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+--- Thread: IOC Research Note - AGM 2012 (/showthread.php?tid=980)
- efi426hemi - 06-17-2012
My friends,
The below summary is based upon the combined effort of numerous shareholders who attended the AGM, consisting of board lurkers and regular posters. I would like to be the first to offer my thanx for their efforts, it is most appreciated! I anticipate they will supplement/correct the points in this post as needed.
Government:
Sir Rabbie Namaliu was in attendence at the AGM and he (along with Christian Vinson) was able to provide a great deal of insight into the current political situation in PNG. To form a government a single party or coalition of parties needs to hold a majority of seats in parliament, which is currently 55 seats (may be 1-2 more). At this point in time, O'Neils party - The People's National Congress has 28 members and Namah's party - The PNG Pary has 26 members. These two parties have signed an agreement to form a coalition after the elections and will very likely form the majority government. Duma's party is the United Resource Party and currently holds approx 16 seats.
Sir Rabbie said that advanced polling shows that Duma is losing support and that O’Neill is gaining support and he would be very surprised if O'Neil does not return as PM. Additionally, if Duma's party does not hold many seats after the election it is unlikely he will retain or recieve a ministry seat - a fate that will be in the PM's hands. The first question asked after the presentation was "What impact would a new prime minister have to the IOC selldown process and existing bids." Sir Rabbie answered this with a very direct "the winner of the election is irrelevant to bids." Sir Rabbie also confirmed that O'Neil has the support of the youth of the nation with his promises of education/health/infrasture.
Sir Rabbie and Christian appeared very confident that the political situation was a non issue to IOC. Indeed, today we just received a very strong confirmation in the papers that O'Neil VERY strongly supports IOC. Link here: http://shareholdersunite.com/2012/06/16/political-support-interoil/
[My add - When O'Neil first became PM, he had 5 party seats and was walking a political egg shell. He needed every parties support (including Duma) to hold the majority government and that was very likely the reason why he did not directly challenge Duma over the past 9 months. During that time though, he has slowly been solidifying his support base and can now publically (and maybe privately) challenge Duma. Sir Rabbie was a fascinating fellow to speak to and he made me feel very comfortable. He is very charismatic and I believe it was brilliant of IOC to bring him in to help them navigate the political waters.]
Conforming Bid:
A conforming bid is a bid for 25 to 32.5 percent of the PRL 15 asset. This percentage comes from both IOC and partner interest. For example if Interoil sells 25% of PRL 15 this would be made up approximately (after state entitlement) of 1.) 14.65% from IOC (58.6% * 25%) and 2.)4.725% from partners IPI, PNGDV, Pac (18.9% * 25%) for a total of 19.375% ownership by the winning bidder.
A question was asked about a full takeout and the response was Interoil is a publicly listed company trading on the NYSE and because of this could be the subject of a full company buyout at any time. [My add - A full buyout offer is possible but would likely to cause a bidding war - something that I don't think any party wants to take a chance on, so it is unlikely, but this is in my humble opinion only.]
If you are a bidder of IOC you cannot trade the stock. It is part of signing the confidentiality agreement.
Funding:
Another question was asked about company cash position and Collin answered very clearly this is not an issue, especially with the payments that IOC will be recieving over the next few months from PRE. I believe he said 40 million due by end of July and another 56 million due by end of year. This is a non issue imho.
Announcement:
It was asked many times regarding when IOC would announce the deal. They repeatedly stated they would announce when the deal was 100% complete which included full government approval in a fully binding signed document. I will leave it to you to figure out timelines.
Shortlist bidders:
A question was asked "if there were 1, 3 or 5 shortlisted bidders" and Phil responded that it was somewhere between that number, 1-5 [LOL]. They cannot disclose this number or any other details about this process. On a side note, the investment banks are obviously responsible for bringing bidders to the table and all three will be compensated the same [small percentage more to the IB who found the winning bidder] no matter which bidder wins.
