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I have no doubt that the management of Ithaca is doing all they can to successfully ramp up Stella production from all five wells, as previously stated, one well at a time over a 6-8 week period. This is in Delek’s interest, it is in Dyas’s interest, it is in Petrofac’s interest and it is in the interests of Ithaca shareholders. We will get an update at the final results meeting towards the end of March. Like the good news on first hydrocarbons I want facts not bunting. This will be, the status of the five wells and current production rates including the oil/gas ratio. Perhaps before then we’ll have news on the commencement of drilling on Harrier. But I doubt that Ithaca is inclined to pander to the wittering common on BBs for frequent updates on progress. I would imagine that elements of the commissioning will go better than expected and other element less so. Does anyone here really have the expertise to assess the minutia of the process? If they did they wouldn’t be wasting their time on this BB. If it’s a regular RNS that floats your boat perhaps you should look at those companies that release updates on the daily bowel movements of their rig crew in the absence of a substantial metric to otherwise value their company. Okay I exaggerate........ Slightly! Londoner7
Apologies for invading board, but Did any of you look at it? Massive cash build each month and no debt. 2 exploration drills ahead which will attract retail too. Worth a look guys. It's on the move. Keep an eye on this still - what a joke of a bid
Just to add about what is happening now. It is an important question in that are we ramping up production in which case will we hear about it? Or are we not doing much at all in which case we need to ask the question why? Again is it all about not looking too good during the next month or two? If the company is being run properly we'll be ramping up production and getting ready to tell us all about it in a way that is sensible, sober and detailed but certainly not whispered shamefacedly.
If this board of directors had been presented with exactly the same offer as is now on the table at the time imminently before good news but without their own positions being quite nice with share option payouts (or whatever they are called) and jobs etc then there is no doubt in my mind they would NOT have backed it unanimously. They are not stupid! The timing of the deal announcement and the subsequent downbeat RNS are indicative of the way the other shareholders are being treated. I mean the bod have not even attempted to be subtle! They have basically said we have agreed this deal now (pre-news) so that it looks better than it is and we have released very long-awaited good news in a way so pathetically obviously poorly as to say and we are continuing to play everything down. It makes me wonder just what is happening in the company now? Are we ramping up production? If we are will we find out via the company or will we have to rely on observations from outside the company for news? Are we to have a news blackout between now and the deal vote - we certainly better not have.
The board could have rejected the offer as too low and wrong time. They could have come out with a neutral stance. The unanimous support is wrong in any circumstances.
Agree - there is security in a Delek backed business with access to capital to grow. It's just that there will never be a takeover premium as its now out of play. The best deals for exit are when there is a bidding war and that's off the table. So there is no cap on the upside but it's still less than if a bid was forthcoming in future. I am happy sticking for the ride with Delek and like the security a major well financed shareholder brings.
Might not have had any choice but to release news of the offer before they announced first oil. Delek might have forced thier hand by making the offer, and the bod are legally obliged to announce it. Quite why they agreed a large break fee and back the deal leavesca bad taste in my mouth and as others have said the deal values ithaca fairly today, but allows no upside or future value potential. I for one am glad cavendish are not backing the deal and I too will be rejecting it.
Foresight: not sure I agree with your statement that a Delek controlled entity will have less upside. It could have a lot more upside. I believe Delek want to have a listed vehicle to further their North Sea ambitions. If they decided to use a majority owned Ithaca as an acquisition vehicle to buy other distressed assets, or even other companies, the new Ithaca could see huge growth. Getting clarity on their intentions may be the reason some of the institutions have not declared their positions. Either way they wont be getting my shares for anything like £1.20. But if some do choose to accept and increase Delek's holding, I may well be happy to stay with them for the ride, provided the listing is retained.
On further investigation it appears it takes 75% in favour present at the vote to trigger a delisting so maybe they could manage it but I'm still not convinced that is their aim at this small premium. Just because they become the major shareholder doesn't make a friendly takeover impossible, a hostile one obviously it would, but if they were offered good value or wanted to exit the north sea further down the line who knows, admitedly it makes it less likely that another low ball bid would appear but that means any future offer for Ithaca would have to represent much better future value to tempt Delek to sell up. I'm sure there's still more value here than £1.20 and I'll be holding until I no longer have a choice or until at least £1.50 which I would consider fair for a risk reward balance even though long term it will be worth much more in all likelihood.
It must have a drag as there is no option of a takeover. Delek would need to find a price that clears shareholders out over time if they want to get it all - you are not forced to sell until they get to 90% but lower thresholds will enable a delisting. Overall I would suggest the ultimate price would be less but a lot higher than now. Also having a majority holder strengthens the company as they would not want to fail and lose their investment so there is less downside risk given they are a well capitalised company. In conclusion - a Delek controlled entity will have less downside and less upside but can increase in value significantly especially if they pump more assets and cash into growing the business which they will.
"and the share price can continue its upward progress..." Does the share price of a company with a majority shareholder behave any differently to a company more widely owned? Would having a majority shareholder discourage other investors and consequently hold the share price back? Not saying it would, just asking the question.
