Australian (ASX) Stock Market Forum

CLE - Cyclone Metals

Jump to new
Nothing in this morning's West. Looks like whatever the news is is being held tightly to their chests.

Stock exchange opens 0830 AEST for company notices. So we will see something very shortly (upto 1000, market open).

Judging by what has happened in the past few days, with so many deals being signed out here in WA, I think it will be good news.

Or at least I hope it is! :)
 
Either Delong Holdings purchased the mine yesterday or Ding Liguo still is the holder. Delong could have purchased yesterday because their release on SGX was dated 3/8/07. "As of the date hereof"
 
05 September 2007
The Company Announcements Office
Australian Stock Exchange Limited
Via E Lodgement

DELONG HOLDINGS LIMITED TAKES AN INITIAL 4.4% STAKE IN CFE
Key points:

- Delong Holdings Ltd (“Delong”) converts 12M unlisted Options in CFE, increasing

cash reserves by approx AUD$4.6M;

- Delong now hold a 4.4% stake in the Company;

- Prior to 30 September 2007 Delong will convert a further 28M unlisted Options, lifting its stake in CFE to 13.25% and providing a further approx AUD$10M to CFE; and

- First payment of sale agreement (approx AUD$72M) delayed by mutual
agreement to 30 September 2007.

Iron ore exploration and development company, Cape Lambert Iron Ore Limited (“Cape Lambert” or “the Company”) has welcomed a new major shareholder to its register, with Singapore listed Delong taking an initial 4.4% stake in the company through the conversion of 12,000,000 unlisted 2010 Options (at a price of AUD$0.377). The conversion of these options provides approx AUD$4.6M to the existing cash reserves of the company. Delong major shareholder and Chairman Mr Ding acquired these options through a private
transaction announced to the market on 30 March 2007.

At the time he indicated that he wanted to convert these options so as to provide a tangible example of his long-term commitment to the Company and its operations. He has since transferred these options to Delong (refer Delong announcement to Singapore Stock Exchange). Delong will convert the balance of the 40M unlisted Options (28M raising a further approx AUD$10M) on finalisation of minor outstanding issues associated with the Sale Agreement. It
is expected that this will occur before 30 September 2007. At the completion of this conversion Delong will hold 13.25% of the issued capital of the company.

By taking such a meaningful stake in the Company Delong has not only provided the Company with a significant boost to existing cash reserves, but also gives a strong commitment of the role they would like to play in the Company and its development moving forward.

This is a good step forward but not great that the $50mil wasn't delivered on time.
 
This announcement confirms my initial thoughts.

Dings trying to buy some time here - who knows why? Is the deal ever going to go through? Well, I suppose when we see the colour of his money, then we'll know.

Maybe, he wants to assess the direction of the iron ore market over the next 2 - 3 weeks?

I'm losing trust in these people at a rapid rate. Any thoughts on the goings on?
 
my thoughts...

its typical of chinese to do business in this way, and i will probably look at exiting soon.

it shows bad management in my opinion, if a date is set and then not stuck to. No matter what countries they are doing business with. Plus there is a contract in place which isnt being enforced.
 
prawn_86 said:
my thoughts...

its typical of chinese to do business in this way, and i will probably look at exiting soon.

it shows bad management in my opinion, if a date is set and then not stuck to. No matter what countries they are doing business with. Plus there is a contract in place which isnt being enforced.
Click to expand...

I'm getting to the point that I will be steering well clear of any company that is relying on a china deal - seems they just do not keep their word and cannot be trusted!
 
I should clairfy that I don't actually hold, but will be looking at exiting my fathers holdings.

But yes, not meaning to offend anyone out there, but the Chinese and most Asian countries tend to work on their own time frames rather than that set out by contracts or specified dates. And this doesnt show bad management in their eyes.

Its the joys of dealing with them, but can be a risky thing to do I guess, although I think the deal will most probably go through in the end, just when is unsure. Could even be next year lol
 
I have known for sometime that this date can be delayed if BOTH (BOTH)parties agreed.

The fact that some options have been converted indicates that the Chinese are still interested. The rest of the options have been agreed to be converted before the end of the month.

NBerardis on Hotcopper indicated this might be the case. Some of his posts prior I believed. So I wasn't too supprised if it was delayed until the 30th.

The Audit outcome was still in excess of 300mt's.

I am still going to hold.
 
I will continue to hold a bit longer. Held since January through the ups and downs.

