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phoenix_ffm's avatar

I don't get it. Investing now I could profit from a win against the JV partner but not from the main case as I wasn't an investor between feb 16-19th? Why would anyone invest after that date?

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Kingfish Capital's avatar

All those numbers i posted already assumed a 51% stake of total claim will go to the company, so it's a very good opportunity if you invest as of today (hence why i'm not selling even though i already qualified for the bonus shares). Another reason, due to the sheer incorrectness of today's price (in my opinion, based on my assumptions), I assume that every day there's more and more chance of the stock re rating to reflect the actual optionality.

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James Gilliam's avatar

Is the 40x upside in the title also based on 51% of the claim? Not just for holders before Feb 19?

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Kingfish Capital's avatar

the 40x upside is based on 51% of the claim only, but they would need to be awarded the upper end of their claim.

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James Gilliam's avatar

got it, thanks!

and thanks for the great write up, amazing find

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phoenix_ffm's avatar

btw very nice find. Arbitrations are often a great opportunity. Extremely difficult to assess which makes the cases with the involvement of a litigation funder specially interesting. I take off my hat to you.

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Kingfish Capital's avatar

Thanks. I think the price is so wrong just due to sheer smallness. This stock doesn't even trade $1 sometimes.

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phoenix_ffm's avatar

Is there a date for the final decission yet? In my experience it's mainly in the last 6 months before the the decission when investor jump in. Most investors don't seem to care to catch the bottom but rather prefer the final run up. Maybe you are familiar with $MEEC and $OMEX. The chart is very telling.

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Kingfish Capital's avatar

I've seen some stuff on MEEC, do you recommend I take another look? The main case will be heard early next year.

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phoenix_ffm's avatar

Both cases are interesting. $OMEX is more like all or nothing. Three different litigation funders involved. Final decision sometime between now and end of march. A decent lottery ticket.

$MEEC is a little more complex. Legal cases are difficult to assess. A litigation funder gives me a vote of confidence in such a context. In this case there is none involved i.e. as investor we have to assess the probabilities. Lot's of the heavy lifting has been done. An institutional investor wrote some research: 1035 capital management. There's a retail investor who focuses almost exlusively on this one stock called danban. He writes on X and stocktwits and was invited to a podcast about $MEEC. If you search for the tickers on X you can easily find the core information about both and decide from there whether you want to dig deeper.

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xyz's avatar

"Both cases are interesting. $OMEX is more like all or nothing. Three different litigation funders involved. Final decision sometime between now and end of march. A decent lottery ticket."

The end of March? Why such a timeframe?

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Gabi Sammut's avatar

Did the company give any insight as to whether their intentions after the lawsuit is to wind down and liquidate or continue as a going concern?

What would you say is a probable time period for the case to close? Hrvatska's lawsuit started in 2005 took around 10 years if I'm not mistaken.

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Kingfish Capital's avatar

I think them creating the SPV that owns 49% of net claim proceeds (if shareholder as of feb 19th) is their way of saying "this is the cash that shareholders are guaranteed to get" instead of just promising a capital return or special dividend in the future.

I assumed a 30% discount on the cash from the remaining 51% of the claim for this reason, because i think they will keep the rest to continue on the biz.

Hrvatska's international arb claim did take that long (remember average time is 425 days for an ICSID case), looking into the specifics, this was due a conflict of interest that took a long time to address + Slovenia had a lengthy and apparently strong counter memorial (a document outlining why the company's claims are wrong).

In AST's case, I believe it is much more straightforward. IDA.AX and WINS.tsxv for example have very similar precedents and were both awarded a claim within a few years (IDA within 3 years of lodging the claim), AST served Slovenia with the notice of dispute in march 2021. So it has taken a bit longer then other cases, more so due to Slovenia asking for time to come up with settlement propositions, then failing to provide an appropriate offer.

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Roman Bulanenko's avatar

The company gave away 41 % of claim again in February. So now investing in this company only gives you 10 % of the claim

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ParanoidAndroid's avatar

Folks, are there are any updates as to whether the investment thesis is still intact? From what I see here https://icsid.worldbank.org/cases/case-database/case-detail?CaseNo=ARB/22/21 the case is chugging along, with testimonials having been heard over the summer. I couldn't find anything that would be detrimental to the investment thesis. Any wild guesses anyone when the decision will be made by the court?

