That is the conclusion of the London arm of Germany’s Berenberg, picking through the aftermath of the group’s failed bond issue.
For those investors who’ve recently been vacationing on Mars, Sirius failed to get a US$500mln high-yield debt issue away, citing market conditions.
Revolving credit facility
Said fundraiser would have allowed it access to a US$2.5bn revolving credit facility, which in turn would have kept the workers at Woodsmith gainfully employed digging a mile down into the North York Moors.
Instead, the company is reining back construction to save funds as it looks for alternatives to the bond issue.
“A strategic investor appears to be the only lifeline left for the company, with financial backing from the UK government appearing unlikely,” said Berenberg’s Rikin Patel in a note to clients.
“Given the increased uncertainty about financing, we reduce our assumption about the probability of completion of the mine to 25% (from 50%) and assume further delays to start-up.”
Catching up with reality, the bank cut its price target to 4p a share from 17p. In mid-afternoon trade the stock was changing hands for 3.97p, down 3%.
Patel and the team see little prospect of the government intervening to back-stop a financing package after the Infrastructure and Projects Authority gave Woodsmith a hard pass.
“In recent weeks, Sirius returned to the UK government for financing, but without success,” the Bernberg note concluded.
“It appears that government guarantees or backing are unlikely for the foreseeable future, especially if the current political uncertainty persists.”