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Haven’t speculated about the no sale option much yet as I believe it is more than 90% likely to be sold.
However, imagining for a moment it does not what would happen?
Firstly the BoD position would be untenable. Operations have all but stalled, and expectations raised amongst shareholders that they will get a return on their investments. The major shareholders and almost all PIs would riot!
I think GC would be out, he had a close shave anyway at this years AGM and knows it, so the sale process is his last hurrah.
A new chairman would be appointed probably under the direction of Michinoko. They have been quiet throughout, but in the case of no sale the options would depend on the underlying reason. It would be safe to assume operational failure would be the only main driver of not being sold, so a new chairman would have that as a prime focus to fix.
The new chairman may well keep JW, but appoint a COO to drive execution of the E&P programs hard with a view to selling in 2 years time.
The share price would be all over the place, likely many investors / short term players would lose patience and dump shares collapsing the price short term. The assets and core value are still there though, and if driven with new vigour we could see the company strongly recover from the initial drop. They have no debt and could weather any share price drop at least short term whilst restructuring a bit.
All of which turmoil is highly unlikely, first of all because the BoD are highly motivated to avoid it.
In theory BunsenBurners point is valid, there is always a risk that the board believe the best offer doesn't match their own desired target, the ACSO rns today is the sort of worded rns I would fear from our own, it read:
"The Company and its advisers have now received refreshed indications of interest from a number of the interested parties, none of which are at a level that the Board feels offers sufficient value to shareholders"
Nope it would drop like a stone, probably to about 14p maybe 12 at worst. But it should recover quickly enough as assets finally get developed. But as mentioned there has been set back after set back and multiple guidance not kept. I’m hoping a sale goes through and I think it will. We are sticking our finger in the air as true value is hard to pin down but what ppl will pay is harder to identify. Anything under 25p I’d expect the boards to reject and frankly anything under 30p is a great deal for the buyer! The bullish argument is strong with multiple interested parties and assets that are worth fighting over. Could we reach some of the high figures banded around here... yes I think we can... will we.....probably not but I’m willing to wait and see
Pickled, good round up
In theory we shouldn't. We're so close on extra CPO5 drills and should've already progressed putamayo seismic that should be good to go there too.
The proximity of potential huge gains is a reason some investors on here have voiced discontent with the sale.
We might see hostile bids. think management would need to take on debt to speed up drilling and do some.share buybacks to protect the sp.
They should've arguably already done this . The fact they didn't suggests there has been a gentleman's agreement with Oxy since way back. I'm any case, JW xferring his options pretty much confirms a sale will happen
bb123 - if the company is not sold the SP will soar as they develop their blocks and production mushrooms, then it will be sold at a premium to the inflated price.
So sleep easy, it's a big win or a bigger win later.
Wow that was a bloody fantastic overview, thank you very much. So the potential upside is great - what is the risk if Amer does not get sold? Would it slowly go back to the 10p range? Thanks very much!
Thanks for this summary. Excellent!
The 37p figure has been widely quoted. A table was provided at the time of the FSP on the financial times. This was from Stiflel. The 37p was for current producing resources, oxy obligations, the oba and CPO5 upside ONLY. nothing in that 37p for Putamayo upside. Overall figure was actually 64p.
37p may also have been quoted elsewhere from other sources (not sure where).
I'm not saying we'll get 64p but does highlight the challenge (and disparities) in pricing Amer - and perhaps explains why share price is being maintained near the M&P offer.
Incidentally, I agree that should be in the range of 25-35p.
Before I was so rudely truncated I was going to say price is likely to be in the range 25-35p, a lower bid won't cut it, and a higher bid would only emerge if there is head to head bidding by two or more companies that REALLY want the assets. The house broker as a proxy for the BoD indicated 37p a share as fair value for the company at the start of the FSP, you could potentially look at that as the asking price.