Also, it appears from the last trading update that Ascent has made a $1m investment in a US gas producer. MC is now down to $4m and to the extent that that investment doesn't turn sour, it's good to know that there is at least something small to keep the boat afloat. An investor apparently made this possible, by subscribing to stock at 2.3 pence, which is at a premium to the beaten down price. Good to know that someone still sees some potential in this left-for-dead company.

Any updates from anyone welcome! It's very lonely here as the case continues to be completely undiscovered.

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ParanoidAndroid's avatar

Beautiful find, congrats on such an impressive piece of investigation. One question - I see sales of gas in the company's H1'23 financials. Does that mean the gas field is operational, after all? I find that a bit confusing because you seem to imply the (presumably low) sales from the (under-stimulated) gas field were realized by the fraudulent JV partner, so does that mean the JV partner is off the picture and the company realizes gas sales directly now ? If the litigation fails, does the current MC has any prospect of being supported at least partly by the sales of gas that remain to be realized? Extrapolating H1, it looks like full-year sales could be in the region of GBP 3m for a modest profit of GBP 300k.

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Adrian Garcia's avatar

Any update so far?

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The Silent Treasury's avatar

Hello,

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Giorgio Priori's avatar

Thank you. Very interesting (also the international arbitration field it is) I will dig more in this Special Sit.

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TheRick's avatar

Is this thesis still intact? Anything worth updating with stock down 30+%?

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Viral's avatar

How does the risk/reward look now? Any chance we can get a refresh if the thesis still holds?

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Álvaro Serrano's avatar

Can you give us an outlook about their main shaholders?

i see MBD Partners SA joined the company with 20% share last october, but Spreadex LTD has sold this week 25% of its stake....

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Álvaro Serrano's avatar

Thanks for this special situation. Is there any way to track the status of the claim by the company? Do we have at least a calendar of hearing dates and legal proceedings to follow? thanks.

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Under The Radars's avatar

Additionally, how much has the company spent on the arbitration so far? What are the projected future legal expenses?

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Under The Radars's avatar

Interesting write up! Thanks for sharing. What's the expected duration of the arbitration proceedings? Are there likely to be appeals that could extend the timeline?

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Elias's avatar

I think first main hearing will be early 2025

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Inflecting_Bottoms's avatar

Correct me if I am wrong. In your example where company is awarded 85m, Feb16-19 holders get 33m guaranteed and then 36m(after 30% discount) is available to all shareholders.

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Kingfish Capital's avatar

yeah the 36mil is the cash discounted by 30% , which is supposed to represent a conservative estimate if the MC after win

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Kingfish Capital's avatar

bit unsure of your question, it seems what you wrote here is also what i wrote

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Inflecting_Bottoms's avatar

I meant to confirm that holders before Feb 19 get both 33 mil and 36mil and holders after Feb 19 only get 36 mil in your example. The 36 mil stays in business but the 33 mil is special dividend guaranteed.

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Kingfish Capital's avatar

Yep correct.

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CMW11's avatar

Could you explain further where the 30% discount comes from? Time value? Cash burn between now and settlement? Thanks

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CMW11's avatar

Also curious how you're monitoring this investment given limited press and company reporting?

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Gabi Sammut's avatar

Hey again, I found 3.7 in "italaw11654.pdf"

this is inconsistent with the snip that shows what happened in November 2017 in this substack article.

I find it a bit strange that they didn't legally need it but proceeded to try get that authorisation too.

An "abundance of caution" doesn't quite cut it for me. What are your thoughts about it?

Also,

The law state that you can only sue someone with whom you have a legal relationship.

Ascent Resources is not an original counterparty to the Slovenian Government when awarding the concession. Geoenergo is.

Why isn't Geoenergo part of the arbitration proceedigns? I would assume that they too should be seeking compensation from Slovenian government.

Thank you for your replies and for your time :)

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Kingfish Capital's avatar

So remember there are/were two arbitrations. 1 against their JV partner Geoenergo which they recently got a positive outcome on (except then Geoenergo filed for insolvency in order to not to pay). And 2, this new arbitration I talk about in the post against the Republic of Slovenia.

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JB's avatar

Geoenergo is govt controlled so would that not mean that Ascent had a legal relationship with the Slovenian Government? I would think so but I'm no legal expert.

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