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RockyRide - So you mean summary we cannot complete another deal like Assala Energy or another prior to SS is that correct ?
I have asked the NOMAD this before and he said (the normal standard party line) that any material information needs to be declared in the same way whether a share is suspended or not. I probed further and he said, the point any other deal would be deemed material would be at the point of SPA being signed. If my memory serves me correctly, Z has said he’s seen SPA’s being signed very late in the total cycle and completion happening in a matter of weeks. But in this scenario, while we are delisted with no company currently existing on the stock market, I wold think that this kind of think would be impossible and we have not seen a SPA being signed anyway. However, I would be hoping that we are ready to sign one very soon after re-list either with or without a SS deal. But if it is without, I think we will see a lot of PI’s bailing as they would be in fear of another RTO and subsequent lang suspension again.
I just had a thought this morning and wondered if anyone had a view on this and whether it's technically and legally possible. Could we complete another deal whilst we wait out decisions on SS government prior to the SS Deal. What I mean is return to market with another deal which enlarges the company so it doesn't need to stay suspended prior to the SS Deal, than the SS deal can play out in it's own time with the deal still intact in the background if it continues to take longer.....................
I wonder if that's actually possible in this same suspension window and whether legally and technically allowed given that we were suspended for the SS Deal in the first place so would be able to re-order the running order and execution of deals ?
Probably a legal or a Nomad question one would think ?
And I wouldn’t be surprised for some sort of deal being done with the Government to give them more skin in the game. Maybe they take a higher percentage of revenues from the extensions to the PSC’s. Could they benefit by taking a slightly larger share from ourselves, CNPC and the other partner (can’t remember who they are).
Or could we sell a bit of our share back to the Government, similar to us trying to sell 10% of COTCO back. I know the SS would not have the funds to pay but could it all be done from production revenues with an economic interest date of dd/mm/yyyy. The other 2 partners may do the same if it enhances the chance of the PSC extensions and would reduce any threats of Nationalising the oil fields as happened in Chad.
One way or another we need to take the Government with us and not by dropping suitcases out of planes.
As with all deal making there is an escrow process so folks can google it, so all parties to transaction feel comfortable to commit to each other using a third party a legal firm. So the South Sudan government can feel comfortable that Savannah can finance the acquisition and has backers and the debt providers can feel comfortable that they have assurance on government approvals, It's a matching process and it happens in tandem, you can have the approvals happen later but in this case I believe Savannah and Debt providers would want approvals and debt execution to happen concurrently to give assurance to both parties, so the escrow process allows for this and both parties can not say you are not providing debt or you are not providing approvals, they can both satisfy each other through escrow.
It really comes down to SS government will to complete this deal and let's be frank that's the only thing that matters with this acquisition and nothing else really
It's hard to say Ian.
Some of these institutions have major funds under management and while holdings in SAVE for the top 9 including the EBT are just shy of 60% it might not register that high at all on their overall FUM.
For a few weeks to a few months this either going to transform from $280m to nearly $1.8b yearly revenues with a significant debt reduction (we hope) on the transaction cost 2.25 years on ? and IIs seeing a more realistic valuation/re-rating with perhaps further deals in the pipeline in the short-medium term for continued growth ?.
If they were to pay a $50m div (from $1.8b revs) it's about 12% at the current valuation at 26p to 4% at 78p which imo would be affordable relative to low debt and a $70/b oil price.
Maybe a need to wait and see the expansion plans re reneweables - would IIs pull their money without seeing the details of that growth arm/performance next few years. On the above they'd have to now pull that money and look for opportunities anew and success while Save might be on the cusp of transformation. They may not react in the same way as PIs re access to capital. Just imo.
I’m inclined to agree to a certain extent, but when II’s see then opportunity cost of having capital tied up in a business where they can’t trade to another opportunity, particularly when in 2022 the NASDAQ is up more than 20%, II’s will be mindful of dead money taking oxygen from performance.
To me it looks like they want govt approval prior to even issuing the adm document given the wording this morning. In no deals have i seen approval needed prior to an adm document so perhaps that's SAVEs stipulation ?
From Trustilies AI article yesterday, i wonder where did AI pck up on completion expected in the next few weeks to print thar re S.Sudan -
"In the next few weeks, moreover, it is also expected to complete the purchase of the interests of Malaysia's Petronas group in South Sudan in an operation it announced in 2022."
I still don't think it necesarily means though that it could take right up to the 2nd April and could come through before that.
