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Yes, 42 days for public consultation and 28 days or so for internal debate within the govt. I guess there will be some questions raised in the public consultation period which will take a bit of time to resolve/answer so this should be approved in 3-4 months at the latest
"CAPITAL GAINS TAX
In December 2013, Rockhopper announced that it had reached
an agreement in principle with the Falkland Islands
Government (“FIG”) regarding the timing and quantum of the
Capital Gains Tax (“CGT”) liability due as a result of its farm out
to Premier Oil of a 60% equity interest in its Sea Lion discovery.
The parties agreed in principle that the total CGT payable is
£90 million with payment split into two tranches. The first
payment, equating to £26 million (approximately $41 million),
has now been satisfied. The second payment equates to
£64 million (approximately $107 million) and will now be paid
at the same time as the first royalty payment to FIG from oil
production at Sea Lion.
Constructive discussions continue with FIG to document the
above agreement in principle."
Gosh, they were talking about reaching project sanction in 2015 !!!!!!
LTT
Rpoodle, the voice of reason.. Good to have you posting again Sir!
I've read all the comments but I'm not sure I really understand why RKH requested FIG approval. The OM award has nothing to do with FIG regardless of the tax position. You could argue the other way that RKH niw have skin in the game to say we will only pay tax if RKH Navitas get the green light on Sealion.
Does anyone know when the EIS is out in the public domain for public consultation?
I am pretty sure Mogger will be on this when it drops, but can’t recall how long between submission and being put out for public consultation. I think from memory there was 42 days for any feedback!
LTT
That's Great Rpoodle, thanks for posting 👍
Regarding the comment: “ suspect FIG may be seeking tax on the $231mln carry that rkh did receive but that's speculation on my part and may or may not be the case.”
You may be aware, but RKH paid tax on that portion many years ago. I’ve followed this company for years and years, so cannot recall the exact document that info is contained in, but I can assure you that tax has already been fully paid.
JEBR, I do not believe the monetisation award is up for negotiation until after the deadline that FIG have to approve.
If the award is upheld in full, the specialist funder stand to gain $150m or more.
If the appeal is upheld, they stand to lose $45m.
The chances favour the former significantly more than the latter.
As I said, FIG will look after FIG and they are unsurprisingly playing hardball with rkh as, for them, its Navitas,not Rkh developing & funding Sea Lion, rkh are pretty much just being carried, So whilst FIG be eagerly licking Nav ass, they certainly ain't gonna do the Rock any favours.
Sam & the team will have to use all the guile,diplomacy & negotiation skills they can to resolve these issues and hopefully get FIG to authorise the OM transaction & agree the tax ammendment.
We don't want another arbitration and I expect they will iron things out between them. Rkhs case on the €674mln carry they never received is stonewall but I suspect FIG may be seeking tax on the $231mln carry that rkh did receive but that's speculation on my part and may or may not be the case.
Navitas may even lean on FIG if they continue being uncooperative & stubborn as they will want things to keep moving and the OM cash will be needed to go towards rkh's share of the funding, so FIG, whilst seemingly holding all power over rkh, do not hold all the cards. Navitas do and Rkh being their partner, Nav will not want to see FIG holding back Rkh and thus, potentially holding back SL development, so thankfully we have a powerful allie in Navitas on the matter !
Hopefully Sam will return from his trip to the FIs with FIGs approval 🤞
I wonder what will happen in the unlikely event that the Annulment procedure reached it's end already next week and RKH is awarded everything. Will that mean that the cash deal will be renegotiated in such a way that RKH gets more out of it?
As PaulDrayton says, it’s a clever situation which benefits both RKH and FIG.
This “deemed Capital Gains Tax” from 2012 was valid at the time, but everyone knows that it is no longer payable including FIG. It has been written down to zero in the Company’ s accounts and the auditors approved that. The liability no longer exists under status quo. But there is a useful clause in the tax deed where it becomes immediately payable if the Company were to be taken over. It’s a poison pill to prevent a takeover and anyone in the know, knows it, so it’s useful to keep it.
When Odey tried to grab the cash element of the Premier farmout in 2013, via a court action to convert the share premium to distributable reserves, FIG used the CGT liability to take a security over “all” of the Company’s assets to prevent that happening. Odey was thwarted and left with his tail between his legs. That security is now the apparent clash with the OM award funder, as the potential cash assets increase.
