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Would be nice to have few bidders come in ASAP before SF screws up things with the blessing of their dummy board....makes sense for Adnoc to have a unit to do this. Bahri which is owned by Aramco also makes sense. In fact, if the board had tried to sell the company earlier, would have been better - dont know why they never pursued that route. Perhaps that was the plan as part of the capital raise....
https://www.bloomberg.com/amp/news/articles/2020-11-30/adnoc-is-said-to-be-in-running-to-buy-offshore-oil-services-firm
Interesting......
oh wow, now that is very interesting re: Zakher Marine. Given ADNOC's interest in Zakher, it also provides further evidence that were SF+friends to go down the administration route with GMS in order to pick up the vessels on the cheap, there would very much be a fair bit of competition for the assets and hence a very risky (and thus unlikely) strategy/scenario.
Look who is buying Zakher Marine
Yes, I had always thought that an outright bid may not be Option 1; wasn't too sure about SF balance sheet strength, although the 22p rounded out to a nice USD 100m.
But its not that much of a stretch to do a deal - here is the math:
1. Initial bid budget - 10p x 350m x 87% = GBP 30m. This would have been the initial outlay. I believe there were ready to deal with the bank at that stage with the change of control. Perhaps less willing since the board signed that agreement in June
2. Acquired an estimated 8% at 10p = GBP 3.0m
3. Acquired an estimated 9% at 22p = GBP 7.0m
Means they still have GBP 20m remaining from their initial budget. This gets them an additional 26% at a 22p/share bid.
To acquire 50% at 22p, they need GBP 39m. (assuming Mazroui and Horizon join for the ride)
To acquire 80% at 22p, they need GBP 62m. (buying out everyone)
Alternately, a new partner would need GBP 34m to buy the remaining 44% if SF does not intend to spend more than their initial budget. In all cases, the bank debt is a constant, and I am sure they had a plan on that before they tried the bid.
As an M&A banker, I will let you be creative on how to construct the deal, but its not a stretch if you are creative
In the case of a capital increase, multiple options again. As long as SF don't under write and squeeze out minority shareholders. Obviously, an equity raise isn't great (unless they can do so at a premium)
Also to be seen what value, if any, the Emirati board brings to the table. Can they source more deals with the local oil cos and ramp up utilization? This is a low hanging fruit to optimize, and banks would be more comfortable with this scenario and we can limp past the finish line with no capital raise or a smaller capital raise. All are value accretive to equityholders!
Well, that was all slightly anti-climatic. Was partly thinking there might be an RNS about a bid at 7am. But then again, how would that be a good use of capital at this point - i.e. spending c. $50-60m to acquire the c. 50% they do not already control (i.e. to put into the pockets of the existing non-SF+friends shareholders) which would leave the debt overhang remaining in tact. Actually, doing so (succeeding with a full offer) would trigger a change of control with the banks and so they would then need to refinance the whole debt quantum in any case, including the equity injection component.
Surely it would be better from the point of view of SF+friends just to spend $75m in new capital (to pay banks). For me the question is how they go about that. Can it be done as a private placing of new shares solely to SF/Mazroui/Horizon? In this case SF clearly goes above 30% which in ordinary circumstances would require making a full offer. To waive such a requirement would I think either require the consent of the Panel (unlikely to be granted) or existing shareholders (but as an ordinary (50% approval) or special (75% approval) resolution?? If the former, then no problem, if the latter then it gets complicated). Alternatively, if they go down the route of a traditional rights issue it would probably have to be underwritten. Do they get a local bank like EFG to underwrite (with whom the new team have very close ties)? Could it be underwritten by SF/Marzroui/Horizon? If all shareholders don't subscribe pro-rata then SF/Mazouri/Horizon then need to pick up the difference which puts SF over 30% (unless it's picked up by Mazouri/Horizon) hence reverting back to above issue about waiving requirements for a full offer if breaching 30% level.
As a former M&A banker myself, am starting to wish I paid more attention to my Equity Capital Markets colleagues on some of these finer points...
As much as i welcome it, making bid now makes it so easy on minority shareholders. With the board fully under the control of the 50% holders (SF, Mazroui, Horizon), there is no rush to make a bid unless SF have agreed that with Mazroui and Horizon. As long as they don't destroy value, should stay put. Nevertheless, with the bank deadline looming, there is guaranteed newsflow before the end of the year.
I think the 28th Nov was the end of the close window for SF. Now they have their board in place to approve a bid will they make one or drag it out further???
@4C - thanks, indeed still very much here and waiting to see how this whole situation pans out
Weird to see it marked down 12% when the sell price is UP 3% and the buy is stagnant
@AA2020 good to see you are still here!
Wouldn't mind the offer, and a better deal/win win would be a capital raise at premium!
It’s the final countdown! Things are bound to become clearer by end of Monday. Am still thinking either a new offer or details of fundraising with new capital from SF and friends.
Interestingly only SF, Mazroui and Horizon voted for him, i.e. 49% of shareholding. The last general meeting to elect the new board had received the support of 60% of shareholding.
Heikal is in - lets see if he works his magic solely for his masters at SF or for everyone. This is a guy who was in trouble with the Egypt regulators few years ago; hopefully he has some sense of corporate governance having been the CEO of an investment bank there
@captnemo - wouldnt it be great if they bid 22p before christmas!!
Just hoping they dont destroy value for the remaining 40pct shareholders since SF(30pct)
and Mazroui+Horizon+Buddies (30pct) = 60pct now. Another 10pct is with Castro, who was represented by recently ousted Mo Bissiso. I would think they managed to convince MHB to vote with them - is that because a bid was promised or some other plan was hatched. SF can't make a bid before 28 Nov - they can make a bid now with new boards approval but that might show collusion. New board by the way is comprised of guys from oil and gas in Abu Dhabi - so could translate to significant value creation if they ramp up utilization.
Also you are guaranteed some action in next few months as there is also the bank to deal with, who have given a 31 Dec deadline to raise equity or issue warrants. New board is trying to re engage with the banks - great move would be if they can convince the banks to take some haircut
That's the minimum they can bid for a while as was the highest price paid when they amassed their 29.9% holding. Alternatively they just sit it out now they're in control anyway. All depends what side deal they have done with the other two major holders. Obviously they're not all working together as that would be against the take over code!!
Whyt would they bid so much higher now, just because they are in control?
And then ??????? Anyone care to make a prediction?
New bid at 22p?? That would make for an early Christmas...
7 days to getting SF's Heikal on the board
10 days for the no-bid period to end
sorry to say: there is no trading pattern to analysis if there is no volume.
Is it just me, or does anyone else think that the current trading patter is a little odd?
There were lots of very small sells all day, one was for 2 shares at 14p total..... which has the effect of driving the price down in the lack of any strong buying and then late in the afternoon someone buys a million shares - or two different people had the same idea 23 seconds apart.
Could it be that a '3rd party' is picking up as many shares as they can, as cheaply as possible, so that come Nov 29th SF can make a formal offer at 22p for the small number of shares that they don't already own?
@ GruffJ, not to temper your enthusiasm, it also means someone has sold as much as they can :)
Seems like off the market trades don't have to be reported at all. So there were possibly other undisclosed off-book trades in recent past, which probably explains the fact that 60% of shareholders voted for SF resolutions (unless of course SF convinced more people to vote for their proposals)
Pop again tomorrow I hope!!!
Somebody has bought as much as they can at market or just over today before they have to issue an RNS tomorrow I expect!
I agree, it's an absolute travesty that they haven't investigate or stopped any of what has happened. WHat message is it sending to the world about how we protect out companies?