Please don’t forget to read our disclosures, you should also always do your own due diligence when making your own investment decisions.
In three previous posts, I covered why I think IPI is undervalued, why even in a worst case scenario the company could still make a profit for shareholders, and how one mine was worth the total value of the company, net of debt.
This evening, the company just announced news that it finally reached an agreement with its lenders, removing an incredibly large overhang for the stock and launching what I hope will be a catalyst for increased market value.
Additionally, the company is set to report earnings for the previous quarter on 11/2/2016, however, I don’t believe the quarter will be that amazing and that this credit announcement is the more important event at this time.
The risk before this announcement was that the company had violated certain debt covenants, and because of those violations the lenders could “pull the plug” on the company and force it to repay its debt right away, causing a liquidity crisis for the company.
It didn’t seem to matter to the market that the company was cash flow neutral (and trending toward being cash flow positive), that the CEO had been purchasing shares at a multiple of the current price, that the company already announced “agreements in principle” and that even at currently low potash prices the company could operate profitably with its “solar evaporation” mines.
In any case, I’m super excited. I ran a “Net Present Value” model based on what the company says its cost of goods is vs. what its realized sales price is per ton of potash sold. My number is a multiple of the $1.04 it closed today at, and I’m super excited to see what happens tomorrow morning and the coming months, and I hope you are too!
If I’m wrong, this could mark the beginning of the end of this blog because I’d have nothing to offer you guys ;).
Did you buy any IPI or are you watching the stock?