Zeev, your assertion that the company only has 5 weeks to get financing together seems to assume that talks with a lending institution only began recently. That is not at all my understanding. I believe that the talks were well underway prior to the issuance of the debentures on August 13.A key part of those negotiations involved the use of the refinery as collateral. However, the refinery had an existing $2 million lien against it which had to be removed prior to finalizing any agreement. My understanding is that the financial institution in question is holding AIPN to a very strict set of requirements that it might not apply to other companies. One of these requirements will be the need to over-collateralize the $15 million.
With respect to the value of the refinery which I put at between $40-50 million, you say "I could not find this on the balance sheet, if I missed this please point me to where it is." Are you saying you could not find the refinery as an asset on the balance sheet or you couldn't find a $40 million value? The refinery is, in fact, listed in the most recent 10Q (Page 2) as an asset with a depreciated value of $18,912,633. I've been told that for tax purposes ,which I do not fully understand, that number does not reflect the true value of the plant.
A pretty level-headed financial advisor who has followed AIPC for more than four years, and who is well aware of the company's past and present strengths and weaknesses,recently told me that he had been in touch with the engineering firm that had designed the plant and was told that it was worth closer to $30 million which it is actually insured for.
So, how do we arrive at a re-sale value of $40-50 million? Well, lets start with location. Strain Consultants recently issued a very conservative research report on AIPC in which they stated the following regarding the refinery: " The refinery therefore has barge transportation [located on Charles River] available to it which allows it to economically receive feedstocks and ship products. The site is also on rail and interstate highway facilities...The major product of the unit will be asphalt. The geographic location gives AIPN a significant advantage in the asphalt market and we anticipate that this will be a successful operation when it starts up at the end of this year..,the VDU (asphalt unit) will process heavy sour crudes from Venezuela and would appear to be able to create gross operating margins of $5 million to $6 million per year when it is established in its markets" Surely, you will agree that the above adds value to the plant?
Next, you might want to consider that AIPC has spent about $2 million to up-grade and re-tool the plant to meet new Federal asphalt standards that are being gradually enforced but will become mandatory in the year 2000. AIPC's competitors have not yet re-tooled so, when AIPC goes into production it will have a distinct competitive advantage for awhile. This, too, must add to the re-sale value of the refinery.
<<As for the value of the "concession" the political risks of losing the concession (look at Exxon losing a bunch of efforts and investments in Russia) are not zero, and there is not a single well there that allows determination of even probable oil, less than that proven.>>
Yes, it is true that Exxon lost a contract in Russia due to alleged "irregularities" but did you happen to read rhe last paragraph of the news story? I can't give you an exact quote right now but it talked about how the major oil companies are abandoning Russia, and all the uncertainties of doing business there,in favor of Azerbeijian (sp?) and Kazakstan which I guess are considered more reliable, trustworthy, and stable. Interesting, no?
As to whether there is or is not oil in the concession, I hear a broken record playing. I don't have the patience to respond to it yet again except to say that the, given that everybody and his brother is trying to get a piece of Kazak, the probability that there is oil in the concession is fairly high. Unless, of course, you believe that the Kazakstan government, which is on record as encouraging local business development, would grant a concession to its own people, including the brother of the President, that they knew containednothing but dry holes. Nepotism in the developing world (and the "developed" world as well) usually benefits the participants. So, with the Exxons of the world, all rushing to the area to stake a claim, lets give the old "there's no oil until there's oil" a rest. The only real question seems to be how much oil exists?
<<Once they prove a billion barrels, or at least have some good indications of such a find this will be another story. In order to that they will need to spend something of the order of $100 MM and the means by which they get this money will be critical for future valuation.>>
If we all waited for AIPN to have "proved" reserves before making an investment, we'd be paying a whole lot more for the shares! As with any investment, the key is to take all the available data, place it in its proper context (often geo-political), look at the players, use some logic, connect the dots, try to see the big picture, etc. and, then, make a decision as to whether the upside potential outweighs the downside risk. When Triton announced proved reserves its stock shot up to around $48...if you had gotten n before "proved reserves were announced you could have gotten the shares between $5 and $10. To me and many others, there are good reasons to believe that the upside for AIPN shares is significant and there are two research reports that supprt that contention. Yes, there are risks but, for now, the connected dots tell a story that outweighs those risks.
<<Here you take a wild rumor and make it a fact. I hope no one is investing based on this rumor. You and no one else have an iota of proof that anyone is looking at putting these $20 MM bucks. It reminds me of the Arab Chieks Alexander was supposed to have for backing Arakis in the old days.>>
For starters, this rumor did not appear to come from the company. George Faris has never once mentioned even the possibility that an investment firm from Abu Dhabi would be involved with AIPN. I just found it interesting that Abu Dhabi also came up as a tangential subject in a conversation I had with Millennium. A money manager concerned about the debentures and I had a conference call with Millennium. At the end of a very long conversation focused entirely on the Hunts and the convertibles, the talk lightened up a bit. It shifted to the kind of calls Millennium was getting concerning AIPN. Gary said they got calls from all over. I asked if he was getting calls from overseas. He said yes. I asked him where they were from. He identified one caller from London and another from Abu Dhabi as examples. He joked about not being able to pronounce the callers name and said that they guy was apparently a friend of George Faris' (he is Lebanese). I thought nothing of the comment and filed it away. When I saw the rumor posted a week later, I found the coincidence interesting. My interest was heightened when I learned that George Faris has been out of the country or two weeks. Then I started connecting possible dots and a possible scenario started to emerge. I realize it is speculation at this point (as is whether or not Microsoft will buy all of Apple) but I would not dismiss it out of hand as you seem to have.
<<Yes I said the stock will visit the 1's and it did, it went as low as 1-5/8, for those realay enamored with the stock, that was a chance to buy. I will repeat it here again,IMHO, the stock will be in the 1's again within the next few weeks.>>
With the stock showing solid support at $2, I personally think you are going to be proven wrong. That said, I, and perhaps others on this thread, would still love to hear some sound reasons for your prediction? Do you have some fundamental negative information that we are unaware of? If so, please share it with us.
<<When are you coming back to DBDY, I hear they are getting their financing arranged <VBG>.>>
I would not be so quick with that "grin", Zeev. I did not bail out of DBDY because of the length of time it was taking to secure financing. I understand that as well as the fact that, unlike AIPN, the company did not have an $18+ million refinery to put up as collateral. What DBDY did have as a sort of collateral were two contracts totaling $240 million. When I learned that DBDY and its reps had intentionally withheld information about the nullification of one of those contracts due to a Chapter 11 filing by one of its partners, I bailed. When a company withholds material negative data from its shareholders it is engaging in what many would call deceptive business practices.
Sorry for the above "OFF-TOPIC" remarks and my apologies for the length of this rambling post.
Cheers...Faris |
