The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Superdad.
Thank you for the courtesy of your response
Unfortunately, I no longer share your belief, or confidence, in the Board – quite the contrary!
Much of their “considerable stake in the company” has been acquired by means of – in the view of many investors - over-generous share options; and some key players apparently have little ‘skin in the game’.
Nor do I share your faith in “trusting ‘experts’ to determine the fate of my investments” over considering the views of well informed and experienced investors on this , and other, BBs. I have paid the price of trusting experts!
It is important to remember that this is not a distress / fire sale!
Amerisur is producing at over 6,400 bopd and has significant infrastructure ownership. Between the estimated value of the CPO-5, Platanillo, OBA, Oxy carry, and cash, the net asset value of Amerisur roughly comes to the neighbourhood of US$670 million. By paying US$315 million, GeoPark gains the control of assets at an implied discount of over 50%.
And when you strip out the $60m cash balance, the offer is actually worth 16p a share.
There seems little doubt that ONGC have been deliberately dragging their heels on COP-5 – with the consequent negative impact on the SP - and the reason for this could be a post-sale redistribution of assets.
To quote the CEO of GeoPark “"GeoPark and ONGC…the operator of the CPO-5 block, have a long term strategic alliance to acquire a portfolio of projects across Latin America. ONGC brings significant operating knowledge and expertise to the CPO-5 project. "
https://www.geo-park.com/files/releases/GeoPark_Announces_Amerisur_Acquisition__Final_002_EN_1.pdf
You go on to say: “What you are doing is voting down and probably removing the board.
Who will then run the company and how will you realise more value than the best offer anyone has given for the company?”.
I really find it hard to believe that the Board, which has a long established history of enlightened self interest, would walk away and forego any share awards that are performance related. Just doesn’t run true to form!
I also find it hard to believe that a group of IIs, faced with a potential 2x – 5x relatively short-term ROI could not recruit an effective team to effectively manage and fully exploit this outstanding investment opportunity. In fact, given the appalling operational track record of the current management, a change would be highly desirable.
I therefore strongly urge all investors – and I include IIs who may be reading this - to support ML’s campaign and ensure that this lamentable offer is robustly rejected, so that we can, in time, realise the full value of our investment.
Whilst I have never posted on the BB, I have followed the various comments with interest. I have held Amerisur shares since the Chaco days and have a similar number to Superdad. Like many I have been appalled by the Board recommendation which I feel has been pushed on them by the likes of Michinoko.
Like Superdad, JTD and others I have a number of questions on why "on the face of it" this offer is recommended. The Board have themselves substantial holdings in the company so they will suffer their greedy selves for such a low share price sell out.
Is the price offered by Geopark right? If so over the years has there been some "creative accounting" by the Board. I was an MD of a small Plc and understand how it works.
The deals done to increase asset value over the last year appear commendable, but it must be remembered the jewel in the crown COP 5 is not operated by us and as shown we are merely "puppets on a string".
Why to date after exhaustive in depth presentations to a "multitude" of interested parties do we come to the present and only offer? Have they all looked and walked away as not worth more? Time will tell.
It would be an honest thing to do for the BOD to explain their reasoning behind the recommendation but with the history of this shower it will not happen.
I am not trying to be negative but just think that these and no doubt other questions need answers to in order to be able to make a rational decision
Torreblanca
I don't believe that Giles Clarke has the clout or the respect that he once enjoyed in the City. The performance of AMER and his other business interests says it all. I would not be surprised to see the share price rise if he were to be kicked out. John Wardle, for whom I once had a lot of respect, has not covered himself in glory either. JW once under promised and over delivered. In recent years to opposite has been true, I am sorry to say, especially when we look at OBA throughput and overall production.
JTD, thanks for your comment which as usual is sound and well considered. I will of course keep an open mind, it has been my job to do so. However I do wonder if the people who have vehemently said they are voting no will be doing the same??!! Regards, and thanks for some really informative posts.