It is a clash that can easily be resolved through a legal agreement for the ranking of securities, viz. who gets what first, if it all goes belly up. Banking consortia do this every day.
Maybe that’s why Sam is going to meet FIG next week?
I think the poison pill will remain even after the clash is resolved.
“London Calling” …..remember The Clash?
HI ii my broker hasnt converted my 100k shares in to the new co ?
any one else have this issue ?
Thanks Digitalboy1 for sharing SM's reply, and CitizenTS 08:38 post.
I personally feel FIG are total Pen1sHeads if they prioritise the ludicrous idea that Rock owe FIG £59.6 million from a 'irrecoverable carry of approximately US$ 670 million' that Rock did not receive from Premier.
Financially blackmailing Rock, if that is what they are doing, over Rocks monetising the OM award, instead of helping Rock to create their O&G industry, which Sea Lion alone will benefit them with $6Billion, is moronic at best !!
It's good to know why FIG now have a say in the OM award, however it leaves me with the impression FIG are way out of their depth, petty and incredibly short sighted.
As per my post yesterday, it’s a clever situation that suits both FIG and RKH. There is a good reason why it hasn’t been resolved!
From all of the post I have read it seems FIG are shi**ing in their own nest ! 🤷♂️
Informative posts chaps 👍..So after 4 years, FIG have still yet to agree the tax ammendment made by Rockhopper and they have security over all rkh's assets from the tax settlement deed.
That sounds pretty much exactly like what I was suggesting yesterday in my 23.03 post !
I had an email reply from SM ref the tax situation:
Please see below:
‘ In fact, when Premier left the Falklands it resulted in some $674 million of carry never being received by us. The tax calculation assumes that money is received. We have therefore reflected a reduction in the deferred tax from £59m to zero in our accounts, based on legal advice. FIG is yet to formally agree to that adjustment from their end.’
The likely next milestone will be putting the revised EIS out to public consultation
Security over the Award proceeds. Arguably the funder is junior to FIG in the pecking order. Sequential not pro-rata.
Patience
Had a reply from SM. I think Zinced came closest to answering but it's apparently a bit complex and involves a conflict. Here's his reply.
There is more complexity than this but at a high level we require FIG consent because the incoming funder wants security over the Award proceeds. That security would then clash with the broader security enjoyed by FIG over all of our assets which came into being at the time of the tax settlement deed many years ago.
Aaaaargh, spell check, "has to" , not history
At risk of perpetuating this trail, maybe everyone's at least partly right! A funder's security might or would only be effective against amounts actually owed to them. Almost history be that rkh remain the name actually "on the docket" when funder pursues RoI. Rkh then still actually receives the proceeds from seizing and selling assets. How does funder then make sure its all passed on as agreed? Security presumably is only and exclusively for that.
At the same time the tax status of the proceeds from selling the award might also be receiving attention.
Chess, this is my last post on the matter as we seem to be repeating ourselves.
You keep talking about FIG having a say about how Rock 'DISPENCE' funds.
The monetisation of the OM award is about how Rockhopper 'RECIEVE' funds.
FIG having a veto on that seems odd !
Jesus said to them, “Render to Caesar the things that are Caesar’s, and to God the things that are God’s.” And they marveled at him.
What is indisputable is that Rockhopper require the Falklands Islands Government to approve the OM transaction and the Falklands Island Government have also stipulated that no shareholders are allowed to receive any of the proceeds from OM so this strongly suggests to me that the tax liability is indeed related to OM or any other cash Rkh may come by until the liability is fulfilled, otherwise why on earth would Rkh require FIG to approve the OM transaction and dictate who how the proceeds can or cannot dispensed ?
Thanks Pre2rcd for that information. SM travelling to the Falklands is more likely to be a good sign that things are progressing, as opposed to a need to sort out a problem.
I fell the disputed tax liability regarding the Rock deal with Premier, unless anyone has information to say otherwise, is a totally unrelated issue to the Rock v Italian dispute. It is a red herring.
I emailed SM earlier asking why FIG have an effective veto on what seems a separate company matter, and unrelated to the Falklands. I will post if I get a reply.