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Good Morning
What are the chances of Premier not making it ? Traded shares successfully from Encore days but now too heavily invested to be able to contemplate a wipe out.Honesty opinions please.
My advice is get out.
I am not a deramper . Just honest opinion.
Cut your losses and move on.
To much debt and low prices .
Used to be a investor. I can smell Thomas Cook all over again.
I am very confident that the price of oil will be considerably higher some time ,and certainly within the next year or so,making Premier one of the best investments to have.Just the next few days that concern me !
Buzzard44,
Doesn't that all depend on the bondholders ? ARCM could have a deciding vote here. If I were in their position I would extend/ defer for 6 months and make Tony wait for his BP acquisition..
Its a mess no doubt but its all about the debt structuring and as ever PoO.
PoO is a variable, if you do not think it will be back to $65 (Brent) then its not wise to invest...unless you want to short on ALL oilers.
If TD can not get decent terms and PoO does not break $55 its another long term service of with out being able to add to diminishing portfolio i.e. further development of Solan, Tolmount and dare I say it SL...if its $65 then Tolmount Solan and debt ( with Andrew and Shearwater producing too) really good in 4yrs ( coupled with tax credits). Still do not see the cash for SL development in the medium term planning though....thoughts anyone.....Zama would not be enough ( I have too many shares in RKH).
Still feel Chryasor+ may have something to play in all this yet.....if they are turning a profit on the +£4 billion investment they have made in the North Sea to date?
Rgds Sft
Must be missing something ?" Premier Oil is just like Thomas Cook".Thought one use to sell holidays and one sells oil. A commodity that is used by all of us and produced in some very unstable parts of the world at the best of times.How safe is the House of Saud ?
Buzzard you asked for people’s opinion. Yes they are different industries .
The DEBT pile is huge. Don’t fall for the it should be at 30p/50p
The company is in a mess and has been trying to pay down debt for years with little to no success, this was with Brent at over $70
the only people ramping this share are the ones heavily invested. I do not want anyone to lose money but you asked for a opinion.
The reason why I said like Thomas cook. I remember lot of media hype about Fosun taking them over and debt restructure . The CEO 5 days before they went pop said they would not go under. Look what happened.
The share price movement is all done by machine not a trading floor. The swing the price up 10% on news just to drop it again an hour later.
I remember 2 days before lockdown PMO surged 76% in the morning only to drop negative by the end of the day.
Your hard earned cash should be invested in good quality stocks . Not high risk / high debt oil companies trying to become rich.
If creditors were to call in the debt why would they Take on assets unless they believe they can cover the debt? Surely they will take more equity but leave the debt in the hands of the company? I’m not very clued up with corporate finance tbh so genuine questions, I just don’t see why they would call the debt in? They won’t want anything to do with assets etc imo.
Also if this was the plan to strangle us into submission why would they close such a large percentage of their short? I know we paid for it but it’s still another large long position they have an incentive to grow.
DD, Your statement isn’t entirely true “ The company is in a mess and has been trying to pay down debt for years with little to no success, this was with Brent at over $70”.
Pmo have paid roughly a 3rd of the debt off from its high!
The company is currently in a mess but mostly down to Covid and the refinance happing at the same time. No one could have predicted it.
TD needs to earn his fat salary and get the refinance signed off ASAP. It’s the uncertainty that’s killed the share price.
If creditors were to call in the debt why would they Take on assets unless they believe they can cover the debt? Surely they will take more equity but leave the debt in the hands of the company? I’m not very clued up with corporate finance tbh so genuine questions, I just don’t see why they would call the debt in? They won’t want anything to do with assets etc imo.
Also if this was the plan to strangle us into submission why would they close such a large percentage of their short? I know we paid for it but it’s still another large long position they have an incentive to grow.
if the creditors called in the debt on the 30 September, then the compamny may be technically insolvent, so they could seize assets as a way of satisfting the debt obligation. They may take equity, but there's no guarantee that they will use the same vehicle, so it could result in existing shareholders not being involved in the future. They could call debt in for any number of reason, including a direct intention to seize the business to ensure it works only to pay debt, so there would be no future benefits/growth to share with shareholders. It ensure they are directly controlling the business as they appoint their own Board, Directors etc. That ensure no more ex*****ve growth plans and the business plan concentrates on deleverage and paying coupons. To the poin that it's deleveraged and reselleable. You'd have to consider any short position in context to any long position. It's a pretty normal strategy to hedge a long debt posistion by shorting the companyequity - and visa-versa. Without know what they hold in the cat. table and their post-transactio profits, obligations etc it's only ever speculation. None of that might come to pass, but it's still possible. In simple terms they may not want either equity or assets, but just ensure the business is run to service it's debt obligations. That limits the future of the business, but for a debt holder there's both a cash flow stream, redemption of the debt at par. If you take PMO1 as an example, that would give you a yieled of to maturity (buying at lows) of around 50% (TYM). Debt doesn't need growth, unless it's venture debt, it just needs coupon payments and redemption. You can still make a considerable capital return buying it as an asset when it's dIscounted from par.
