Rurelec: Alleged settlement & "countdown".

There's been a number of people speculating the "countdown" to the settlement announcement has begun. Its reasonable to say with Bolivia prepping its 'people' via various newspapers that "they have to pay up"...that its not far off as per what was left as a message here: Five companies ask the state $ 1,835 MM for expropriations (Oldish article from 23rd October 2013)

The most comical of which is Evo Moralez's assertions early last month. Yes Moralez actually asserted that a business part owned by the Spanish Agency for Air Navigation (AENA) for the nationalization of its subsidiary in Bolivia, Bolivian Airport Services SA (SABSA), and that instead of paying for nationalising, the owners should instead pay the Bolivia! You can read it here: Evo says that there is nothing to negotiate with Abertis

Ok, its acknowledged that SABSA had received subsidies to develop the airports, but likewise they had taken on the financial risk and developed assets that Moralez is strangely remiss of his acceptance that Bolivia can't do anything major. Its quite clear that Moralez' actions suggest he wrongfully entices companies "with the promise" of protection to then only nationalise them once they've achieved the objectives because Bolivia are incapable of it under his management. I base this on the premise that if Bolivia were capable of developing these assets, including those owned by Rurelec etc...they would not need to 'encourage' investment in their country to later nationalise them. Or am I missing something there....

Bolivia, ironically are only damaging themselves with their conduct, albeit, with the legal 'expertise' being developed its likely Bolivia will now have to pay more and more in terms of 'fair value compensation' than they have previously. If correct in this view, Rurelec's award is likely to be the upper levels of what has been validate/evidenced during the process.

Bolivia will 'no doubt protest' over the level of the award, afterall, it's not because these businesses were so purposeful they were essential to the "nationalisation plan." One wonders why Bolivia has to nationalise anything if a) it's worthless b) never likely to make a profit and c) on the basis of a+b never likely to make a return why nationalise them? Perhaps there's a good case for Bolivia actually 'realising' they should pay fair value rather than this pathetic assertion the assets are worthless.

Lets wait and see, however I don't envisage news in October with the clock ticking, willing to be wrong!

Indonesia frets over International Arbitration with mining company.

Indonesia frets over International Arbitration with mining company.

Thanks Ian & Matty, the Indonesian contingent as they shall be known albeit Ian's heading to Morocco where I am setting off for tomorrow! It's rumoured that Indonesia has also considered the possibility of 'early settlement do avoid egg on face and possibly further damaging their miner sector.' More interestingly, there's Indonesia's 'other similar case' that went to Arbitration & Conclusion in 2000.

Bagus BT Saragih

The Jakarta Post

Publication Date : 29-06-2012

Indonesian President Susilo Bambang Yudhoyono is telling his ministers to prepare for the worst after the government recently entered into arbitration with an international mining company.

During a Cabinet meeting yesterday, Yudhoyono told relevant ministers to take needed steps to prevent such arbitrations in the future, as the case had affected him personally as the head of state.

Yudhoyono was referring to an arbitration filed by London-listed Churchill Mining Plc. that was registered with the International Centre for Settlement of Investment Disputes (Icsid) in Washington, DC, on June 22.

"Please note that this case began at the regency level. But when it’s brought to arbitration, the President is the one who becomes the first defendant," the President said.

"Imagine if such cases happened in hundreds of regencies in the country, and the President was named the defendant," Yudhoyono said.

Churchill turned to arbitration after the Supreme Court rejected its appeal of a decision favouring East Kutai regency that was reached by the Samarinda Administrative Court in East Kalimantan.

The mining giant sought US$2 billion in compensation from the government for granting another firm the right to operate in Churchill’s concession.

"Don’t let us be on the losing or the wrong side, because the implications will be very large," Yudhoyono said.

"I do not want those multinational companies to do anything they desire with their international back-up and put pressure on developing countries such as Indonesia," he said.

