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Good point 4Corners. Definitely more than just those three end games. The merger scenario is interesting. I wonder if SF would look to force a reverse merger similar to the current situation with Premier Oil and Chrysaor. It solves the capital structure issue and no doubt would bring material synergies and greater tendering / business development heft. It could conceivably be of benefit to all shareholders in the medium term. Although this would depend on SF wanting to retain the GMS listing for the combined entity.
Either way I think (or rather hope) it’s unlikely that the SF game plan is to intentionally push GMS into administration in order to buy the assets. It would be pretty risky with no guarantee of success and it’s not obvious how Horizon or Mazroui would benefit.
So that is going to be a meaningless GM as of now, but never know if the glorified dealmakers at SF change their mind last minute like how they did after they resigned from the board :)
@ AA2020 - there are other options too, like a merger with SF for example or a capital injection by SF to own a bigger stake. SF in their first bid in 2019 did not want to buy out the entire business. I am not convinced they have the willingness AND ability to pull off a bid at a higher price.
Let's hope there is life. I have 700,000 to go with your 20,000 and will be voting no to Seafox.
Hoping I didn't miss the sell opportunity, I have 20,000 shares in GMS and they were doing well after refusing the previous bid. Now, I'm not sure whats going on, is it the end of the road for GMS? Shall I cut my losses now before it tricles down to nothing or is there light at the end of the tunnel?
I see three possible adverse end games here, not all of which are mutually exclusive:
1) SF drives the company into administration and then buys the vessels on the cheap from the banks
2) SF stuffs the BOD with their nominees, and therefore has control and individually sells off the vessels (to themselves on the cheap) with banks repaid from the proceeds
3) SF bids again from 29 NOV
With respect to #1, I don’t see how that benefits Mazrui or Horizon. Unless they are shareholders with SF in a NewCo that buys the vessels. But then surely that would prove from Code point of view they were acting as concert parties all along? It might of course be too late by that point for GMS’ other shareholders for the Panel to take any action. Not sure what there powers are “after the fact”
With respect to #2, the current Board of course immediately reappointed the board members which SF succeeded in “removing” over the summer, citing DTR and related corporate governance regs. Might the current Board be able to do the same thing if SF is successful on 10 Nov with their nominees?
@jadpi - very much possible :)
SF votes against the warrants, pushing GMS to default and banks take ownership of the vessels. SF approaches banks with $400m (they could possibly put in $75m equity and refi the $325m). They would have spent the same amount of money as a 22p bid, but end up with lower debt.
I am guessing that is what this article is about - https://www.sharesoc.org/blog/education/lessons-from-a-failed-investment/ (I don't have access)
Or you end up with nothing
The million $ question is if they are interested in buying 100% on 29 November....why buy when you have enough control to block anything (for eg. issuing warrants needs 75% approval - SF can easily block with their 30% voting rights)
For what its worth, 22p translates to $100m equity value. That is $500m for the entire business and "only" 8x guidance EBITDA. SF can remove further costs, making it look like 7x EBITDA. Improve fleet utilization and that multiple drops to 5 or 6x. Small improvement in rates, and they are at 4x. Not a bad deal!
You’re right that if they go over 30% they have to make a mandatory offer, but they are not allowed to go over 30% until 28th November - 6 months after they made a “no intention to bid” statement on 28th May. It’s in the Takeover Code.
They can make an offer for GMS before that with Board approval (seems highly unlikely as they are not exactly on speaking terms!), or if a 3rd party makes a bid (which also seems unlikely at the moment!)
I thought maybe they would make sure they were highest bidders and also scope out other potential bidders to see how likely a conflicting bid would be.
Am I right seafood hold 29.99%? Isn't it in their interests to go over the 30% threshold and make a compulsory offer for the company?
Couldnt they also disrupt the company constantly to keep the SP low while they buy up what they can?
Thanks. Hadn’t seen it.
I thought 5gey would issue it as an RNS.
My bad.
It's on the website under results and presentation on the investor relations menu.
This statement was included in the RNS this morning
“The Circular to Shareholders and Notice of General Meeting will be published later today.”
Yet nothing was published ?
I don't think driving a competitor to the ground while owning 30% makes much sense. That's an internecine strategy. What Seafox says and does nowadays don't make much sense in principle but I’m certain like many here, that these are just tactics to impart fear and disbelief in SHs, so they don’t trust the current management and are more open to sell their shares below their true value.
