 on: September 22, 2017, 07:57:44 AM »
Good to see this finally.

From GMP....We see this announcement as positive for
DC.A. Although our NAV was reduced, we believe the market may have been
assigning near nil value to UHIC. Closing the deal would remove monthly cash
requirements to maintain the property and add long run royalty potential.



Dundee Corporation and United Hydrocarbon International Corp. Announce Closing of Transaction With Delonex Energy Limited

TORONTO, ONTARIO--(Marketwired - Sept. 22, 2017) - Dundee Corporation ("Dundee") (TSX:DC.A) and its subsidiary, United Hydrocarbon International Corp. (the "Company" or "United"), are pleased to announce that United has closed its previously announced transaction (the "Transaction") with Delonex Energy Limited ("Delonex"). The Company and Delonex have satisfied or waived all the conditions precedent under the Share Purchase Agreement dated May 10, 2017, as amended (the "SPA"), including all board, shareholder and regulatory approvals.
The Transaction is for Delonex to acquire United's indirectly wholly-owned subsidiary, United Hydrocarbon Chad Ltd. ("UHCL"), which holds the Company's May 2, 2012 Production Sharing Contract, as amended (the "PSC").

Delonex paid US$35 million on the closing of the Transaction (subject to applicable escrow and holdback requirements), and will pay an additional US$50 million if first oil is achieved, including US$20 million for first oil at Doba and US$30 million for first oil at Block H. United will retain a royalty of 10 per cent on Doba production and a 5 per cent royalty on Block H production, payable unless the average price of Brent Crude oil is less than US$45 for a quarter.
Delonex has committed US$65 million in funding within two years of the closing date for a comprehensive exploration program for the assets in Chad, and, subject to commerciality being achieved, a further US$35 million for development in Doba. The exploration program will include 2D and 3D seismic programs and three exploration wells, representing a significant increase in activity when compared to UHCL's current obligations.

United estimates that following closing of the Transaction and payment of all outstanding debts, expenses and other obligations of the Company, including repayment to Dundee of CAD$5.1 million, United will retain approximately CAD$14 million for working capital purposes, not including escrow amounts.
United's President and Chief Executive Officer, Gabriel Ollivier, commented as follows: "The Transaction is very encouraging for United's shareholders as it grants us sustained material exposure to the potential of our blocks without having to raise additional capital." David Goodman, Chairman of the board of directors of the Company, added: "We are very pleased with the Transaction as it gives shareholders the opportunity to realize a significant return on their investment once commerciality is achieved."

GMP FirstEnergy acted as financial advisor to United.

ABOUT DUNDEE CORPORATION

Dundee Corporation is a public Canadian independent holding company, listed on the Toronto Stock Exchange under the symbol "DC.A". Through its operating subsidiaries, Dundee is engaged in diverse business activities in the areas of investment advisory, corporate finance, energy, resources, agriculture, real estate and infrastructure. Dundee also holds, directly and indirectly, a portfolio of investments mostly in these key areas, as well as other select investments in both publicly listed and private enterprises.

ABOUT DELONEX ENERGY LIMITED

Delonex Energy Limited is a Sub-Saharan oil and gas company focused on exploration, development and production. Delonex is currently active in Ethiopia, Kenya and Mozambique and the Transaction in Chad is part of the company's strategy for expanding its portfolio in Central & West Africa.
Delonex is led by a management team with a proven track record in discovering, developing and operating world-class onshore basins and building and operating pipeline infrastructure. Their core leadership team previously worked together at Cairn India, where they established a recoverable resource base of 1.2 billion barrels of oil onshore in Rajasthan, India, with plateau production of c. 200,000 barrels of oil per day. They also managed the successful financing and execution of integrated upstream and midstream development projects with a combined capital spend of over US$4 billion. The projects included development wells, processing facilities and the world's longest (c. 700 km) continuously heated and insulated oil pipeline with an export terminal. Delonex is backed by a group of global investors with extensive oil & gas experience, led by global private equity firm Warburg Pincus and the International Finance Corporation (a part of the World Bank group).