Baxi, thanks for your post and I respect your views. Personally I would tend to believe the Board (who you rightly say) have considerable stakes in the company over people on a Bulletin Board who have probably never visited South America, Columbia, or any of Amer’s business, or even bothered to go to an AGM. Personally I would prefer experts rather than BB posters to be in charge and determining the fate of my investments. A lot of people spout a lot of rubbish on these chat groups, although I like you have been impressed over the years with the knowledge and expertise of 3 posters on this site. I watched other boards with people ramping up Companies that since went bust, their advice is not always that good! As I say, each to their own, but from my experiences tread carefully. Personally I am praying for a higher offer but it seems unlikely, in which case I will trust the Board have done as much as they can and more than bulletin board posters could do
Superdad - I appreciate your viewpoint, it has great merit and is a concern to us all, I said at the start we need plausible options along with a no vote.
To that end Moneylender is doing a useful job collecting details as much because it gives a feel to the level of dissent, allows information distribution and maybe even gives some party with the competence to challenge the deal the encouragement to come forward - doing nothing is not an option for many of us. Bear in mind, no one is giving irrevocable undertaking, simple registering an intention to take a particular course of action.
Having said that my vote is an irrevocable NO, I've voted to remove them before, I regard them as near useless in any case. lol
I urge you and I'm sure many others inclined to support to keep a watching brief and decide based on how events unfold - the BoD should not be given any comfort at this stage.
Superdad,
I bow to your significant City experience but I would, respectfully, put this point to you.
You say "if you vote it down the Board will resign and the shares will plummet.", and that could wll be the case (bearing in mind that some have invested their own funds, so they may reconsider that optiion).
But if we support the bid, then we crystalise the value of our investments at, what some well informed and highly respected posters consider to be, substantailly below their true value.
Alternatively, if we vote against the offer - which I intend doing - we continue to remain invested in a debt free, cash rich, company with high value assets in a low cost oil producing area. The shares may well plummet but, if we are to believe the data, this will only be a relatively short term (for LTIs) phenomenon and, as a long term investor in Amer, I am in for the long haul. I would therefore strongly urge all PI's (and any IIs that may be reading this) to support ML's campaign and robustly oppose the bid.
Further toy comment below, my reading is that Michinoko have pulled the plug. The bod have taken the offer that best suits the desires of Michinoko and/or their own situation with regard to Ironveld.
I think this is a conflict of interest and they are acting in the interests of themselves and a few other big holders and not the entirety of shareholders. I think most here would be happy with a higher share/cash offer but we are being denied this option.
Great post Superdad, Totally agree with your below concerns / comment !
Raw emotion is a sign of weakness in the world of trading, we need to establish a balanced view, so everyone benefits from the sale.
It does not matter if the SP goes down when we vote down the deal.
In a year or 2 it will be 4 or more times what it is now. Already now the valuation by GeoPark is 670m USA, in other words, double what they are paying for.
We need to vote down the deal because:
- the company is profitable
- The company has no debts
- The company has more than 50m USD in the bank
- Awaiting for new wells to be drilled
- Exiting 2019 with 7500 bopd
- in good shape to exit 2020 with 20k bopd
If we vote down the deal it would be either 50p now or £1 in 18 months.
I hear you SuperDad and it's very unlikely I'd vote against this deal if no better deal is offered between now and then.
I agree that it's difficult to assess without full information. However, it seems the restriction to cash only bids has limited our options. I'd like to know what other bids were received.
Ultimately, if no other counter bids come in now then seems they got the best possible and we've misjudged the market
Apologies for a couple of typos in the above post, not great at typing on my phone!
I again urge some caution and more understanding of what is being planned here. I am a private investor with 1.5m shares who has worked in the city for some 20 years. I totally share the frustrations being aired, and I have been a shareholder for over 10 years. What you are doing is voting down and probably removing the board. Who will then run the company and how will you realise more value than the best offer anyone has given for the company? If it is worth more someone else will put come forward, I haven’t seen any company do this yet. You will he left with an oil company in management disarray with assets in South America (not a great place) and a share price much lower than it is at the moment. Your voting, although understandable due to the frustration we all share, will in my honest opinion make you a lot poorer and I cannot see any feasible plan B. How do you expect more value to be extracted? There are a few very knowledgeable posters on this site, but also a lot who aren’t. I want more, we all do, but please understand what you might be doing by voting no. Please no abuse due to my alternative view, I do have some experience in these matters, and personally think this has not been fully understood or thought through by many on this site. I will say no more, as I don’t often, or Even like posting. Good luck all.