If there's already 2 years to be deducted from the settlement at 50k bopd using $20/b it's $30m/month or $720m to the end of December 2023 with another $90m this quarter to end of March imo. I still think that up to $250m may have been allowed for contingencies on higher oil prices and/or production rates spread over x years.
NtM - I agree and on reflection I retract that comment. I now think that if SAVE have made enough progress in country to be granted a 2 month extension by AIM, it’s probably enough progress for the finance provider/s (if we are taking debt on) to put all their wheels in motion. I genuinely think we have a decent chance of a Q2 completion now.
I'm fine wit this extension.. and if there's another similar duration one thereafter then ok by me too. Thereafter again probably sees me say it's realms of the ridiculous now though.
You add much value here RR. Thanks v much for all of it !
ps: I really identified with your - RR - post of 8.55 am.. but - also - somewhat strongly disagree with one part of it :
''By the way, should we get the in Country approvals by 2nd April, there is not a cat in hell’s chance we will be trading again before 1/7/24.''
Ian - I think quite the opposite. After all this time II’s will see huge growth and yield potential should SS close. They unlike PI’s in many respects but to mention 3:-
They don’t get bored
They don’t need to take cash off the table
They don’t forget the reasons they bought in
Yes there will PI’s who sell but I see far more demand if and when we land a big one.
And when we do close an incremental accretive deal I’m sure we will see a significant dividend initiated. AK has already previously mentioned $12m and $10m. This will be the number 1 reason II’s are still here and AK will now need to pay them back for their unwavering support as soon as the big fat lady sings!
Cavendish are joint brokers to the company, but have been largely silent since the suspension. They had been bulls of the company with a target price of 85p pre the SS deal.
All brokers and the NOMAD will need to play a crucial in the run up to the relisting, keeping the big institutions onside and potentially buyers of more stock.
My feeling is there may be a pent up order book of sell orders ( I’ve been an inadvertent large holder of this for too long and may want to rebalance) so if the SS deal is completed we’d need an orderly deal flow on both sides.
Until then, the waiting game continues.
Hi RR
Good colour on your chat from the NOMAD. Fingers crossed for all those projects you listed.
With reference to the Shore Capital note, they are just a sponsored broker, hence why their notes always have a disclaimer for investors to view it as marketing communication. ("This material is considered to be a marketing
communication and accordingly it has not been prepared in accordance with legal requirements designed to promote the independence of investment research nor is it subject to any prohibition on dealing ahead of the dissemination of investment research. This material is issuer sponsored and has been prepared pursuant to an agreement between
Shore Capital and the issuer in relation to the production of research".)
Thus would not attached too much significance to it.
The other brokers who seem to cover SAVE are "Cavendish" and "Hannam & Partners" who might be independent and not hired by Savannah directly however cannot see anything published by them (which I guess is not a surprise as we have no data/ financials to analyse!)
And a big fat juicy $50m distribution announced with a fx of 1.27 = BANG ON 3p per share or 18.2% based on my average buy price.
Tick tock…
TiL - thank you. and based on a 2 month further extension I see this as very positive. I spoke to the NOMAD in early Jan and AIM were asking for some very solid reassurances on significant progress being made in SS. If they did not get those strong reassurances, a further extension from today was highly debatable. We must have made progress in country.
If Shore are saying a realistic chance of AD in next 8 weeks, either the debt financiers are also happy with in country progress to incur their legal costs putting the deals together or as my previous note, we are not taking on debt for the deal.
Granted Shore will know some decent stuff to put that note together but we were also told from IR very clearly that Accugas debt re-finance deal would be closed before end of December 2023!!!
Anyway, based on where we are at, we could not have wished for a better note from Shore.
Return price on or before 8th April ……………………wait for it…………
89p
Thanks for your post RR, However i don't agree with your resumption date of 1.07.2024 for trading upon approvals, if we get approvals pre 2nd April we will be back up trading within days of admission doc submission in my opinion .
Noix - the main thing being worked on are the license extensions. In addition to those work streams, there are the finance packages, shareholder approval and SS gov approval.
K - yes I do agree finance in place before AD and readmission.
Whilst we all want to see this back ASAP, I too am pleased to see the further extension. Obviously my number one aim is to see the deal done and dusted. However, as TiL alludes to, I also see it like this.
The longer we see suspended, the better chance we have of the SP returning at a higher price even should the SS deal fail. Let’s say the deal failed today and we returned at a made up SP of 25p.