"As long as we are sure that we are on the right path, the East Kutai regent [Isran Noor] must uphold the truth, justice and our pride. That’s the principle."

Yudhoyono assembled his Cabinet members for a one-hour meeting specifically to discuss the arbitration.

Coordinating Economic Minister Hatta Rajasa declined to discuss the results of the meeting. "Things are still underway. Let’s not talk too much about something that is still in process."

According to the Icsid’s website, the Indonesian government is represented by the Attorney General Basrief Arief.

In a statement released on Churchill’s website, chairman David Quinlivan said the Icsid had confirmed that it had jurisdiction to handle the dispute under the Bilateral Investment Treaty between the United Kingdom and Indonesia.

"The board of Churchill is pleased that the Icsid has registered the request for the arbitration, and that the arbitrary proceedings have been formally initiated. Churchill will be seeking the full relief owed to it under the provisions of the bilateral treaty and under international law," Quinlivan said.

The case began in 2008 when Churchill started coal exploration in Kalimantan by acquiring a 75 per cent stake in a concession held by local firm Ridlatama Group.

However, the East Kutai regency administration later declared the mining concessions owned by Ridlatama invalid after it revoked the firm's mining permit.

The Churchill case is not the only dispute involving the government in international arbitration. The Icsid is considering another case filed by British national Rafat Ali Rivzi, a former shareholder of Bank Century, now Bank Mutiara.

Rivzi reportedly is seeking compensation for his losses stemming from the government’s 2008 decision to spend 6.76 trillion rupiah ($716.5 million) to bail out the ailing bank.

Rivzi was sentenced to 15 years’ imprisonment in absentia by an Indonesian court last year for his role risking the bank.

The government has taken international arbitration issues seriously after a case in 2000, when state oil and gas company PT Pertamina was ordered by the International Arbitration Institute in Switzerland to pay around $300 million sis in 1997. Karaha Bodas was controlled by US-based Florida Power Energy LLC and Caithness Energy LLC.

to power company Karaha Bodas Company after the government annulled the contract due to the Asian financial cri

Rurelec PLC Interim Results RNS 27 September 2013 & link for BRR Discussion from 27th September 2013 with Peter Earl

Currently having a lunch to unwind for the weekend. Will review the interims for RUR tonight (in a non-professional opinion). Then post under this heading; the snapshot looks as though the fundraising hit the Net Asset Value (NAV) but for very good reasons. Yes we have to acknowledge the decrease by 15% in NAV, however this should be made up in other gains post settlement & other asset sales / booked profit on sales. Remember the BirdSong % / Agreement has already/is being amortised in previous years accounts under payments/sharebased payments. Overall, the results show that progress has been made, admittedly at a discount to NAV but should prove fruitful in the future. Will update in due course, have a good weekend.  

Any question, as per the norm, will not be published if requested but will endeavour to answer from a viewpoint that is not legal or financial opinion. So will answer those already submitted by this evening (Caveat: pending if lunch rolls into Dinner/Evening Out). Guaranteed though by Saturday AM GMT at the very latest. 

As promised, we got there. Fab night and slightly fatigued from the fun!

Addition 28th September 2013 - 09:40 Rurelec PLC Interim Results RNS 27 September 2013 

Profitable in Argentina with margins improved with the project Debt being paid down; as mentioned in the BRR Media with Peter Earl Rurelec PLC Interim Results RNS 27 September 2013 Peter Earl is looking for a partner to develop the company production further makes sense to share the costs.

Peter Earl refers to being in "standby" from the Middle of October, with a 7 days RNS due once Rurelec have been notified from the Court. However, don't get fixated with that being the first of October or November, just let the process do its thing (my view). Micro-managing is unhealthy, and shows a lack of confidence in any investment, doesn't mean there are no risks, its more that you have to accept them, or sell up and move on! 

Please obviously do your on checks on these figures, its just what was glaring out at me whilst reading. I'll double check these in due course but there's no issue with challenging. Couple of things that cannot be ignored from the Interim Results, I suspect most people have noticed but they'll be covered anyway.

