Member Info for bigdouble

Mrc - there are people in the world who stand up and do something if they see an unjust and there are people who sit there and tell people what to do and later on tell people what they should have done. Which category do you think you fall into. Have a great day.

Just drop me a quick hi

see latest email. Important all unhappy shareholders read.

Mrc - being a keyboard warrior will not make a blind bit of difference. Shame you did not do something a little more constructive.

I wouldn’t say intelligence is posting consistently on a share one has no financial interest in. Anyway, back to doing something that could actually make a difference.

Ilovesushi - feel free to email me at

soloegm123@gmail.com

Mrc - well it will save me about £25 a month a least. Every cloud has a silver lining

Article by *************

I have been peering into the world of AIM-listed Scirocco Energy (SCIR) – formerly Solo Oil (SOLO) – following a shareholder revolt which saw 36.56% of voting shareholders reject a deal to sell its interest in the Ruvuma Asset in Tanzania to AIM-listed Wentworth (WEN). 36.56% was not enough to derail the proposed transaction, but looking through the associated Circular is it hard to see what shareholders in Scirocco gain from the deal.
Whilst the headline was that Scirocco would receive $3 million plus contingent deferred consideration of up to $13 million. Note the “up to” here! In addition the letter to shareholders stated:
subject to satisfaction of certain conditions Wentworth will make a loan of $500,000 available to Scirocco (the "Initial Loan Amount")
Of course, “available” does not necessarily mean drawn. And “contingent deferred consideration” has no guarantee of generating any cash at all.
But reading down the associated Circular, I found this:
Pursuant to the Facility Agreement, Wentworth has agreed to make available to Scirocco a term loan facility of up to $6,250,000 (the “Facility”).
Utilisation of the Facility is subject to the fulfilment of certain conditions precedent including, inter alia, the Resolution being passed by the requisite majority of Shareholders at the General Meeting, preemption waivers being provided pursuant to the APA and no event of default having occurred.
The Facility is being provided to Scirocco purposes of meeting all cash calls due by Scirocco pursuant to the Ruvuma JOA between the Economic Date and Completion.
Well that seems reasonable enough: the Ruvuma asset might need some cash spending on it ahead of the formal sale being completed. Better still, we are told that the first $3 million of the loan facility is being provided interest free, but the rest is subject to 7% interest per annum until such time as the grant of the security in respect of the Facility is approved by the Minister for Energy in Tanzania – at which point the facility will be secured against the asset, in favour of Wentworth.

But we are then told:
Subject to Completion occurring, the Facility is repayable by Scirocco upon Completion by way of a corresponding reduction to the consideration payable under the Asset Purchase Agreement.
So if Scirocco borrows $3 million to spend on the asset ahead of completion, does that mean that the initial consideration of $3 million is then wiped out? And if the sale falls through we are told:
the Facility will be repayable on the date falling 90 days after Wentworth has demanded repayment following termination of the Asset Purchase Agreement (the “Repayment Date”). If the Facility is not repaid by the Repayment Date, Wentworth may convert all or part of the Facility into fully paid Ordinary Shares, subject to applicable laws and regulations.
Hmm – at what price? And given that the market capitalisation of Scirocco lies at £3 million, there is surely the risk of extreme dilution here if the deal runs into trouble. And if the sale does not complete by the “longstop” date – the end of June 2023, unless by reason of Wentworth defaulting, in which case the loan is non-refundable, then 50% of the loan facility is repayable – presumably immediately.
Let’s take a look at the $13 million deferred consideration. We are told that:
$3,000,000 to be paid following the date on which the operating committee provides final approval of a development plan under the Ruvuma JOA;
.....which could, presumably, be reclaimed if Scirocco has to spend the rest of the loan facility on the asset
$8,000,000 which shall be payable from first gas on the Ruvuma Asset where the net revenues payable to Wentworth under any sale arrangements shall be payable 75% to Wentworth and 25% to Scirocco until such time as Scirocco has been paid $8,000,000; and….
Er….so that is out of the profits generated (if there are any). Given that potentially Scirocco could end up spending around $6 million on the asset, a 25% cut over however long it takes to cough up $8 million doesn’t seem hugely enticing!
And finally:
$2,000,000 following the date on which the cumulative gross production from the Ruvuma Asset is equal or greater than 50 billion cubic feet.

