It's an interesting play but the main risk to the thesis is enforcement against a country like BF. This is not the same as the Ascent vs. Slovenia litigation (should be decided in weeks, as no doubt you know!) where the counterparty is a civilized EU country that generally plays by the rules of law and so full award payment is a realistic scenario after some initial foot-dragging. Getting the thugs that rule BF to pay anything? Good luck with asset seizures - BF is a dirt poor s__hole that probably has very few assets around the world that could be confiscated or they will be protected by immunity doctrines (you can't go and seize an embassy building). It's not a commodity-rich country to whom you can just confiscate a tanker full of oil or a bank account where oil sales end up. If the award is good (and it should be, considering that BF filed late, doesn't have their own arbitrator and their case is likely quite flimsy), there will no doubt be a violent re-rating of the stock on the award, but I also think it will be significantly discounted compared to the award face value. Sarama's best plan will be just to take the award receivable and offload it to a specializer enforcer who will probably spend years chasing BF thugs' assets around the world. There will be a significant hair-cut though, likely 30-50% of the award value, on top of what you already have to pay your lawyers for winning the litigation in the first place. When you model this secondary haircut, my modelled upside is closer to 5-7x. 10x is imho too bullish but what do I know. I am just a fool talking to my buddy Claude a lot.
Yeah, I also see a rerate on winning the case (which I agree is almost certain), but the time from winning the case to Sarama actually seeing any of the money could be quite a long time. BF may try to drag out paying as long as possible, so could file for annulment. While they would almost certainly lose, it seems like that process could take like ~2 years? And of course, you then also have the difficulty of getting BF to pay. Based on my estimations, the company barely has enough cash to cover getting to when the award would be announced. They would either then have to raise more capital or offload it to a specializer enforcer bc of the extra time annulment proceedings could add and the difficulty in getting BF to pay. All that to say, thanks for the idea bc it still has significant upside!
It's an interesting play but the main risk to the thesis is enforcement against a country like BF. This is not the same as the Ascent vs. Slovenia litigation (should be decided in weeks, as no doubt you know!) where the counterparty is a civilized EU country that generally plays by the rules of law and so full award payment is a realistic scenario after some initial foot-dragging. Getting the thugs that rule BF to pay anything? Good luck with asset seizures - BF is a dirt poor s__hole that probably has very few assets around the world that could be confiscated or they will be protected by immunity doctrines (you can't go and seize an embassy building). It's not a commodity-rich country to whom you can just confiscate a tanker full of oil or a bank account where oil sales end up. If the award is good (and it should be, considering that BF filed late, doesn't have their own arbitrator and their case is likely quite flimsy), there will no doubt be a violent re-rating of the stock on the award, but I also think it will be significantly discounted compared to the award face value. Sarama's best plan will be just to take the award receivable and offload it to a specializer enforcer who will probably spend years chasing BF thugs' assets around the world. There will be a significant hair-cut though, likely 30-50% of the award value, on top of what you already have to pay your lawyers for winning the litigation in the first place. When you model this secondary haircut, my modelled upside is closer to 5-7x. 10x is imho too bullish but what do I know. I am just a fool talking to my buddy Claude a lot.
Yeah, I also see a rerate on winning the case (which I agree is almost certain), but the time from winning the case to Sarama actually seeing any of the money could be quite a long time. BF may try to drag out paying as long as possible, so could file for annulment. While they would almost certainly lose, it seems like that process could take like ~2 years? And of course, you then also have the difficulty of getting BF to pay. Based on my estimations, the company barely has enough cash to cover getting to when the award would be announced. They would either then have to raise more capital or offload it to a specializer enforcer bc of the extra time annulment proceedings could add and the difficulty in getting BF to pay. All that to say, thanks for the idea bc it still has significant upside!
Do you know what's up with the cosmo newberry exclusion zone? Thanks