Evil Knievil: Things are looking up

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Evil Knievil: Things are looking up

Some readers may recall my rabid enthusiasm for REA (LON:RE.) late last year which proved to be trumped by a pernicious export tax imposed by the Indonesian government imposed last December. After that it seemed that there was a cap on REA’s digging itself out of trouble.

There then arose how best to refinance REA, which was not as simple a task as it first appeared. Followers wondered whether the Indonesian government could be prevailed upon to ameliorate the export tax.

A couple of days ago success was announced as the tax came down by roughly $100 a tonne of CPO. This makes a big difference.

Yesterday I managed to get hold of the CEO of Sipef, a Belgian plantation operator which has substantial interests in CPO in West Africa as well as the Far East. The CEO reckons that the export tax will not be increased and that therefore REA can plan for the future. 

Given that the REA pref dividend due to 30th June 2021 was paid on that day and that there is an 18p arrears the REA prefs remain a screaming buy which is ideal for an ISA. However, I listened carefully to the Sipef CEO and yesterday bought a further 100,000 REA ordinaries at 55p. There may well be a fund raise by way of further ordinaries but I doubt if it will be down at 55p.

(People forget that the Belgians have a long history of plantation operation – think of Conrad’s Heart of Darkness – and that the Sipef CEO’s judgement is certainly to be respected. This may prove BLM or Belgian Lives Matter.)

Comments (5)

  • Stupmy says:

    I’ve only just received you’re RE. comments (07/02/2021). You bought at 55 and it’s currently at 89. The last time I can see teh SP at 55 is Aug/Sept 220. You did well, but the volume is so low I’m surprised you managed to get 100,000 at 55p. I guess there’s something I’m missing here.

  • Saigon says:

    Stumpy, you’re looking at the wrong share. RE closed yesterday at 61p up 12% on the day

  • Terrapin Trader says:

    Hmmm I took up the recommendation from Simon for Allied Mind- it’s down 50%

  • philip baker says:

    Stumpy you have the preference price RE.B the ordinaries are RE.A . I hold some preference RE.B and have thought about the ordinaries. Loan refinancing has taken place but still at 10% all of the companies borrowings seem at junk bond levels.
    If i were a director i would keep passing the ordinaries and clear company debt to close to zero, as 10% interest seems high at this point where interest rates are almost 0% around the globe.

  • Stupmy says:

    Thanks all, I used to watch this one a while ago and took another look following Simon’s piece, but was very confused.

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