PV Crystalox – the big pay out

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Over the years, PV Crystalox’s (LSE:PVCS) reneging customers, or their receivers, have been attacked by PVCS’s directors using the law (expensive lawyers, but apparently effective). This has resulted in some impressive cheques being handed over to PV Crystalox. In 2014 one paid €8.7m for failure to abide by a contract.

The 2012 pay out from arbitration was the most spectacular, a whopping €91m (£76m). The directors decided to pay out €36.3m to shareholders shortly afterwards.

Compare these numbers with the current market capitalisation of £26.8m.

There is one final arbitration hearing to go, at which the company could be in line for a sum of money similar to that received in 2012. Here is what the interim report, published a couple of weeks ago, said:

“The Group has a significant outstanding long term sales contract with one of the world’s leading PV companies which has failed to purchase wafers in line with its obligations since 2013. The supply contract was signed in 2008 and related to wafer shipments over a seven year period with prices which reflected market prices at that time and which are considerably above current levels. Despite extensive negotiations it has not been possible to reach a mutually acceptable agreement and a request for arbitration was filed in March 2015 with the International Court of Arbitration of the International Chamber of Commerce. The evidentiary hearing of the arbitral tribunal had been scheduled to take place in Frankfurt in July 2016 but following a request by our customer the tribunal agreed to postpone the hearing until November 2016. The judgment of the arbitral tribunal is now expected in early 2017 and while the outcome is uncertain, the value of any award if our claim is upheld could be a multiple of the Group’s market capitalisation.”

In sum:

The company already has NCAV about the same as MCap, so there is a backstop position there (see yesterday’s Newsletter).

Plus, it could receive, say, three times its current market capitalisation from the Court of Arbitration.

Thus, it could be a four-bagger

But, it is high risk. There are two main concerns:………….To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

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