Looking for free options on Met Coal

[bskptkl]

I am not sure that I understand the drop in MHY.UN related to this announcement.

 

Marret Resources owns 15.1% of Cline while it is just over 50% for MHY.UN. Marret Resouces plans to sell its 15.1% stake in Cline and to distribute proceeds to its shareholders.

 

If they sell it for nothing then yes, it would look really bad for MHY.UN. However, there is no indication of what will be realized.

 

So what has changed really regarding how much this met coal mine in Colorado and iron ore mine in Madagascar are worth?

 

Cardboard

An efficient way for MAR to distribute interest in Cline (presuming they cannot just sell it - if they could why not do that already?) would be to do a deal with MHY.UN accepting MHY shares in exchange for Cline interest and then distributing the MHY shares to MAR shareholders. If this transpires, MAR shareholders who already own MHY might want to front run the trade and bash MHY.

 

Ok, ok, not bloody likely I admit. Why go to all the trouble/illegality for peanuts...It's just that there was heavy selling out of the blue a couple days before the announcement.

 

Whatever the case may be, once again we are provided a "free option" on met coal in the form of buying MAR stock prior to the deal for 53 cents or below.

[sbalsam]

Cardboard,

I don't think anything has changed regarding Cline Mining (at least not for the worse).

What has probably changed in certain investors' minds is the concept of buying Cline for free through Marret Resources (setting aside deal closure risks) versus at a discount with MHY (and MMF). At least that is how I was thinking about it yesterday. I happen to own small amounts of both MHY and MMF, but yesterday I was buying Marret Resources.   

Steve

[sculpin]

Latest Cline update from Q4 MDA put out end March...

 

Cline Mining Update

 

Met coal prices have climbed back above $200/tonne, as shipping bottlenecks in Australia and mine closures in

China have been supportive. Chinese factors look to remain positive over at least the next 2-3 quarters. The

overall environment for Cline continued to gradually improve in 2017 and into 2018. Prices remain strong, the

U.S. dollar has weakened somewhat, and at least two restructured coal companies have gone public. This

indicates there is a renewed desire to provide capital to the industry.

 

Cline continues to be engaged with multiple parties in exploring fresh capital and perhaps new ownership for

Cline. The visions for Cline are extremely varied, as are these parties’ perception of value. These negotiations

are complicated and have proven to be protracted in the past. Overall, the prospects for a liquidity event are

improving, yet far from certain.

[rukawa]

https://web.tmxmoney.com/article.php?newsid=6874281951184801&qm_symbol=MAR

 

Marret to distribute Cline to shareholders and to allow shareholders to elect $0.53 in cash (8 cents or $1.4 million more than hard NAV) - vote to occur in June.

Those are great terms negotiated by management. Consider me impressed.

 

I bet news leakage explains the sharp sell off in MHY.UN last week - went from $0.15 to $0.085.

 

How do you calculate hard NAV? Is this non-cline NAV?

 

I don't really get where they are getting the $0.53 in cash from. Is this coming from the private placement. If it is what do the private placement investors get out of it? Did they sell all the non-Cline assets to someone? I feel like I'm missing something.

 

 

[bskptkl]

https://web.tmxmoney.com/article.php?newsid=6874281951184801&qm_symbol=MAR

 

Marret to distribute Cline to shareholders and to allow shareholders to elect $0.53 in cash (8 cents or $1.4 million more than hard NAV) - vote to occur in June.

Those are great terms negotiated by management. Consider me impressed.

 

I bet news leakage explains the sharp sell off in MHY.UN last week - went from $0.15 to $0.085.

 

How do you calculate hard NAV? Is this non-cline NAV?

 

I don't really get where they are getting the $0.53 in cash from. Is this coming from the private placement. If it is what do the private placement investors get out of it? Did they sell all the non-Cline assets to someone? I feel like I'm missing something.

They update NAV on their website - here's what it says today: NAVPU (April 19, 2018): $0.893

In their last MDA they attribute $0.449 to Cline value.

I presume the buyers will finance the 53 cent cash out. No telling how many elect to cash out.

[rukawa]

I presume the buyers will finance the 53 cent cash out. No telling how many elect to cash out.

 

And why would the buyers do that? What do they get out of it? You are telling me they are paying 8 cents more than NAV. And the Cline assets are going to result in a separate distribution. So it seems like the payout of existing shareholders kind of screws over the buyers. Why would the buyers agree to it unless either the non-Cline assets are worth significantly more than reported NAV.

[cashisking]

There is $171M (~$9.6 per share) of tax assets and a public vehicle. I'm not sure if all of those DTAs are useful or that they all survive the transaction, but my guess is thats why the buyers are interested in MAR