If we can return to previous highs (around 80c) it will be worth it.

Patience.
 
Just got more information from CFE. They believe they have struck a good deal and I tend to agree. The contract was either/or. It appears one has failed to raise $. So we can now expect the other to buy.

Will hold.....

If you don't so be it.
 
MR. said:
Just got more information from CFE. They believe they have struck a good deal and I tend to agree. The contract was either/or. It appears one has failed to raise $. So we can now expect the other to buy.

Will hold.....

If you don't so be it.
Click to expand...

Did you call CFE? to get this information.

The chinese will come through in my opinion, its just a matter of when. Delong holdings is in need of resources locked in to hedge prices it states it clearly on their site, they are looking at long term growth for a large company. A few more weeks is fine for such a deal, its the Chinese way unfortunately.
 
I actually think its a very good announcement. I would have preferred to see the money go through, but a committment from Delong to take a major stake in the company is very good in my opinion.

Has to be taken to its next logical step. If Delong were to pull out of the deal now, what would happen to the value of their shareholding? Yes, it would be seriously diminished, at least in the short term. Do we really think they would make a stupid decision like that to lose money in the short term?

Delays are a part of any business, we arent talking about a minor amount of money here, its a quarter of a billion dollars. They have to get it right in the first instance.

This aint the silver bullet type news that many short termers were hoping for, but for those of us that are holding long term, i think it is very good.

We are still talking about CFE being a mid range producer of Iron Ore for the next 15 to 20 years - and perhaps beyond. Nothing to sneeze at in my opinion. With such a small market cap, confirmation of the deal makes CFE well undervalued. Just my thoughts of course.:)
 
Did I call CFE?

NO. Do you like me sharing my information or not. I have put alot of work into this.
 
CFE has not much cash left of its own. So if the gravey train requests a 1 month delay to finalise minor details of the Agreement, then hard for Management to say No. They did manage to get Delong to exercise 12m options, with a further 28m to be exercised in Sept.

I took a look at Delong financials. Share price seems to be trading on a very high PE ratio, about 15 to 18 times, if based on Delong making approx $100m net profit for 2007. Half year 2007 recently announced was $42m. But good news is they have the cash to be able to pay the A$240m, from a recent Convertible Bond issue.

Comments about the Chinese mentality in honouring the original Agreement are misguided. This is business. The only colour issue is the colour of the money.

My belief is the risk premium that the deal would not complete is now very much less than before. Until the market takes the same view, this is an opportune time to "load up the truck"....... Then again, maybe it has .....
 
Article dated 22 May 2007, at time of the CB issue.

Chinese steel maker issues renminbi CB
By Anette Jönsson, | 22 May 2007

Read this article online at:
http://www.financeasia.com/article.aspx?CIID=81653


Delong Holdings raises US$175 million amid a positive earnings story and rising steel prices.
Chinese steel manufacturer Delong Holdings has raised about US$175 million from another renminbi-denominated, US-dollar settled convertible bond at a time when the previous four such deals are still trading below par.

This time, however, terms looked slightly less aggressive which was seemingly confirmed by the fact that the offering was five times covered at the cheap end and that the bonds were quoted at 100.5 in the grey market following the pricing early last night. The Singapore-listed company’s good track record and expectations that it will embark on more earnings enhancing acquisitions likely helped attract investors, but according to sources, CB players were also drawn to the deal simply because it offered diversification away from Mainland real estate plays.

Since the first such deal in January this year, there have been six renminbi-denominated CBs sold to the international market with four of them coming from the property sector. Over the past month, there have also been several property-related CBs in other currencies as well as placements, which have resulted in a bit of market fatigue for the sector and made investors more sensitive to price.

The Delong deal, which was arranged by Citi, was offered with a fixed conversion premium of 35% over the S$3.30 closing price at yesterday’s morning session. The shares were suspended in the afternoon to carry out the transaction.

While still quite high, CB premiums over the past month have typically been set at 45% to 50% - some even higher - making this one look quite reasonable. However, Delong’s share price has risen about 140% already this year in response to improving steel prices, which could make further gains a bit more of a challenge. If the share price continues to perform strongly, the issuer can call the bonds after two years, subject to a 125% hurdle.

The bonds, which pay no coupon and were issued at par, have a five-year maturity but can be put back to the issuer on the third anniversary for a yield of 3%. They were offered to investors with a wide yield range of 2.375% to 3.375%.