I, personally, believe in tangible results. And GMS has managed to meet my expectations (shown via their annual results) while sorting out a depressed energy market, banks arrangements, a hostile shareholder and a disrupting virus.
Markshares, if they drive it into the ground the banks will take ownership. They can then sell the assets
off to the highest bidder or keep the company as a going concern whilst they look for a buyer. Either way, Seafox will 'lose' their investment with no guarantee that they will get the assets or the company as a going concern...interesting times!
Why spend all this time and money (I estimate to be around $15 - 20m including hiring Perella Weinberg for the bid) when they can go buy the vessels in the market (as they stated in the bidding statement that if the bid did not go through they would recreate the portfolio)?
My worry is that they are driving a competitor into the ground. OR they are making a bid post 28 November
But if they run it into the ground can't they acquire all the assets they want, on the cheap anyway?
Comprehensive reply from GMS; says it all really. Seafox continue to agitate; to my mind they are laying the foundation for another lowball offer in the hope that SH's will accept because they are fed up. Their problem is that THEY are also a SH, so if it goes too far and the banks step in, they stand to lose more than anyone. The annual results will give a good indication of where the company is regarding their turnaround plan and if they are fairly positive Seafox are unlikely to get the company for a song.....
It is truly baffling... Resign and then hours later ask to be reappointed? GMS ought to be able to take some kind of action against Seafox for wasting time and money.
What a complete load of rubbish from Seafox; they continually act as if other SH’s are complete idiots! They made it clear that as majority SH’s they would in no way support an equity raise. Now they are protesting that the equity raise is not going to move forward and place the blame on the current BoD; incredulous!
Very hard to read what's going on. - Seafox's statements don't make sense either. Why resign in protest when they would have their directors of choice in a month? Either they are incompetent, and they have misread the shareholders and the board yet once again or they have some plan up their sleeves - i am inclined to think that its the former.
They still have to call the general meeting I suppose and Seafox and friends could vote out the current board, and re-elect Hassan Heikal. Another question is if they intend to still stay as shareholders
Just seen this on the SeaFox website
Statement re Gulf Marine Services PLC (“GMS”) – Director Resignations
Seafox International Limited (“Seafox”) notes the 7th October 2020 resignations of Mr Hassan Heikal and Mr Hesham Halbouny (the “Seafox Nominee Directors”) from the board of GMS with immediate effect.
Seafox notes the reasons for resignation as follows; the other GMS board members without the presence of the Seafox Nominee Directors decided to halt the capital increase process with the pretext that Seafox's requisition to remove certain directors and to add Arab board members with serious experience is disrupting the process. This is despite the fact that the overwhelming number of vessels, assets, clients, contracts, personnel locations, banks and debtors reside in the Gulf. So far as Seafox are aware, shareholders predominantly from the GCC region and representing a significant majority of GMS capital were not consulted, nor had the opportunity to advise, as to whether the Seafox proposed requisition is conducive or not to a capital increase or a rights issue.
In this context, Seafox believe that the GMS board decision, without the Seafox Nominee Directors presence or invitation, to abort the capital increase process is alarming. The GMS board made an announcement as early as March 2020 of an in principle understanding that the company will need a capital increase of $ 75m. We don’t know what has happened since but Seafox are not aware of any firm underwriting from any shareholder nor the placement banks. Seafox believe the GMS board that approved a bank amend and extend deal that commits the shareholders to issue either shares worth $75m or warrants, that did not have any firm commitment prior to signing the bank deal, that didn’t pre-approve it through a general meeting, scrambled a few months later to try to start a capital process then decided, abruptly, without Seafox Nominee Directors being present, to stop the process without appropriate consultation.
We further note that today, 7th October 2020, Seafox have sent a further requisition of General Meeting to GMS requesting the re-appointment of Mr Hassan Heikal in the context of the prior requisition request dated 22nd September 2020 and if successful Seafox look forward to a new GMS Board with a fresh outlook, including replacement independent Directors with significant industry and regional experience.
Well, I didn’t see that one coming!
Really not sure what to expect next. GMS has until Tuesday (13th) to issue the notice of the GM which SeaFox has called.
They said there would be further info released after the initial ping-pong of letters, but nothing yet.
Standby for a flurry of RNS from both sides over the next few days I reckon!
Seems like Hassan Heikal wants to be reappointed....come on Seafox make up your mind!
Anyone care to speculate what might be going on behind the scenes in the GMS boardroom?