Which, of course, may never be reached.
Now it could be that Scirocco doesn’t have to fork up a penny, Wentworth pays up and pushes the asset into fabulous production and Scirocco bags a total of $16 million for the asset. But an alternative reading is that Scirocco has to borrow from Wentworth to keep the lights on at the Ruvuma asset and could end up with no asset and a thumping debt sitting on the books.
I am reminded by this of the equity “loan” deals on offer from Equities First available to company directors, which were presented as the director borrowing against their shareholdings (and using part of the proceeds to buy more shares) when in fact they were essentially share sale at a huge discount, with the option to buy the shares back if they had not collapsed in the meantime.
It seems perfectly plausible to me that Scirocco could end up spending $6 million on the Ruvuma asset ahead of completion – thus taking all the risk - and Wentworth collecting the spoils.
The directors, with all of 3.2% of the company’s shares, recommended the deal, noting:
It is the duty of the Board and management to safeguard the interest of all shareholders and make decisions that we believe are in the best interest of the Company.
But one has to ask: what is the likelihood of this deal ever bringing a benefit to Scirocco’s shareholders.
Maybe I am just too cynical. But then there is the connection with Gneiss, which advised on the deal. I wonder what is in it for it, and how much of the potentially up to $16 million will end up being paid out to it!
If the name Gneiss rings a bell with readers of the fine website, they might want to wander over to this article regarding Block Energy (BLOE) before the rebels (including Gneiss owner Mr Jon Fitzpatrick) were seen off (at least temporarily) by management.
My problem here is that it seems that Ftzpatrick/Gneiss have made £2.1 million out of Scirocco/Solo over the four years to 2021. But since the start of 2017, Scirocco/Solo shares have declined heavily. At the start of 2017 they were 0.28p and now they are 0.36p. But that is up, I hear you cry! Yes it is – but take into account the 20-1 consolidation in July 2017 and it is down by a very impressive 83%.
Gneiss work if you can get it!

I have been peering into the world of AIM-listed Scirocco Energy (SCIR) – formerly Solo Oil (SOLO) – and the fruits of its relationship with Gneiss Energy (run by Jon Fitzpatrick). In part one I looked at the deal to sell off the now non-core asset of Ruvuma in Tanzania and wondered what shareholders had to gain from the deal. But there is another deal which smells all wrong to me.
I mentioned in part one that Gneiss/Jon Fitzpatrrick had made £2.1 million out of the relationship between 2017 and 2021. That’s a pretty hefty payment for a company with a current market capitalisation of £3 million – made all the worse by the fact that the share price has declined by some 83% since the start of 2017 (after one takes a 20-1 consolidation into account).
But now I want to take a peek at another deal: the £1.2 million investment into Energy Acquisitions Group Ltd (EAG) as part of a new investment strategy to invest in sustainable energy and “circular economy” (whatever that is), as approved at the 2021 AGM on 9 July. Part of the AGM dealings was to do with a reorganisation of the Board, when Gneiss boss Jon Fitzpatrick stood down as a NED – so he’s hardly an independent voice – but ties remained as the relationship with Gneiss carried on.
The deal was completed as announced on 25 August 2021, when we were told:
· Scirocco Energy has completed its £1.2m investment into EAG and subsequently owns 50% of EAG (https://www.energy-acquisitions.com/)
· EAG will use the funds to acquire 100% of Greenan Generation Limited (GGL) and its 0.5MWe Anaerobic Digestion (AD) plant in Northern Ireland
· GGL is a cash generative, operational AD plant which the EAG team believe can be optimised to enhance EBITDA margins and free cash flow
· EAG anticipates initial annual turnover of c. £1.1m from GGL
· The investment into EAG has been funded by cash on the balance sheet and the EAG team has identified further opportunities to invest in a pipeline of AD plants in the UK totalling c. £30 million in value