The final yield is higher than on the other renminbi-denominated bonds, which would have been partly due to the fact that yuan swap rates moved quite a bit higher after China raised its official one-year deposit rate by 27 basis points and the lending rate by 27 basis points last Friday. If fully converted, the CB will also account for a massive 80% of Delong’s current free-float, which means some extra incentive may have been needed to ensure the market would be willing to absorb it all.

In addition, one source says the company was conscious of the poor performance in the secondary market by SPG Land, New World China Land, Greentown China and Gome, and wanted to make sure it got a better treatment.

“This company is a first time issuer and it wants to demonstrate that it is a responsible user of the capital markets so that it will be able to come back as the consolidation story develops,” the source says. The fact that the bonds traded up slightly last night, suggests it was able to achieve that without leaving too much on the table, he adds.

About 75 investors were said to have submitted orders. Since it isn’t really possible to hedge either the credit or the equity, virtually all the participants would have bought the bonds because they believe in the equity story. And according to analysts that story is a positive one as Delong is a low-cost producer with a good acquisition track record that will likely be at the forefront of the consolidation trend in China’s steel industry.

The size of the bond issue is Rmb1.34 billion ($175 million), but there is also a Rmb191 million ($25 million) greenshoe that could boost the total funds raised to $200 million. According to the term sheet, the money will be used for core business expansion and for the funding of possible strategic investments, joint ventures or acquisitions, or alternatively for general corporate purposes and working capital.

The underlying assumptions include a credit spread of 370bp, although the bookrunner was said to have provided only a small amount of credit bid at that level while indicating that the appropriate longer-term level for Delong is more like 350 basis points. The stock borrow cost was set at 5% and the divided yield protection at 5%.

This gave a bond floor of just under 95% and an implied volatility of 33%. The latter is quite high in light of the modest dividend compensation, but does compare with a historic volatility of above 50%. Still, such comparisons are rather academic since you cannot short-sell the shares.

A China-based analyst covering the company says the sale of the CBs suggests Delong may be planning more acquisitions.

“It’s quite hard to get approval to expand capacity in China so the only way to grow the business is through M&A. If this deal can generate expansion it will be quite positive,” he says.

Delong, which specialises in the manufacturing and trading of hot-rolled, mid-width steel coils, did commission a second hot-rolled coil (HRC) production line in mid-December 2006, which helped raise its annual production capacity by 50% to 2.4 million tonnes. It also allowed the company to move up the value chain through the production of HRCs of higher grade specifications with higher selling prices.

This contributed to a 131% year-on-year increase in net profit in the first quarter to S$34.6 million ($23 million), while revenues rose by 32.2% to S$272.5 million ($179 million). The net profit margin widened to 12.7% from 7.3% in the first quarter 2006. The company said it expects its second quarter profit to be significantly better than the first quarter performance.

The company is also benefiting from a strong recovery in steel prices since the beginning of this year. In connection with the first quarter earnings release last week, Delong Chairman Ding Liguo, who is also the controlling shareholder, noted that international steel prices are expected to continue rising in tandem with increasing demand and that demand for steel in China is expected to grow at 10% per year for the next two years.
 
Very disapointed with the outcome. Even Is not a bad news but still not a good news either ....... Chinese company never keep their promise at all.........:( Is time for me to sell some of CFE n CFEO.
 
prawn_86 said:
I should clairfy that I don't actually hold, but will be looking at exiting my fathers holdings.

But yes, not meaning to offend anyone out there, but the Chinese and most Asian countries tend to work on their own time frames rather than that set out by contracts or specified dates. And this doesnt show bad management in their eyes.

Its the joys of dealing with them, but can be a risky thing to do I guess, although I think the deal will most probably go through in the end, just when is unsure. Could even be next year lol
Click to expand...

The rich do this doesn't matter where your from, why do you think he's rich??
They have their own agenda....still worth waiting, if he's rich and in China, I'll back him..
 

Similar threads

ducati916
May 2024 DDD
2 3 4
Replies
69
Views
7K
qldfrog
qldfrog
System
BM8 - Battery Age Minerals
Replies
3
Views
2K
JohnDe
JohnDe
bigdog
J Capital Research
Replies
1
Views
2K
greggles
greggles
springhill
CAE - Cannindah Resources
2
Replies
27
Views
8K
The Triangle
The Triangle
springhill
LOT - Lotus Resources
4 5 6
Replies
100
Views
26K
brerwallabi
brerwallabi
Top