My initial reaction was that a takeover would mean a delisting and the end of the road for private investors, but after learning that they need over 90% to delist it does make me question if that is even thier aim, as surely if it was they would have offered a larger premium to get anywhere near that percentage. Of course they are gonna start with the lowest offer the board would recommend but it still seems like they are aiming only to be the majority share holder at the cheapest price they can get and a takeover bid is the only way they are allowed to hold more than 20%. So then the question them becomes assuming they become the majority share holder with no intenetion to push for 90% to delist, how will that effect the company and share price going forward? Would it not be positive in that there were fewer shares in general circulation and also Ithaca would have access to the finances of Delek on generous terms and the share price can continue its upward progress or am I missing something?
Hi Kejoglo, Delek have already stated they want the current BOD to stay, as reported in the "Press & Journal" article on offer. That was why we had such a low ball offer accepted by them. SCUM-BOD-AYE are trying to work a flanker, it`s up to us to stop them and get our true worth.
My sense is that Delek want to feel they got this at the lowest possible price. I would expect them to have to increase the offer when the management and advisors relay back to them that a significant number of holders will not sell. I am sure they are doing this tactically well. And I know they will be happy to close out with a majority but not the whole lot. They are averaging in - a company that is worth more than £2 they will get when all said and done for average c.£1. Good on them. I would be happy to take some off the table at £1.5 and leave some for the future upside. Derek is not a normal E&P company - its more an investor. They want the management expertise and would be happy with the listing to go and do more deals.
The "Ithaca story" is going to be quite different whatever happens. If we have a Delek majority shareholding (but not a complete squeeze out) then things will be different because they have complete control (I am not saying better or worse but different) and if we have "no change" well we will have changed because what then happens to the management team? It will be an uncomfortable and untrusting situation for a while. Some if not all would have to go. If Delek play it too clever they may end up losing out with Ithaca. Once a vote had been rejected (if that happened) then Delek's break fee will also be gone I assume. At that point another bid could descend on us - a bid that is waiting for us to reject. Waiting for us to show them how much we think the company is worth! The way I see it is that the shareholders are up in all scenarios if we reject (unless oil crashes after the vote or something sinks - but hey this is Ithaca so we know that). What concerns me is just how much Delek and the board have the vote stitched up. A clean end to this would I suspect be for Delek to raise the offer. I think 150p would do it easily at the moment and I fear to say perhaps even a little less (this is not necessarily what I would be bailing out at but what I think would nail it for Delek). If the market scents that this bid will fail the sp may wobble for a bit but then it would be on the up. I think we are about at a proper market value right now regardless of the offer.
Charliee, thanks for the heads up. PM came out against the offer on day one, but it's good to see he hasn't changed his mind after further consideration - I wonder if he's had his discussions with management on their recommendation of the offer. But his comment is a little misleading. There isn't a vote as such. Delek are proposing a tender bid at an indicated price of C$1.95 inviting shareholders to tender their shares. Yesterday, I had a brief look into the experience of other Canadian bids. Based on this I estimate there could be shareholders representing 10-20% of capital who are either unaware of the bid or for other reasons hold out beyond the deadline even after the acquirer has posted news that the majority have tendered. Worst case, if the bid is successful payment is delayed to these shareholders. I'd estimate that the top ten minority shareholders, including Cavendish (PM), account for a total of 20% - 25% of Ithaca's shares. Delek will need successful talks with all these holders to get their backing and they would still be short of their target. The bid circular is expected prior to 31st March. I guess Delek reserve the option to post earlier rather than later if they get sufficient indications of support or for some other reason. But I expect the circular to follow the final results due end March when we'll have an update on Stella production volumes. Delek will be soliciting institutional shareholders to close the gap between the likes of Paul Mumford (who alone speaks for more shares than Ithaca management) and their proposed C$1.95 offer. In the meantime a question private investors will be asking themselves is, why hold on for at least another 2 months for a 25% premium on the current bid (Paul Mumford’s price) with no guarantee of any premium, or a failed bid and a return to the Ithaca story with perhaps a 5-10% pullback, when you can put your investment into other ideas? It’s clear that a number of shareholders have cashed in albeit with much shouting and wailing, as evidenced by these BBs. On balance taking account of current market pricing (I’m an investor and not a trader) and the degree of protection the bid offers on the downside, I decided to maintain my holding in Ithaca and monitor proceedings. As a result of smaller shareholder selling there will be a consolidation of holdings to the advantage of Delek. I say this because for Delek’s bid to be successful they need a significant number of informed shareholders alert to the bid with a clear valuation in mind. I believe this is also to my advantage in terms of maximising my investment. I see three outcomes: 1) I secure a higher price. 2) I accept C$1.95 3) The bid fails and the Ithaca story continues, albeit with a temporary pullback. I attach my own probabilities to these outcomes and I’m happy to let this proportion of my portfolio ride out developments. Londoner7
Good news from Cavendish. Not sure how many other institutional investors have declared their intentions but I'm sure there are others. As for the management the only thing they can do now to try to retrieve their credibility is come clean, admit they made a "mistake" and persuade Delek to up their offer. I'm very optimistic that a higher offer will surface, from some source or other and will be holding on till the very end.
