Time to examine more of the con-speak in MMEX’s most recent shart-holder letter of Dec. 2018…
Contract law is far more complex than the MMEX STRONG, or most OTC “investors” have the capacity to understand.
Looking at MMEX’s shart-holder letter, we can pick apart con/grifter speak contained in the first substantive paragraph pretty easily.
The first paragraph is fun, and informative to dissect:
What does “agreed in principal” really mean? An agreement in principal is a stepping-stone to an actual contract - but, it is not a contract, and it has no legal binding. The underlying problem here stems from Mad J.’s incompetence; his first (wildly wrong) cost estimate for the project was at most $49-million, which then jumped to $70 - 77-million, depending on which B.S. you believe, then to most recently, $88-million.
So all this opener says is that Mad J.’s told his “lender,” (the unnamed “international debt fund,” with a “terms sheet” that was “extended,” and “expired Nov. 15, 2018) that he needs to borrow more money. Since there is no information disclosure, or any way to verify Mad J.’s claim that “we” means both parties “agreed in principle,” there is no way to verify that the (imaginary) lender agreed to this.
The second sentence is interesting:
Here, Mad J. alleges that discussions about raising equity might be ongoing. On an 80/20 deal, Mad J. needs about $17.6-million in equity. Of the more than $2.1-million in proceeds from toxic lending, depending on the B.S. one believes, no more than $800K or so has gone into any component that could be considered equity, transferred from MMEX into an SPV - to make the math easy, Mad J. still needs about $17-million, minimum. After more than a year, he’s failed even to soft-circle it. There’s no evidence in the PE community about any PE raise for MMEX.
The third sentence of grifter speak is hilarious:
EPC contracts are “closed” once the entire project financing structure (JV, SPV, equity raise, and debt close) have come together - NOT before, or even concurrent.
For those with no understanding of contract law, and this is important, MMEX (or really, the SPV) must have as an element of capacity (one of the seven foundational elements in contract law) the ability to “perform.” In this case, “perform” means that the entity forming a valid, enforceable contract with an EPC must have the ability to pay! Catch-22, MMEX…
In project finance structures, as I’ve pointed out several times before, the full equity component is raised first - typically called and banked for high-risk deals, possibly soft-circled for low-risk deals where the entities in the PE part of the syndicate are known, and can fund.
So Mad J. has totally blown it (once again), for anyone who understands contract law, and project financing. His grifter-speak is total, and complete B.S.
Contract law is far more complex than the MMEX STRONG, or most OTC “investors” have the capacity to understand.
Looking at MMEX’s shart-holder letter, we can pick apart con/grifter speak contained in the first substantive paragraph pretty easily.
The first paragraph is fun, and informative to dissect:
Quote:Status of CDU Phase 1 Project Financing. We have agreed in principal with our senior lender to increase the potential amount of our senior debt component. We continue our discussions with several equity participants to complete our total project cost financing. The remaining items to close on the financing are the EPC contracts and the equity commitment.
What does “agreed in principal” really mean? An agreement in principal is a stepping-stone to an actual contract - but, it is not a contract, and it has no legal binding. The underlying problem here stems from Mad J.’s incompetence; his first (wildly wrong) cost estimate for the project was at most $49-million, which then jumped to $70 - 77-million, depending on which B.S. you believe, then to most recently, $88-million.
So all this opener says is that Mad J.’s told his “lender,” (the unnamed “international debt fund,” with a “terms sheet” that was “extended,” and “expired Nov. 15, 2018) that he needs to borrow more money. Since there is no information disclosure, or any way to verify Mad J.’s claim that “we” means both parties “agreed in principle,” there is no way to verify that the (imaginary) lender agreed to this.
The second sentence is interesting:
Quote:We continue our discussions with several equity participants to complete our total project cost financing.
Here, Mad J. alleges that discussions about raising equity might be ongoing. On an 80/20 deal, Mad J. needs about $17.6-million in equity. Of the more than $2.1-million in proceeds from toxic lending, depending on the B.S. one believes, no more than $800K or so has gone into any component that could be considered equity, transferred from MMEX into an SPV - to make the math easy, Mad J. still needs about $17-million, minimum. After more than a year, he’s failed even to soft-circle it. There’s no evidence in the PE community about any PE raise for MMEX.
The third sentence of grifter speak is hilarious:
Quote:The remaining items to close on the financing are the EPC contracts and the equity commitment.
EPC contracts are “closed” once the entire project financing structure (JV, SPV, equity raise, and debt close) have come together - NOT before, or even concurrent.
For those with no understanding of contract law, and this is important, MMEX (or really, the SPV) must have as an element of capacity (one of the seven foundational elements in contract law) the ability to “perform.” In this case, “perform” means that the entity forming a valid, enforceable contract with an EPC must have the ability to pay! Catch-22, MMEX…
In project finance structures, as I’ve pointed out several times before, the full equity component is raised first - typically called and banked for high-risk deals, possibly soft-circled for low-risk deals where the entities in the PE part of the syndicate are known, and can fund.
So Mad J. has totally blown it (once again), for anyone who understands contract law, and project financing. His grifter-speak is total, and complete B.S.