https://www.londonstockexchange.com/stock/PMO1/premier-oil-plc/company-page
Pre stabilisation deal PMO1 has a yield to maturity (YTM) of 44.642% - calculation provide by the London Stock Exchange.
You seem to be trying to scare people, what’s your motive?
As far as I’m aware creditors can’t just decide to take over the company as they don’t own it.
They do however own the debt and can call it in if we brake the covenants, which has been reset until the end of the agreement that ends in May (as far as I understand it).
At the end of this they can call it in which would then potentially make Pmo insolvent. This would then mean Pmo would have to call in administrators. They would be the ones to work out how to pay off the creditors.
Currently we are nowhere near this. Whilst nothing is certain there is no indication that the creditors won’t agree. They are getting a good return for money unlike the Pi’s.
That’s not to say it’s not a risky play.
They could call debt in for any number of reason, including a direct intention to seize the business to ensure it works only to pay debt, so there would be no future benefits/growth to share with shareholders
I know initially they were not supportive of this deal but after holding the company to ransom for 80m new shares to close a big percentage of their short in exchange for backing the deal surely they couldn’t just turn around now and not support the refinancing?
They have crippled the share price as I see it, they called for more equity to be issued to pay down more debt which derisks it for them, that dilution is what has hammered the share price, how would it be legal for them to turn around now and say actually we want to call in the debt?
Motive?
Jesus make me sound like a criminal.
A post asked for a opinion and I gave it. No I am not a investor/trader hold a short position .
Been watching this company for 10+ years.
If you want to know what Ollie’s I am in
Pharos Energy
Jadestone energy
Sorry missed some of the copy and paste of your point I was referring to.
They could call debt in for any number of reason, including a direct intention to seize the business to ensure it works only to pay debt, so there would be no future benefits/growth to share with shareholders. It ensure they are directly controlling the business as they appoint their own Board, Directors etc. That ensure no more ex*****ve growth plans and the business plan concentrates on deleverage and paying coupons.
A polite warning for shorters...
‘I want the guys in the trading floors to be as jumpy as possible. I’m going to make sure whoever gambles on this market will be ouching like hell.’
Saudi Arabia warned short sellers not to challenge its resolve to protect oil’s recovery...
Some of what you say is half truths and misleading. Everyone still invested here is well aware of what’s going on.
It’s tuff times for all oilies.
Pmo has lots of assets and has been widely regarded as well run up till now. (Not to say I like Td)
Lots depend on poo rising of coarse, but it can’t stay this low forever. Too many snouts in the trough.
As for your comment about the company could be run for Servicing its debt obligations, I would suggest this has been the case since last refinance. TD bends over backwards for them, so I repeat there’s no reason they won’t accept. They could however demand more since he paid off Arcm.
Also for the record I don’t like the position we are in but in my view it will go through leading to massive dilution but a secure future.
DYOR
You are correct SK, first option for existing shareholders at discounted price, it is not available for public directly.
Also , the IAG shareholder got a option to sell their options, they receive money in return, hope this applies to PMO.
typo
Also , the IAG shareholder got a option to sell their Rights, they receive money in return, hope this applies to PMO.
"You seem to be trying to scare people, what’s your motive?"