The problem we face is that it is difficult to believe management now. They may have made a big mistake in announcing this deal a week or so before the first oil news and allowing Stella to ramp up and achieve stable production later this year. So they need now to justify the deal and will be overly negative on the asset and risks. There is no independence any more, the board, the management and the main shareholder are all in bed with each other with a conflict of interest to the other shareholders that they are trying to get out. For sure, Delek will not want to leave a cent on the table and so if they are offering £1.20 then this is clearly worth more! A lot more as production comes on and we pay down the debt and then get some new tie backs to replace the reserves. There is a good chance that Delek need to up the price just to get to a majority position and not have the whole thing fail. Then they can nibble away to build a bigger position over the coming years. So maybe a £1.5 bid to get the threshold and then over £2 next year. Not much downside and still plenty of upside IMO
Just seen this in Invesotrs Chronicle....another large holder (Cavendish Aim) will be voting against the offer. The fund's second-largest holding, meanwhile, North Sea oil explorer Ithaca Energy (IAE), recently received a takeover offer from Israeli conglomerate Delek. But Mr Mumford does not believe the offer recognises Ithaca's potential to more than double its production from the Greater Stella Area. "Based on the current circumstances, the offer is fair," he says. "But there's tremendous long-term value in this company." Mr Mumford is the fourth-largest shareholder in the company and intends to vote against the offer in the hope that he can retain his interest in Ithaca.
I guess that Delek can accept any tendered shares in the process but do not have to buy them if the take up is less than the 50% threshold. If they get to the 50% then they have to buy even if they don't then want to. Accept the $1.95 is the formal offer as this is a Canadian company -despite all the management and assets being in the UK. We are exposed to FX but think the is limited risk as it seems pretty stable and if anything, £ could devalue after Article 50 and we could be at an equivalent £1.3. Maybe the arb funds that are buying the shares see that as a real possibility and get a great return. One thing is clear - this is a very badly managed process by the board. I really can not see why they did not tell Delek to wait to after the results in March, see how the market has adjusted to Stella and the news of new tie backs, then launch their bid at whatever premium they want. The timing is completely stupid and that is what wrangles with me most.
Londoner7, foresight, thanks for your comments. Londoner7 said; "I've asked the question about Delek's option to increase their shareholding beyond 20% if the 50% threshold isn't achieved on the Stockhouse BB. I'd expect Canadian shareholders to have some experience of the possible bid outcomes." This is an important point. Hopefully a vote of less than 50% means no shares at all are sold however if it simply means Delek don't have to buy but can if they WANT to then we are in a strange situation. A "near miss" (say a vote in favour of 45% of the non-delek shareholders) would mean the deal would be rejected by a majority of the non-delek shareholders but if Delek could then buy the shares it would become the majority shareholder and the bod would be untouchable. It would be sensible for the 50% to be the trigger which has to be met for any sale to Delek but we need to know this is the case for absolute sure. Some company law is not that sensible.
foresight, I agree with most of your comment except: I've asked the question about Delek's option to increase their shareholding beyond 20% if the 50% threshold isn't achieved on the Stockhouse BB. I'd expect Canadian shareholders to have some experience of the possible bid outcomes. The proposed bid is $1.95 Canadian, not £1.2. This may change in the formal bid document but it's wrong to say the bid is £1.2. It is subject to FX movements. The FX detail or timeline is likely be in the formal bid. I think Delek would be delighted with option 3). It just comes down to price. regards, londoner7
When do we feel would be the best time for another bidder to show their hand (that's obviously IF there is another bidder waiting in the wings). We have Stella under way so that is a hurdle cleared. Or would such a potential bidder wait until after 31st March and Delek's formal offer is fully launched? Any thoughts? OT just noticed another in Malcy's bucket list looks like it's about to take off: SDX.
I think generally these comments are correct and the three scenarios are the only ones: 1) Delek fail to acquire more than 50% of the remaining 80% - bid fails. Derek would stay at 20%. 2) They get more than 50% of the 80% and are committed to buying the shares tendered. We have a majority shareholder controlling the company 3) They get to a total of 90% (another 70%) and they squeeze out remaining shareholders and de-list. My view is that (1) or (2) are likely and I also believe Delek want option (2) to be the outcome. They have several majority positions in listed companies - its their model. They may increase the bid to get to option 2 if it looks like they are failing to get enough shareholders across the line at £1.2. Maybe £1.35 would get them enough to be at 60% overall and deal closed. If they went to more than £1.5 they would probably get the whole lot - not what they need or want in my view.
Kejoglo, I missed the detail of your question. Could Delek buy up what shares were offered even if they then did not become majority shareholder, say to get them up to 45% or so? Yes (IMO) londoner7