Having looked at the NAV (Net Asset Value), it has decreased some 15% or 3 pence per share decrease to 17 pence.

When going through the figures, they purchased planet and equipment but increased the attributable value which went up £23M to £41M from £18M. However the dilution of the fundraising should be recovered on the assets when they're in situ and in operation. The carrying value of the compensation increased near £5M from £48.8 to £53.7m, because of accrued attributable interest that has to be realised on the book as the case is on-going.

So there was a booked increase of near £28M or what would be a 5 pence per share increase? Yet overall the NAV has decreased 3p per share. Is it the issue and fundraising that has diluted? Yes, clearly but the company is now progressing with its plans for development. Perhaps needing more substance for a Santiago listing? Also there is % payable to holders/funders of the litigation claim, the BirdSong Agreement? This has been amortised in previous accounts (i.e. allowed for.), well 60% of it so far, so there's around £1,3M to be shown on the book/recorded/off-set.

So its fair to say the carrying value is at least 'realistic' for the Compensation and is on the low side (personal view) and likewise the compensation claim interest I'm led to believe is carried at a lower value than is likely from the settlement. With the above in mind, as a down side element, its likely "in the event" of no-settlement the NAV value would be around 7p max, so for calculating margin stop losses 3 pence is realistic. However, its clear RUR had an asset, it was nationalised, it was in production and the evidence available suggests (albeit not a professional opinion by the writer) that they have a very good case.  17-19 pence is certainly achievable post settlement as a very minimum. This is excluding any deals or reduction in ownership %'s to sell down assets which could add further value. 

So wait for the release of the Arbitration Decision, it may mean a few twists in the chapters ahead, all adding spice, in addition to the Santiago listing, sale of 50% assets, the future is certainly looking a lot more positive than negative. 

Apologisies - No Prospectus Required for Santiago

Good Afternoon from the UK, despite Ian having set the default to Thai Time for these pages as he was lucky enough to live there for some time.

Apologies as after clarification it appears that Rurelec do not require a Prospectus as it's a secondary listing / introduction. This is logical when its position is cleared, its just a shame I thought illogically for awhile.

Regarding Churchill's announcement today, nothing more than housekeeping due to  Reg 9 changes. Very quiet on the western front!

Presentation from August 2013 & September Acquisition of Cascade

After an amazing stag do in Pareee (Paris) and catching up with a few traders and friends including Ian who's now off around Africa for another 3 months; I've got time whilst recovering from debauchery on a grand scale to update here!

Still trying to collate items; additionally there has been a request for the prospectus for the Santiago Listing, so will hopefully place here when I have time. Peter Earl BRR Discussion with BRR Media Rurelec - Exclusive right for 120MW Plant in Peru & progress with Arica power plant 12th August 2013 with the presentation downloadable by clicking on the link.

The timeframes given imply sometime around Q3 for the judgement/decision on the International Arb Case & listing should add drivers to the SP. Santiago listing is likely to be October.

Rurelec - Acquires Cascade Hydro Limited Peter Earl on BRR (18th September 2013)

Its by my estimates there's only about 4% of the stock tradeable so its likely to have some significant volatility in October (a caution for CFD holders & Spreadbetters - watch the margins).

Attorney warns about excessive and exorbitant Rurelec order La Razon Article - not necessarily an accurate translation

Attorney warns about excessive and exorbitant Rurelec order La Razon Article (original article)

Translated/adapted by a friend...please seek your own translation for meaning and clarity as this was to put in the context of what was said and is not a legally based translation and potentially inaccurate as I do not speak much Spanish.

The Reason [La Razon / Willy Chipana / La Paz

2:58 / August 17, 2013

The Attorney General (PGE) warned the International Court of Arbitration in Paris to not award exorbitant and excessive demands to the British firm Rurelec for the nationalization of its shares in the Company Guaracachi SA (EGSA) which was seeking compensation of U.S. $ 142.3 million .