Special Dividend:
It was asked if this is possible and it has been discussed but until a deal was completed and the company knew exactly how much money they were dealing with, no decision would be made. Recieving stock from the winning bidder and a stock buy back were other options also discussed.
Triceratops:
As mentioned in a few other posts, PetEngineer was able to attend the AGM and near the end of the Q/A session he, Phil and Wayne all started looking at the wireline logs in large scale. It was a very exciting time during the Q/A and some of us other shareholders came over to just be witness to the brilliance. I am not sure how much Pet was able to glean from those few short minutes, but as others have mentioned, we all look forward to hearing his thoughts.
This was another fantastic trip and I very much enjoyed my time speaking/meeting shareholders and also getting a chance to speak with IOC executive. The executive are clearly in a very difficult position as they cannot disclose any details about the selldown, which leaves some room for doubt regarding how far along the process is and when it is going to happen. But if you believe in body language then it is very clear that the executive are very confident. That may not be enough for some, but I am a believer that this will be a very good year for the company and its shareholders.
Tusker you a most gracious host and went above and beyond. Pet, it was an absolute pleasure! For the rest of you lurkers/posters - good times indeed, I look forward to our future conversations.
FWIW, Please Do Your Own Research and most importantly, Health and Happiness,
Hemi
Disclosure: I am an uber bullish long.
- freddiekingman - 06-17-2012
Hemi (& others)...as always : great job!
I always considered taking Sir Rabbie Namaliu aboard was one of the best moves IOC did..it pays off now in this political turmoil..
furthermore some individuals on yazoo who think there will be no money left in a few weeks will be shown wrong...AGAIN!
as you, Im uber bullish long also...(..and proud of it,lol)
again ..Thank you, Sir.
- ebster123 - 06-17-2012
Hemi (and all who assisted with the summary), thank you!! I look forward to the future of IOC!! Great information and an outstanding post.
- geologydude - 06-17-2012
Thanks Hemi for a very informative post. Your insights and those of the others in attendance are most appreciated.
- Palm - 06-17-2012
Good summary Hemi. Can we possibly expect good things and substantial accretive pps rises from this info? Maybe, maybe not, but it sure was good to be there this year and get a look at the cargo hold of this great ship. Words cannot describe the treasures aboard.
Time to pull anchor Tusk and start our journey home?
Thanks again Hemi!!
- sageo - 06-17-2012
To ALL - I humbly thank you ! You ALL are TOPS in my book !!! Great post, Hemi.
- Tree - 06-17-2012
Thanks tons Hemi and the rest of you guys for spending the time, effort and $ to research the AGM and report back. Comfort levels are re-affirmed/created/elevated with these first hand reports.
Timelines schmineline, we just have to let this play out and it is playing out to our advantage. Saw an appropriate quote from of all people Ruth Bader-Ginsberg:
“Those who know don’t talk. And those who talk don’t know”
Thanks again for alls ya'alls efforts, eh!
- Rvande4 - 06-17-2012
Hemi,
Great summary and I feel confident based on the meeting and side bar conversations with management and the BOD. I am still trying to figure out Phil's remark about a stock buy back when talk has been about a split to increase number of shares and decrease IOC being manipulated.
We are close to the really big event happening!
Thanks to all for your help in putting the pieces of the puzzle together. It was great to meet you at the AGM.
- sageo - 06-17-2012
Guys-One of mentioned Pet's upcoming comments! I,as many of you,look forward to his thoughts with great excitement.( What if....yes,another one....with our new extension to the east,Triceratops could now become...drum rollllll ! Quadceratops!!!!) How about them apples ???
- jft310 - 06-17-2012
Sam Tibbs did extensive work on a model for a stock buy back. IOC has made positive comment sbaout the model.A stock buy back is 100% different function then a stock split. The purpose of the split is to improve the size of the float the number of shares available to trade. A stock buy back on the other hand improves the ratios and metrics for the financials. The stock split just divides everything in portions or nothing changes. The stock buy back reduces the denominator,and improves all the financial numbers.IOC should do both and list on the Singapore exchange so those Chinese,Japanese and Koreans can trade all hours of the day and night.