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The board can run an oil company, they did a decent job in very choppy waters before the delek bid, but yes they have lost trust. BUT they know how to run a company.
As we come to the end of the process, shares are trading lower than the offer, whereas they should now be getting to match it. Suggests there is not the confidence that this will go through. The FX now means the offer is equivalent to £1.16. About 6% premium to pre offer price. Great deal indeed. Rough adding up seems to suggest about 110k shares changes hands. If all those go to Delek, then they have got another 25% so well short of the 60% they need in total. But we shall see... This has in effect become a nil-premium takeover offer for an undistressed company about to re-invent itself. Who do they take s for?
The status of the Board is what constitutes the major risk now. Hopefully Delek raise the offer to an acceptable level and we can sell up. Worst case scenario is the offer fails, Delek withdraw and we're left with a Board that doesn't have the confidence/trust of shareholders., with a serious impact on the SP. I don't think that will happen but it's a risk.
Agree the deal has a good chance of failing. So what do we do then with the management who can not be trusted imo
Price of oil is rising and with increased tension between major producing countries, this will only help the price, coupledcwith further OPEC cuts. Delek know this, but im not sure they'll raise their offer. I have instructed my broker that I will not be tendering my shares, as once this offer fails and is out of the way the SP will rise. This offer is actually holding the SP back. Debt is reducing all the time, harrier will add to reserves and be ready to give production another boost. There are many other assets within the GSA, so we have great infrastructure and assets. ALB Mostyn
Ramp up phase on Stella to commence in April, so additional revenue streams won't be available till Delek have had their way with us.....yeh?
Just to point out that many institutions do not like fighting their battles in public and so do not expect them to come out. For sure Delek knows what they are going to do. I am very confident that there will be more than 10% who reject so a complete clean take over is off the table. I have no idea whether they will get to the 50% threshold. And in some ways I don't care what happens as I am a long term investor. The only issue being that if it is a complete failure we need new management we can trust. My quick math indicates about 25% of the shares have changed hands provably bought by arb funds looking to seel to Delek at the offer. So they may get to a total of 40% which is way off the 60% needed. If oil stays strong in the next week then this bid may fail. Delek may increase a bit to get to 60% - probably another 15% would do. I doubt they will offer the full value to get to a complete take out. The only reason to tender your shares is if you feel this is the highest the share price will be in the near future. As I have said, I think we would be higher now if it were not for the bid price pegging the share price
Just have to add londoner7 that I understand your questioning of being there with delek in full control of the company, which will happen only when they reach 66.666% of shareholding, which would require more than the 50%+ of the other shareholders required to get the offer valid...
Right londoner7, I did not cover the increased bid scenarios because it increases the speculative ways of outcome and I don't think they will increase to my expected level of the share price after a full Q with Stella, and I did not add that Harrier drilling results coming could be another material game changer, and surely forgot other things, like the future of the bod after this, etc...thanks to you and everybody for the feedbacks and comments which are surely helpful to a lot of people at this point... all in my personal opinion
Yes good post londoner, i certainly hope that is the way this will go. Of course, in the normal scheme of things it would be the management who rejected the initial bid and then negotiated a better price for us shareholders. Unfortunate that they turned turtle without so much as a whimper before getting to the first fence. It has not been their finest hour.
Good post. Rec'd!
KeithR39, it isn’t clear to me that you describe the outcome I’m playing for, which is that Delek succeed in the offer but not at $1.95. Unless I believe that Delek will walk away if they fail at $1.95, and I don’t believe they will walk away, then there is little risk to holding for a higher offer. Offering my shares at the current price of $1.95 weakens the hand of the principle shareholders who will decide this bid. This is how I expect (hope) the bid is played out. Between now and the 20th Delek/Ithaca are contacting shareholders with direct holding, i.e. not nominee accounts, via letter and the Laurel Hill phone calls. The purposes of these contacts are twofold. One to ensure that you are aware of the bid with an encouragement to tender your shares; and two to determine the level of support for the $1.95 bid. In parallel with this activity, Delek/Ithaca is discussing the offer with the principle shareholders (institutions and those shareholders like the Ex Valiant director with say 1% or more holding). They will be determining the price which will gain their acceptance. According to Ithaca’s website the eight largest holdings account for 25% of Ithaca’s shares – 8th in the order accounts for 1.4%. Therefore, the remaining target holding of 53% (78-25) is held by shareholders with less than a 1.4% holding. It is cheaper for Delek to influence your decision with a letter and a phone call than raising the bid price. This suggests to me that Delek will be very unclear on the acceptance level until the smaller non-institutional shareholders (albeit some with large holdings) declare their intensions by either tendering their shares or holding. This is why I maintain that all shareholders can influence the outcome (a higher bid) by holding off on the 20th April deadline. Following discussions with the principle shareholders Delek will have built a ‘ladder to success’ which consists of the level of support at various prices from these principle shareholders. Assuming none of them consider the $1.95 offer to be fair it might look something like this: $2.00 1% support $2.10 3% support 4% cumulative $2.20 4% support 7% cumulative $2.30 3% support 10% cumulative $2.40 5% support 15% cumulative $2.50 6% support 21% cumulative $2.60 2% support 23% cumulative >$2.70 >2% support >25% cumulative The Delek offer target is 50% of 78% = 39%. If 20% of shares have been tendered by smaller shareholders by the 20th then Delek require a further 19% from the principle shareholders. The ‘ladder to success’ indicates that an offer of $2.50 will secure an additional 21% of shares so that will be Delek’s revised offer price on this basis. Londoner7
Thanks for your excellent comments foresight and Keith. I think most invested here (myself included) plan to sit on their hands and see what happens next. It does surprise me that only a few of the major shareholders have revealed their positions as to what they plan to do; their opinion carries weight so why keep their powder dry? Delek come across as a particularly shrewd company, as the timing of their investments in Ithaca and Faroe demonstrate. It is all part of a plan to expand outside of Israel so will they walk away if their initial bid fails I wonder? Are there better alternatives out there in an already turning market? Happy to wait and watch as the potential will still be there even if Delek are not.
