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Skittish: that’s me!
Gazprom sold him its UK Wingas subsidiary, which owned the Saltfleetby gas field (which had been closed for 18 months following the closure of the Theddlethorpe refinery), in May/June 2019, apparently for a nominal consideration. They also gave him £12.5mm (was it? Or £14nm? for site abandonment provisioning. Wingas was renamed Saltfleetby Energy Ltd later that year. Their offices were next door to Angus Energy’s and a deal was arranged - we don’t know when or how - with the Earl of Lucan, who had been appointed to the vacant MD job at Angus earlier that year following the Tidswell share dealing scandal and subsequent ousting of Paul Vonk, though he had no knowledge of oil or gas or experience in the industry.
Lucan bought the gas field for £1, plus £2.5mm for either an abandonment reserve or to bring the field back into production by installing refining facilities and connecting pipelines at an existing site to replace what had previously been done at Theddlethorpe. Lucan said the £2.5mm would more than cover the cost.
Since then, Saltfleetby has cost probably £2-3mm of Angus’s pre-existing cash, after which they spent a year negotiating a £12mm loan to finish it. They’ve had several placings in addition. The loan is at usurious rates and requires repayment of capital and interest, combined, of c. £4.5mm this summer. There are, in addition, hedge contracts over most of the expected gas production, which if not met will result in losses to Angus - possibly very large ones.
There are charges on the loans which forbid asset sales without the approval of the lenders and entitle the lenders to take over the assets of both Angus and SEL (the latter are guarantor of the loan) in the event that they don’t make the payments.
Saltfleetby is very late and it looks to the more analytical followers of Angus as if they are quite likely to fail to finish it in time to meet the payments.
All the assets in SEL (according to the May 2020 latest accounts) apart from some inter-company balances and £750,000 in cash, are the pipeline and gas site assets bought from Wingas. If they can’t make the payments due in June/July, the lenders may own SEL’s assets. Where the abandonment liability will reside, for which Wingas paid them all that money, is a moot point.
The suggested shuffling of part of SEL’s share of Saltfleetby into another company may well turn out to be a rearrangement of the deck chairs on the Titanic. The revaluation in the SEL accounts reflects the write back of the abandonment provision, since the gas field no longer appears to need such a reserve, being brought back into production again. It’s not clear what happened to the rest of the money that was not passed on to Angus, or if there was any. If he paid himself a dividend, he’s done well! Unless he finds himself liable for abandonment costs one day.
"Skittish"? You sound more like a ramper to me, but I am less enthusiastic; you omit:
"an override of 8% on gross revenue following repayment of the facility"
Of gross revenue, not even profit. Not even after wages...
Skittish: further to our conversation re SEL/ Wingas, can you recall where you saw the data re the cash paid by Wingas to SEL/ Paul Forrest?
As for cash, it is referred to in the accounts of Wingas/SEL - the company was transferred with the cash in the bank account. Wingas and SEL are the same entity of course, simply different names, as I'm sure you appreciate. Ownership of the shares in that company were transferred from The Russian Federation to Forum Energy Services Limited.
As for being a ramper, maybe I am a bit, but with AAOG, which is my only interest here, it is difficult to ramp as they are delisted.
Skittish, I’ve just been back over the Wingas/SEL deal and can’t see it.
skittish,
Apologies - I had not read the entire thread and was not referring to you; I did not even realise there was a poster called 'skittish'.
I was making a sarcastic comment that the situation is even worse than OofyProsser pointed out, as the 8% royalty on gross revenue after the loan is repaid seems to siphon off a lot of the profits whilst avoiding any responsibility for abandonment costs by the lendee.
Nomlungu: I’ve been following your, Mirasol’s and HITS’ admirable posts on the Angus site. There’s quite a lot of pretty ill-informed people to contend with there.
The reason I didn’t mention the royalty is that I seriously doubt that Angus will make it that far.
Gentlemen. I would assume that anyone taking a stake in Angus would be in negotiations with the lender as current agreements seem to be untenable. Yes the lender can on default take over the asset but do they really want it. A new owner could on different terms give the lender a good chance of getting a return.
irishmouse
You are talking about a gas reservoir whose net asset value is:
NPV P90= £213.5m
NPV P50=£376.75m
Plus other assets.
By lending £12m only in return for taking over all these assets, I would say everybody wants it.
I t has been said that Forrest may have other backers. I f he did , would he be in such predicament. I t would be nightmare senario if the recent placing went to the lenders themselves.
I don't think lenders lend hoping for default, unless they are in the loan shark bracket. Are they?
The Lenders are commodity traders. They have arranged the hedges on 70% or so of the project’s expected production. These are not your friendly neighbourhood bank. If they’re on the other side of the hedges and haven’t covered them elsewhere, and Angus is incapable of meeting the hedge terms from July, what would you expect a commodity firm to do, who has screwed Angus down to extremely ungenerous loan terms and stands to make a great deal of money from the hedges? They must have a couple of capable young MBA’s among their staff who wouldn't mind having a project to manage. With deadlines.
I don’t know why the Lenders would be buying shares, either in the market or in the placing. Why would they do it, if they’re expecting to be able to take it over in the summer? And Angus is reliant on placings to make up any further shortfall. Borrowings and asset sales are closed to them.
OofyProsser
Not sure if AAOG case will be similar to that of Petroceltic International case.
Petroceltic international violated the rules of Investment funds some twenty years ago. The latter took them to court and managed to own the company. Here is an extract from Wikepedia:
"The Company's shares were delisted on the AIM of the London stock exchange and the ESM of the Irish Stock exchange following a process of examinership, approved by the High Court of Ireland. The company is now a private company owned by Investment Funds under the management of Worldview Capital Management Limited."
Petroleum1: Angus haven’t got a single large shareholder, just Frazer Lang and his family, Knowe Properties etc. In my opinion, the FCA. and AIM should be taking a retrospective look at certain claims they made in 2020 in broadcast interviews re their financial requirements. They won’t though, AIM is generally, in effect, unregulated. I think Angus will remain unmolested by regulators until either Saltfleetby makes their fortune, or they get taken over either without compensation or for peanuts. There may be a chance that someone with deep pockets who wants the gas field for eventual gas storage purposes may be in the data room but I doubt it.
There are companies in London and everywhere else whose job is to look for financialy distressed companies. They offer to bail them out and in the process they end up owning them or stripping off some of their assets. I think that Forrest being an accountant know this fact and this is why he split Saltfleetby reservoir into two companes, Angus and Saltfleetby Energy . I am an engineer and not an accountant and I hope that Angus will survive.
I think Angus is a typical AIM company that exists to keep its otherwise hard-to-employ Directors in well paid jobs. SEL appears to have essentially a free carried interest in the Saltfleetby project. Its liability in the event of a default is limited to its stake in the project. Angus’s liability under the loan terms extends to all its assets and it pays all the costs of bringing the project into production.