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I think they announced the SL strategy in july. Separate entity. 400mil vendor loans. 800mil export finance and balance from balance sheet capex. The farm down will be very unattractive as pmo will want to pass on the rkh carries prorata. That deal was done when oil was +100. Personally i think that pmo should delay any decision until post refinance and cleaner BS. Or that they tell RKH that the deal is no longer viable. Not sure why we havent eaten rkh but i guess we cant. Then farmdown would be much more attractive to others
Doesn't' the market see SL as a negative atm? If they were to announce we put it on the back burner till financing conditions improve the SP would likely go up. Answer to this is the farm down, but if they have no takers they won't/can't do it anyway. So isn't SL neutral at worst to SP?
Oiluser, as we know we are seeing strong debt reduction purely from the strength of the business even with weak crude prices. As always the big imponderable is SL & how that’s going to be financed.....maybe that’s the Achilles heel that ARCM expected to capitalise upon.
Cant think any reputable banks turning down 5% now. What puzzles is why not unwind unless they have insider info on export financing conditions
I think their ability to force an equity placing is in the bin. PMO cashflow inc debt pay down can generate a refinancing. Question is the rate.
I stand corrected.
Exactly Thotl, the sp is a key metric & has been totally undermined by ARCM. Company strategy will have been shaped by the poor sp performance & you raise an important point re Zama, I am sure that other opportunities will have been lost because of ARCM undisclosed actions. IMO short should be immediately closed & fca should sue for blatant disregard of the rules. Given the size of the short & ARCM loan to PMO, this is wrong on so many levels.
Get on short tracker and check it out. It was 15 or 16
...without trying to force an equity placing?
Oiluser, I thought their biggest previous reduction was only 6 down to 3 in the early 2018 oil move over a 6 month period? This is a whole new beast to unwind
I'm doing same this am. We need solid shareholder action to get this resolved.
Well done jw61.
I’ve emailed FCA and copied to editor of FT
letters.editor@ft.com
Great pointb manjukwai who would be the best to make alert of this situation press wise I wonder??
Perhaps asking the financial press to comment on this short rather than FSA PMO etc may be a better way forward.
WOULD be interesting to know now what the average price they shorted at is??? Can they get out now or not with profit or are they already losing money on there short???
These guys got out pretty quick last year from 15% to 3 or so. They will do it again this year if oil rises to 70. Were dependent on debt reduction and company mo indicates the same.
Great to see holders complaining in numbers to FCA there useless at best but united we can do something. Not sure what the FCA will be able to do but I don’t fully understand the legality of the situation. Just a average PI getting screwed for the last 2 years by these shysters makes you bitter
Forgive me if this is a stupid question but I get why ARCM have hedged but why wouldn’t they adjust the short as the SP moves ? Someone said every 1p increase increase in the SP is USD 1.4m down for ARCM. Their position hasn’t changed since June so surely at some stage if the SP keeps going up (and their position stayed the same) their loss on the short would outweigh their gain on the loans ?
Fully agree with the comments that the non reporting of this short is outrageous and i’ll be using that FCA link to complain.
Think the clue is in the fact the other shorts are getting out and the share price has gone up. ANd it stopped suddenly in July, pre all the debt reduction news.
Would still like a decent explanation on how they are fully hedged. If they have some call protection, then whoever has written those calls needs to cover stock as the share price goes up
Lazy reporting oiluser it shows the incompetence of the reporter.
How is it TD’s fault if the slimy lenders are shorting PMO shares he will be as ****ed off as anyone with the amount of shares he owns..... if it wasn’t declared then he’s not a mind reader....
TD answered already. Sale of Zama and Farm down of SL. Too many on here need soothers.
I thought debt was 2billion. Where is 2.55 coming from.
They have been doing this for almost 3 years. Their position dropped to under 4% last year. They reduced as oil climbed and started adding again as they watched oil fall. They have failed to notify but seems to me the main street know all about the hedge. Which is how its been termed by all parties. They had a huge position when debt was 2.8billion, seems to me that with debt dropping that pmo is less at risk. But not without risk all the same.
Premier Oil becomes the target of record £132m short bet by Hong Kong hedge fund
Asia Research & Capital Management built up an enormous 17% short position
The hedge fund did not disclose the bet to the watchdog until Friday last week
The short position is huge by typical standards
By JAMIE NIMMO FOR THE FINANCIAL MAIL ON SUNDAY
PUBLISHED: 22:03 GMT, 7 December 2019 | UPDATED: 22:03 GMT, 7 December 2019
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A Hong Kong hedge fund secretly built up the biggest ever short position in the UK by taking huge bets against Premier Oil shares.
Asia Research & Capital Management should have revealed its bet to the Financial Conduct Authority in February 2017 when its short position in the North Sea oil firm’s shares went above 0.5 per cent.
But ARCM, which invests in distressed assets, did not disclose the bet to the watchdog until Friday last week – when it belatedly revealed that it had built up an enormous 17 per cent short position worth £132million.
ARCM built up an enormous 17 per cent short position worth £132million in Premier Oil +1
ARCM built up an enormous 17 per cent short position worth £132million in Premier Oil
Short-selling involves borrowing shares from another investor for a fee, selling them, buying them back, hopefully at a lower price.
The shares are then returned to the original owner, with the short-seller pocketing the difference.
ARCM’s huge short position – thought to be the largest ever disclosed in the UK – is understood to be a hedge against its $380million holding of Premier Oil’s $2.55billion net debt, which becomes repayable in May 2021.
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Premier Oil shares: Check the latest price here
Premier Oil agreed a crucial debt refinancing package in February 2017 when ARCM bought its debt and began shorting the shares as insurance.
The £132million short position does not mean ARCM has spent £132million betting against Premier Oil, but it does pay a fee for borrowing the shares. It means ARCM has some insurance if the shares fall and it suffers because it holds vast sums of its debt.
This is a rising concern when oil prices are falling, as they have done since April.
A source familiar with ARCM, which has not increased its short since June, said the company always hedges all its investments.
Even so, the short position is huge by typical standards. It is the largest short position in Europe by percentage of a company’s shares, according to analysis by Breakout Point. The second largest is CPMG’s 5.86 per cent short position in German technology company Aixtron.
Premier Oil and ARCM declined to comment. The FCA decli