Yes three outcomes in theory: 1) Delek do not get to 50% - offer fails. Shares will be priced on the news flow after short dip. A large portion of shares bought by arb funds will be held for a while so not a lot of selling. Inquest have done better than us over the past 6 months so the bid is possibly holding us back. I would expect all being equal we are at above $2 in a week. Management team needs to be changed - do not trust this lot to be honest with us any more. 2) Delek get 50%+ and close as the main shareholder. Good position as they will underwrite the company and want to it to grow through large acquisitions. Very strong player and good to be part of this story for a few years. 3) Complete take out - which will not happen at $1.95. So will need to up the offer to get this. All these point to holding your shares as this is not a good price at a good time for us - just Delek. IMO
very good point foresight, here is my personal decision tree: 1- You plan to accept the $1.95 offer because you fear a bad scenario: you better sell now at $1.93 on the market because if delek dosen't reach 50%+, the deal is not valid and your order won't get exercised. 2- You wait till april 20th to see if delek succeed to get 50%+: if that's the case, the mandatory minimal 10 days offer extention apply and you still have time to make up your mind. If they do not reach 50%+, the stock trade freely again, and personally, I'm not sure it will fall like a rock because the last Q report was not taken into account in the offer recommendation valuation, wich report has a 35% (about 20 million berrels) increase in reserves, a confirmation of a cost per berrel down to $18 and an anticipated Ithaca production of 25,000+ boepd. It could open above $2, imho. 3- You're a hard rebel like me and you wait for the september results guessing that crude oil will trade higher than today and the above mentioned numbers will show up strong in the Q report. All my personal opinion
Even if they get the 50% they need, you can still hold the shares in a listed company with Delek as the main shareholder. I think this is a better position than before as we have a strong well financed shareholder looking to driver this forward. I am staying long term - there is a lot to play for in the next few years with oil price and production. thats why Delek want the company. The only way they get my shares is if they make a decent offer now that reflects the future upside as well as the current asset value.
I hold shares in my pension and also with iweb and there votes must be in today and then have some with bestinvest which vote must be in by the 17th . I am holding and hoping that Delek do not get the 50% and come back with revised bid i hold a total of 249,536 shares. Even if Delek do get the 50% i am lead to believe we get another ten days to accept this so can have another think about the position at that time.
Barclays rating.........from a business with a sound reputation for dealing with numbers?
With Syria already heating up with angry Russia and Iran, US is now going at North Korea. Serious stuff about to happen imo, those shares could be worth much more in a few months, in my opinion. The purpose of the meeting with Xi was probably more than economic... https://www.aol.com/article/news/2017/04/11/north-korea-threatens-us-with-nuclear-strike-as-american-warships-approach/22035090/
being generous over here too.
Sorry. From campus1 on Stockhouse Others report the same. I guess these guys don't have nominee accounts. Perhaps they'll get champagne and chocolates before the 20th. Personally, I'm holding for the $$$$$
Delek getting nervous I just received a phone call from Laurel Hill advisory group wondering if I had any questions and how I was going to vote on the Delek offer. Told them no. She asked why and I said because the offer was to low. She said she would pass on that info. Read more at http://www.stockhouse.com/companies/bullboard#4LYZU2OgoxvSIPqH.99
Nice RNS.... stronger NO now. Can't lose here.........
Its a no brainer vote no
Agreed don't trust this bod only objective is to cash in now