The state attorney general, Hugo Raul Montero, said Friday, in contact with La Razon - that statements were made during the arbitration hearing at the international court, but did not specify on what date exactly.

"We have provided the necessary evidence to say and establish that the amounts demanded (by Rurelec PLC) are really exorbitant and excessive," he said Montero has been ininaugurated the National Higher Education Diploma and Masters in Security, Defence and Development Dept.

The May 13, 2010, Rurelec (the company) referred the letter of formal notice of dispute with Bolivia for the nationalization of EGSA on May 1 of that year [2010].On March 2, 2012, the company reported that the "total [full] compensation" sought for the nationalization of its shares in Guaracachi (50.001% equity) amounted to a total of U.S. $ 142.3 million, "plus interest" generated "until full payment" of compensation.

The authority of the PGE [Attorney General] insisted and pointed out that the British compensation requested is excessive and said that it was estimated it to be less by the State, but did not specify how much is that amount. "The evidence we have presented shows that the claim is too excessive and not the real amount, that's what we went to Paris [for]".

Defense. On March 5, 2012, Vice President Alvaro Garcia Linera said that "what you are doing [with] Rurelec is an act of abuse and corporate arrogance" and then said that "the state will defend and prove with evidence that cannot compensate the kind of money a private company has not invested [in a company] ". On 18 February this year, La Razon reported the procedure that was ordered by the Arbitration Tribunal, the hearing for Guaracachi/Rurelec was held from 1 to 10 April this year 2013.

Raul Montero said yesterday that the Bolivian Government is now waiting for the resolution of the arbitration award to be issued by the International Court after evaluating all the evidence that was presented by both parties. "There are (other) instances yet (to) that can be used if the fault is really unfair and we operate in other settings."

Delegates to the case

The company appointed M.Conthe Rurelec (Spain) as its representative on the arbitration and elected Raúl Vinuessa Bolivia (Argentina).

Expert says that the award will be a final judgement

The lawyer and arbitration expert Jorge Valle said yesterday that an arbitration award is a statement issued by an international court in which the conflicting parties must comply. The appeal to any aspect of the judgement in similar in instance and is likely to be rejected. 

"The award is a final judgement for the ultimate resolution of parties in arbitration and is final unless there is a noticeable illegality of any law or laws that incurred by the court in making the award," he said.

For Guaracachi, explained that if the Bolivian state appeals the ruling of the International Court of Paris before other courts, should be against the country, is likely to be rejected. The lawyer argued that a country can negotiate a settlement with the plaintiff even before the decision is issued or after it is issued.

Apologises for absences, he's blaming me & I'm blaming him.

Good Evening, been a very long run since May/June whereby both Fraser and I have been overwhelmed with work.

Jurisdictional Update from CHL 24 May 2013  - seems nothing further has progressed for CHL in terms of Jurisdictional Dispute however, Indonesia is still suffering the anti-competitive nature of the policies and this will continue until they change the 5% rules on contracts whether oil PSC's or similar; whereby if an Indo company is within 5% of the tender but higher than the foreign investor, they will automatically be granted it.

Oxus really aren't any further forward since their results, albeit progress is no doubt being made with the case it's a painful one in terms of investors that are 'all in' Preliminary Results 17 May 2013 and likewise the ever (never) diluting SEDA/EFA (Equity Funding Arrangement 24 July 2013 is doing them no favours at 100K roughly a month. This with CHL, with the exception of spikes etc...monthly buying is the best way forward over the longer term. 

Rurelec appears to be progressing very well. Rurelec Appoints BICE for Santiago Secondary Listing 12th July 2013 this should prove very positive for the AIM holders, albeit who's going to be selling at the current share price. 

Overall very quiet, but that's expected of International Arbitration, certainly Evil's short paying well for hime or thereabouts...