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Can't see a problem with the RRE route.
Win win for backers and holders alike
Yes it’s also a very different market now from when Faroe started operating. Although Faroe was an extremely well run and successful company, I think they are going with a different strategy this time.
Faroe was a exploration play with that mind dilution is the name of the game. Mid tier production companies the route planned for Long boat come with bringing production assets to the table thus limiting the need for the same dilution as was seen with Faroe. I don’t believe the list of shareholders ie Blackrock have the appetite for a large mix of exploration that’s why I see a production deal in the near future followed by the further production deals moving forward. The blue print is there with RRE if. If HH wants to be a mid tier producer put the Austin top gun cap on and get it pumping.
Stewart and HH Did do a lot of damage 're dilution with faroe.
sales hope the copy the RRE route. depends who is stumping up the zeros's But why not double or more the money with s RTO seems simple really
Duster, you are right that nothing is a given.
Must remember though that Faroe were taken out in a low ball offer, and that wont be forgotten, they won't want that to happen agaon. I realise it's early days to be talking about scenarios like that, however I would have thought that the management team would have given some thought to not diluting the sp to the point where they risk the same thing happening again. Just a thought
It's an interesting one. Depending on how much they plan to raise, the current share price could be irrelevant given there are only 10million shares in issue and a large portion of that is covered by the current cash balance.
Any equity raise here is being talked about as a given that it will be a lot higher £2,+ it's not a given and RRE is a rare example
With baring in mind but I hope the RRE model is copied here
It all comes down to the backers really at the end of play
Ha ha Whirlaw Stones. I just don't get it but i might buy more tomorrow
"Why is the price low now if everyone believes it's only a win win situation? Should i sell my car which is sitting idle on my drive and buy a load of LBE?"
Ash sell your car, sell your house, sell your Granny mate, this is only going one way, booom!!
(Only joking mate, maybe keep hold of your house for the time being ;)
Thanks for your reply Wisha. I will have a read up! Cheers and good luck
Ash - look at what happens to shares in a Reverse Takeover (RTO) ruling.
Wisha - what circumstances dictate when a company has to withdraw and relist at a higher price upon purchase of a company or assets? I've never come across this before. I've tried to find a simple explanation to no avail. In my simple mind the shares in circulation would change along with market capitalisation and ultimately a change in share price. Does this not simply adjust on the day of a RNS announcement?
The assets are now that cheap in the North Sea with what Exxon has been forced to do through institutional requirements in terms of selling their North Sea portfolio they should be throwing the helicopters in the deal for HH to take a slice of some of their wells. It’s a buyers market and a distressed one at that too never will there be a better time to buy North Sea assets.
In order to capture the imagination of the wider investment community a deal of significant value needs to be executed. Securing assets doing 3k bopd is hardly going to wet the appetite.
10k bopd for £50-100M in current oil market is do able and would be a steal
I remember RRE were looking at acquiring an asset in the range of £1bn - that really got my attention and Created a real buzz and volume.
Elite board will execute a top deal for investors. The clue is in the recent incentive package RNS. Join the dots
It all depends on the BOPD.
Futuretruth - Bang on!! the size and scale of the acquistion will determine the placing price. If we acquire an asset doing 10,000 bopd then every man and his dog is gonna want in on the placing including me.
In addition, there is a very good reason Blackrock and AXA are on the SH register. You will find out soon why....
Min relist price 200p
Max relist price 600p
All depends on the asset and bopd
Think of the 'deal' board are trying to do as similar to getting a large mortgage on buy to let property (at a time when house prices are cheap but likely going to go up in future)
1. The finance raised would be 50:50 mix of debt / equity raised against production. You are correct that has risk. Price of oil and production needs to remain high enough to repay debt
2. This is not a risk free investment. It is speculation board will negotiate a deal and decent financial terms for existing holders to go alongside. Looking at their history they have good chance of achieving that. But it's not certain
I haven't had any experience of such deals with a company in its infancy. However, from reading comments and thoughts on here it looks very positive.
What puzzles me is:
1. Any deal to buy assets or a company costs money, it doesn't come free. So surely the debt holds back share price?? And...
2. Why is the price low now if everyone believes it's only a win win situation? Should i sell my car which is sitting idle on my drive and buy a load of LBE
I'm a little confused if anyone can help explain.
If we can add a 3-5k bopd acquisition I would expect a mcap north of the £80m price range, the placing could well be over £2.00, it’s the strength of the acquisition that matters in my opinion, if we are higher than a 3-5k bopd acquisition the placing price is anyone’s guess.
To cut the long story short .... anyone and everyone invested needs to understand The gains here its very simple here .....
40% - 400%
Min. - max
I will take halfway thanks.
Here’s my take on the possible situation that could occur.
So discussions below have highlighted the blue sky potential here.
Let’s now look at the worst case scenario which would still present a significant increase in sp.
First of all ..... directors don’t have a large holding, could be for a number of reasons and one of them seems to be that they would get diluted on any equity raise.
So they decide to give themselves options / incentive shares at £2 a share.
Secondly any decent asset they get will not cost less than £100m so for the sake of this debate they need to raise £100m for acquisition.
It could very much be the case where 75m shares are issued at £1.50 a share to raise just over £100m after costs etc etc.
The main holders would take up those allocated shares knowing its a producing asset and with an agreement based on dividends issued within 18-24months.
Remember this is the first deal so although we want it massive it could easily be a simple deal at 30-40% above today’s sp
They want to do 2-3 deals and maybe there’s too much risk for the big boys to invest at £5-6 re-listing knowing the Bod get free shares at £2. It’s like the backers are giving them free money.
Just a thought, I’m still long and strong but the above is a worst case situation and still 40% profits to be had from today’s sp.
Either way there’s easy money to be made here.
Ps. Also the lower level the big boys find the deal at ... the safer their investment is, they would rather fund a deal at £1.50-£2 rather than £8 a share.
Finally there will have to be equity issued in the new deal ......and it can be significantly higher than today’s Sp just like RRE did.
The range / placing is from £1.50 to £5 a share.
Hope that helps us understand. I’m still with wisha. It’s boooooooom time here
Hi Paul, very good question, and none of us know the answer. We do know that Rockrose IPO's at 50p and have their first placing 150p. That does not mean the same is going to happen here.
I guess it depends to an extent on how good the deal is. The better the deal the more likely the placing is to be popular. The more popular the placing (i.e. if its oversubscribed) then they should be able to set a higher placing price. I would think that any placing price would be aligned towards the value of the company after the acquisition.
Guess we'll soon find out!
Good point, if there is debt involved they wouldn’t even have to raise it all via equity, meaning an even higher potential placing price.
I’d be quite happy for them to issue equity at £15/share!
Good luck all, I think the management here are very shrewd and this market will have thrown up a lot of opportunities for them to get their hands on a bargain or two.
Exactly : the reason to be invested here is belief LBE board will soon do a deal and raise £50-100 million combination of equity / debt required. The initial 9 million funding simply allows them to do due-dilligence on potential deal
Thanks, obviously it would be different if they’d raised money for an acquisition at the IPO and had tens or hundreds of millions of shares in issue, but it would seem they might have flexibility now. It would also give those initial investors a decent return straight away.
I guess we have to wait and see and it’s all speculation for now as you say!