Q: Hi Guys,
Can you please give a quick update on NML's decision not to answer the $23MM cash call from Tata? Based on the initial agreement between the two parties NML has a $300MM free carry and then any Cap Ex above this amount NML would be responsible to pay their fair share which is 20% of any further Cap Ex based on a 30/70 equity/debt split. Based on the math looks like the total spent thus far on the DSO is $684MM resulting in a $23MM cash call. NML has made the decision not to give Tata this funding and therefore will be diluted in their ownership perhaps to 16-17% from 20%. When the initial binding legal agreement was established would NML not have protected themselves against this? Tata in the last year or two changed the scope of the DSO to produce more than originally suggested and therefore further Cap Ex is required. Theoretically Tata can continue to spend further pressuring NML for further cash calls knowing NML can't or won't raise the funds. Hence diluting NML's interest potentially to zero. I assume the original agreement would have set up the guidelines and NML would have capped the Cap Ex? If Tata on their own changed the scope why would NML be bound to the new terms? thank-you for any clarification.
Can you please give a quick update on NML's decision not to answer the $23MM cash call from Tata? Based on the initial agreement between the two parties NML has a $300MM free carry and then any Cap Ex above this amount NML would be responsible to pay their fair share which is 20% of any further Cap Ex based on a 30/70 equity/debt split. Based on the math looks like the total spent thus far on the DSO is $684MM resulting in a $23MM cash call. NML has made the decision not to give Tata this funding and therefore will be diluted in their ownership perhaps to 16-17% from 20%. When the initial binding legal agreement was established would NML not have protected themselves against this? Tata in the last year or two changed the scope of the DSO to produce more than originally suggested and therefore further Cap Ex is required. Theoretically Tata can continue to spend further pressuring NML for further cash calls knowing NML can't or won't raise the funds. Hence diluting NML's interest potentially to zero. I assume the original agreement would have set up the guidelines and NML would have capped the Cap Ex? If Tata on their own changed the scope why would NML be bound to the new terms? thank-you for any clarification.