Now let’s say the deal fails in a few months time instead. By that time we would:-
Have a few more months of strong Accugas revenues reducing next debt, therefore pushing SP up.
Improved chance of seeing first oil in Niger and 35mboe moving from 2C to 2P
Possibility of an interim ruling on 4 court cases re Chad / Cameroon
Another M&A acquisition could be announced (or are we not allowed to announce due to everything else at the moment)
Accugas debt restructure may eventually get done in this window
Compression project in Nigeria completes and significant new gas customers possibly signed up
So if a few of those came in over the next few moths before deal fails, the SP would return at a premium compared to what it would be had the deal failed today.
So with all the World volatility and the vast amount of uncertainty we have, a few more months of suspension gives us a chance of some of our issues improving, whilst the Worlds issues will probably deteriorate even further with all the incompetent Governments we have making it all up as they go.
By the way, should we get the in Country approvals by 2nd April, there is not a cat in hell’s chance we will be trading again before 1/7/24.
Should we complete then we may have had 30 months of EI since 1/1/22 to take off the headline deal figure of $1.25bn. A mere $20 per boe equates to $913m leaving $337 to be found from future production deal and or debt and or cash.
At an economic interest of $27.38 per boe, the $1.25bn would be paid in full after 913 days from 1/1/22 = 1/7/24, ever likely AK is camping out in SS. Maybe he will return with a net worth higher than EM!
PS Shore Cap have just issued a note, does anyone have access to it?
Savannah Energy+ (SAVE, Suspended, Under Review)
South Sudan acquisition update
In a short RNS this morning, Savannah has confirmed that (further to its prior announcements) the company continues to advance the various workstreams – including the receipt of relevant approvals in-country – required to complete the acquisition of PETRONAS International’s South Sudanese portfolio.
Regarding this major proposed reverse takeover transaction, Savannah reports today that AIM has granted a further extension to 2 April, with subsequent updates to be provided as and when appropriate.
Given the further eight-week extension that has now been secured, regarding this obviously significant transaction, we believe that publication of the related AIM admission document can be very realistically expected within this newly updated timetable – and will look forward to further news in due course.
Whilst acknowledging that publication of the admission document (relating to the South Sudanese reverse takeover deal) had originally been expected to occur at an earlier stage, we continue to sense that Savannah is pressing on to ensure that this can occur as soon as possible – noting AIM’s granting of the further extension announced today.
We will obviously continue to look forward to admission document publication, at which point we will be in a position to fully assess the incoming South Sudanese assets. Whilst the shares will naturally remain suspended ahead of this, we continue to forecast material organic revenues and cash flow in the meantime. Our last-published Risked NAV estimate stands at 45p/share.
Not sure of the answer to that PF. I'd imagine they need both, approvals from the varioul ministries plus the overall approval of the govt., but happy to be corrected. Either way, I do think that the extension shows that the powers that be (AIM, Nomad) have been convinced that the transaction still has a good chance of completing.
RR, for the AD doc. to be published I'm pretty sure that the finance workstream would need to be completed. You would have thought that any new timeframe given by SAVE i.e. 2nd April would include that as well. At some point I would expect the financiers will be satisfied that things can re-commence and that the end date reflects that.
Needless to say not happy how AIM has let them of the hook again. What workstreams ? How long can they be allowed to push this out ? end of 2024 ? I don't think they would get away with it on main market.
Is “approval of the Government of the Republic of South Sudan” the same as “receipt of in-country approvals”. Has Government approval been granted and we now await other “in-country approvals”?
Komakino
I believe it's flagged government approval as the main (not necessarily the only) sticking point.
I'd like to think that pretty firm verbal assurances have been given, otherwise why prolong the agony.
My thought when I saw that included Noix, was that it was a simply a little more information for shareholders indicating that we won't see the AD until they have secured the in-country approvals. The update today was fine with with me. I know others want to recommence trading and have access to their cash, which is understandable, but I'm taking today's update to signify we are more likely than I'd thought previously to complete this transaction.
They said this in the rns of 12/12/22 announcing the SPA :
"The Transaction is conditional upon the satisfaction of certain conditions precedent including, inter alia, approval of the Government of the Republic of South Sudan, the approval of Savannah's shareholders and re-admission to trading on AIM taking effect."
In any of the extensions (updates) since, approval of the government of SS doesn't figure, until todays rns when this is included " whilst it continues to advance the various workstreams, including receipt of in-country approvals,"
One can draw ones own conclusions.