· This aligns with the new strategy, approved by Scirocco Energy's shareholders on 9 July 2021, to deliver value through acquisitions in the European sustainable energy and circular economy markets
· As part of this transaction, Scirocco Directors, Tom Reynolds and Muir Miller, will join the board of EAG
Well that all sounds fine and dandy: EAG is to be handed £1.2 million which will presumably be spent on acquiring Greenan Generation Ltd (GGL), which was expected to have initial turnover of £1.1 million and there are other deals in the offing. For its £1.2 million, Scirocco got 50% of EAG. Splendid.
Or was it? For a trip to Companies House tells a rather different story. For a start, Scirocco’s investment into EAG was in the form of a £1.2 million loan, via 100%-owned Scirocco Energy (UK) Limited, as detailed in Scirocco’s FY21 Annual Report (see the Strategic Report). There we are told that the £1.2 million investment
was be used by EAG to acquire 100% of Greenan Generation Limited ("GGL") and associated 0.5 MWe Anaerobic Digestion plant located in County Londonderry, Northern Ireland
So did EAG get the whole of GGL, funded 100% by Scirocco but which only resulted in Scirocco having a 50% interest?
The RNS released by Scirocco on 25 August 2021 states Scirocco Energy has completed its £1.2m investment into EAG and subsequently owns 50% of EAG, which to this “reasonable investor” might lead me to conclude that Scirocco had bought 50% of EAG for £1.2 million. But the Confirmation Statement for EAG, released by Companies House on 9 November 2021 and dated 28 August 2021 (so after the completion RNS of 25 August 2021) shows that Scirocco Energy (UK) Ltd only held 100 A Ordinary Shares of £1 each, for which it paid £1 each, according to the share allotment filing dated 24 August 2021. So where did the rest of the £1.2 million go?
According to Scirocco’s FY21 Annual Report (see Note 22), the Group lent EAG £1.2 million, and the parent company lent Scirocco Energy (UK) - a 100% owned subsidiary - £1.2 million. On both transactions, £44,000 of interest was payable, which leads me to the conclusion that the loan was made via the subsidiary – with the subsidiary ending up with £100 worth of shares in EAG (50% of the equity).
That appears to be clear enough to me: Scirocco bought half of EAG for £100 and lent it £1.2 million. Not that this was made clear in the announcing RNS! What happened next is, however, a bit of a mystery.

Whilst we have been told that EAG acquired the whole of GGL, we are not told how much was paid and to whom. According to Companies House, the last results for GGL were for the year to Mar 2020 (in which we see that net assets were MINUS £253,961 and net current assets were just £17,480, with creditors falling due after more than one year of £1.97 million). The paid up share capital was just £90 and there was no share premium account. So how much did EAG pay for the 100% ownership of GGL? Sadly, the Confirmation Statement dated February 2022 shows no updates to the share register, so we don’t know. Nor is there any sign of the issuance of new shares by GGL.
But I do note that EAG mortgaged its shares in GGL to KKV Secured Loan Fund Limited (based in Guernsey), although I couldn’t find how much for. Might it be possible that the monies due from GGL after more than one year was covered (at least in part) by this? Might it have been backed up by some of the £1.2 million paid out? I have no idea.
What I do know is that paying £1.2 million for a 50% interest in a company, when it looks to me as though the £1.2 million was used to acquire the whole thing, does not makes sense to me. Surely Scirocco could have just bought the whole of GGL for itself. Is that really looking after shareholders’ best interests?
Was this deal also the fruit of the relationship with Gneiss? Yes. And I note that during 2021 payments to Gneiss by Sirocco totalled a very tasty £606,000, up from £225,000 during 2020. How much of that came from the £1.2 million invested/lent by Scirocco into EAG?
Truly Gneiss work!

I can assure holders, lots happening behind the scenes.

Lol mrc, if you were a shareholder you’d know what’s going on.

Mrc-mrc - the vote didn’t go against me, it went against the majority of smaller shareholders, that’s 100 plus that I know about. I’m actually trying to make a difference, but due to Company Law, inefficient regulators and a Board that take little notice of real shareholders it feels like swimming against a strong tide.

Seem to be back now

Anyone else seen their posts disappear!!

mrc_mrc - it’s a shame that all the knowledge you have on the company and the Board, it is not utilised in a more constructive way that would then actually make a difference. Unfortunately posting on LSE does not bring about change.

PageofCups - I’m interested in whether or not you are a Scirocco shareholder. Thanks