RE: Tax credits19 Feb 2022 12:03
SF I am also surprised that a big oiler hasn't snapped them up, I suspect that's where it was "supposed" to be heading before the court case.
CA owning 30% , having stopped what was being tried on, and clearly putting out there they aren't going to accept a sale below 14p is the reason why more legitimate takeovers have not been attempted yet.
I would expect any company interested would be prudent to approach CA first informally, and this may have happened and CA have made it clear to them it's not going to be cheap. Would also have strongly motivated CA buying like crazy to get just under 30%
For the tax credit value, the formula is:
To the company they are worth between 19 to 25% in tax savings. A company buying HUR for them has to be in the same industry etc, HMRC like to make it difficult.
lots of due diligence required from the buyer which will cost a good few million, so typically the market value for tax credits is around 50% if the tax they will save from my research. It's not an exact science but I think most would agree the above is there or thereabouts.
Imo it very much underpins the share value...
At 7p a share you could say that you are getting the oil company for free, a company already selling more than $30m a month... Crazy.
I think it's fair to say the price would never have been this low if there wasn't some ... Erm "irregularities" which the court case stopped.
Obviously someone wanted an even bigger bargain and very nearly got it.
Nobody has a crystal ball, but I'm very optimistic that the company can use these tax credits itself saving £300m in tax on its own profits. I would rather that scenario, but either way it's a massive safety net.
Good luck with your investment.
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