This is what the Compamy says:
"In addition, since 8 July 2020 the Group's leverage and interest cover financial covenants for the testing period ended on 30 June 2020 have been deferred under the terms of the Stable Platform Agreement. Without the deferrals contained in the Stable Platform Agreement, the Group would have breached the financial covenants contained in its financing agreements in respect of the testing period ended on 30 June 2020. In the event that the Proposed Refinancing is not agreed or finalised by 30 September 2020, if the Group is unable to obtain a further deferral or waiver of the financial covenant testing for the period ended on 30 June 2020, there is a risk that an event of default may arise prior to May 2021. If such an event were to occur, the requisite majority of the Group's creditors would have the right to vote to declare the Group's debt liabilities immediately repayable. "
So even they acknowledge there is a chance of a credit default. And the group would be required to return several magnitudes of cash greater than it's market cap. How quickly that comes is up for debate. Certainly it reads as if they are going to default on the credit issue arising on the 21st May . Thats what ever is left of the £150m 6.5% notes. That's a significant issue for the company to put in an RNS release and draw it to shareholders attention. The debate is what happens after the 31st of September when creditors know there's a hightened possibility of a credit default within 6 months and the potentila default issue with the 6.5% notes.
Yes of course I understand there's a process, but here's the neat thing. Creditors can, if they choose, appoint Administrators and then Admiistrators role is to protect creditors, it's a business continuity device not a shave the shareholder strategy.
For the recored I'm "long" with my holding, but I'm also practical, so this is just 0.3% of my portfolio. There's an offer on the table of 44% YTM, in my case over 50% I bought at a lower price, so I'm up in capital terms. But, when investment grade debt comes along with less than 2% yield, and bank deposits even less, I have few expectations.
"Also , the IAG shareholder got a option to sell their Rights, they receive money in return, hope this applies to PMO."
I'm guessing as time is very tight, that's of course unless the creditors agree to extend not testing covenants AGAIN, that it will be an institutional placing, so not a rights issue, there will be not rights to sell, just dilution from a discounted placing. That's once they are in a position to start book building. I may wrong, but I don't think they can do that until creditors have voted on the Stable Platform Agreement.
I don't think Company has the time or relational capital to go for a rights issue, I suspect they will take the easy route and just deal with corporate investors. It's just a lot less messy. Only my opinion of course.
Just out of interest, did the Board request the rights to waiver premption rights at the last shareholder vote?
here's the relevans section from the Notice of Meeting:
Special Resolutions
Resolutions 18 and 19: General disapplication of pre-emption rights and specific disapplication of pre-emption rights in connection with an acquisition or specified capital investment
If a company proposes to allot Ordinary Shares or other ‘equity securities’ (including by way of sale of any shares which the Company has purchased and has elected to hold as treasury shares) wholly for cash, it has a statutory obligation (subject to certain exemptions) to offer those shares to holders of similar shares in proportion to their existing holdings. Resolutions 18 and 19 seek to disapply this statutory right of first refusal to a limited extent to give the Directors the power to allot Ordinary Shares (or sell any Ordinary Shares which the Company holds in treasury) for cash without first offering them to existing shareholders in proportion to their existing shareholdings. The powers under Resolutions 18 and 19 shall last until the conclusion of the Annual General Meeting of the Company to be held in 2021 or until the close of business on 24 September 2021, whichever is the sooner.
Part a) of Resolution 18 provides the Directors with flexibility to deal with practical issues such as fractional entitlements and securities law restrictions in overseas jurisdictions when making an offer that is otherwise pre-emptive, and would apply to any allotment of shares under Resolution 17. Part b) of Resolution 18 contains a broader general disapplication of pre-emption rights up to an aggregate nominal amount of £5,249,153 (representing 41,993,224 Ordinary Shares). This aggregate nominal amount represents approximately
5 per cent of the issued Ordinary share capital of the Company (excluding treasury shares) as at 18 May 2020, the date of this Notice.
In accordance with the Pre-Emption Group’s Statement of Principles regarding cumulative usage of authorities within a rolling three- year period, the Directors also confirm their intention that no more than 7.5 per cent of the issued Ordinary share capital (excluding treasury shares) will be issued for cash on a non-pre-emptive basis, pursuant to sub-paragraph b) of Resolution 18 and equivalent authorities in other years during any rolling three-year period, without prior consultation with shareholders.
Resolution 19 is intended to give the Company flexibility to make non-pre-emptive issues of Ordinary Shares in connection with acquisitions and other capital investments as contemplated by the Pre-Emption Group’s Statement of Principles. The power under Resolution 19 is in addition to the power set out in Resolution 18 and would be limited to allotments or sales of up to an aggregate nominal amount of £5,249,153 (representing 41,993,224 Ordinary Shares). This aggregate nominal amount represents an additional 5 per cent of the issued Ordinary share capital of the Company (excluding treasury shares) as at 18 May 2020.
To make sense of that I guess you should read the "the Pre-Emption Group’s Statement of Principles"