Potential buyers include Occidental Andina (Oxy), for whom the whole share capital purchase price would be relatively small change, and much smaller than the full development cost of the fields should they choose to buy in. Colombia looks a good bet for low cost onshore development, and committing a significant spend to the country may well align with several oil major strategies. AMER would just be an accelerator, sitting as it does on semi evaluated blocks with key infrastructure already in place.
So ... fair price may well indeed be 37p a share , or about £450m, just short of 2x today's mkt cap. The question is whether there is a company out there prepared to pay the asking price, or whether bidders will, like M&P tried, attempt to get a bargain. I don't believe there is any possibility of a bid being accepted below 25p, and even at that price major investors such as Michinoko may well decline the break even offer.
Simple version of the story:
The share price had fallen from the 30s+ in 2014 down into the 10s based on perceived operational performance and the unfashionable non-eco credentials of the wider sector. A lot of the fall was driven by a major investor, Rex Harrison, falling out with the board and dripping his 120m shares into the market over about a year or so. Most private investors and some corporate ones looked at the land bank and potential asset value, the lack of debt, the newly stabilized political environment in Colombia, the 200ft column of oil discovery in CPO5, the strategic value of the OBA pipeline, and the Oxy buy in to several Amerisur Putumayo blocks and surmised the company was significantly undervalued against its asset base, choosing to hold or add. There are split views on whether operational expansion or a buyout exit would be the best way forward. A lot of investors have been very frustrated at the inability of the company to move quickly operationally or to hold to program commitments for a variety or reasons, not least of which is the snail like incompetence of ONGC as a partner in CPO5. Amerexiteers just point at the asset base and say a take out is inevitable, bring it on.
Hovering between 10 and 12p a share with not a lot of operational progress made did indeed attract an inward bid from Maurel and Prom, a French company backed by the Indonesian state oil company Pertamina. They seemingly saw a potential opportunity to snatch the company on the cheap and submitted a cheeky 17p cash and shares offer which was very promptly rejected by the BoD. However to the Amerexiteers delight this triggered a strategic review and formal sale process (FSP).
John Wardle, CEO, recently moved his own holdings in AMER into another company (Tracarta). This indicated he believed a whole sale would be likely, no need to protect from Cap Gains unless you are going to make a cap gain. He can sort out the legality of that later with HMRC, however a couple of weeks after that move the company announced that instructions to bidders in the FSP were now to offer for the whole share capital.
The only reason to make this move is they already believe there is a viable whole share capital offer likely to come in. The other option of selling some assets to accelerate development elsewhere is now off the table.
The reason the SP hasn't risen further is because it is hovering just in advance of where the M&P offer came in at, and in the present circumstances it seems few want to bet on a much higher take out bid despite all the signs that one will. Volumes in the last weeks since the FSP process first started have tailed off, everyone is sitting (as advised in RNS from the company) on their shares. I doubt there is a big free float out there, few longer term holders here have sold many shares and no institutions have made significant moves.
So one or more bids are very likely to come in the next few weeks. Price is likely to be in the r
"It seems like people are pretty certain this is going to be bought out, if that’s true why is the sp not going up?!"
You've obviously not been around long bunsenburner... otherwise you would know that it has gone up. If you're asking why isn't it 30 - 40p yet... then there's "obviously" still risk attached that a deal won't fly - but based on AIM shares in general right now... I would say this is probably one of the best risk v reward plays out there!
There are no 100% certainties on AIM... or in life... Choice is yours to invest or not (as always)
YorkshireLife - Start spreading the news...
"It seems like people are pretty certain this is going to be bought out, if that’s true why is the sp not going up?!"
really? you're using your post with that one?
It seems like people are pretty certain this is going to be bought out, if that’s true why is the sp not going up?!
BigSmoke... or is it: "BigFrank".... LOL ;-)
And now, the end is near
And so I push the final buy button
My friend, I'll say it clear
I'll state my case, of which I'm certain:
40p