Member Info for Callasjunkie

Bluerill, I wonder if I could again prevail upon your valuable insider knowledge.

The accounts note on San Leon loans includes the following:

"Ken Fetherston
In late 2017 the Company received a loan of €1,000,000 from Ken Fetherston with interest and a fee of €261,178.
This loan was fully repaid in early 2018."

The specific period of the loan is not stated.....let's say it was 3 months. That would equate to an APR of over 100%.

Is Ken a mate of Oisin Fannings? Looks like they could be best mates?

Bluerill, really, I'm heartened by the fact that you have a wealth of information that's not in the public domain and you certainly seem to be earning your crust here.

I cannot agree with your hypothesis that "The terms of that loan do not appear anywhere in San Leon's results because, you know, like, because IT HAS NOTHING TO DO WITH SAN LEON."

Now a company, that San Leon has a 40% share in, borrows over $70m to make Loan Note repayments and may end up borrowing approximately double that. Now if it is not a 'non-recourse' loan, then failure to repay it could end up in MLPL's assets being sequestered. And what is it's only asset?......San Leon's and Midwestern's indirect shareholding in OML18. And you think that's an irrelevance! You astound me Bluerill.

The following is an extract from the Accounting Policies note in the 2017 Report:

"It was originally envisaged that the quarterly Loan Notes
payments due to the Group would be sourced by MLPL
from the receipt of dividends through its indirect interest
in Eroton via Martwestern. These dividends have not
been received and consequently MLPL entered into
a loan arrangement in order to be able to make Loan
Notes payments to the Company. In the absence of the
dividend payments to MLPL it will be reliant on further
advances under the loan arrangement and in turn being
able to make quarterly Loan Notes payments to the
Company."

So, MLPL, 40% owned by San Leon, has so far borrowed to make the entire repayments on the Loan Notes. The lender is not specified, the interest rate is not specified and the repayment and other conditions are not specified
What is specified is that the future repayment of the remainder of the Loan Notes is dependent on this anonymous lender continuing to stump up.

I have made the point in the past that the true coupon on the Loan Notes is not 17% because it is paid out of MLPL income of which 40% belongs to San Leon. So if there were no other complications, the true coupon is really 10.2%. With the interest on MLPL's borrowings (to pay the Notes) the net coupon must be even lower, and maybe a lot lower given what SLE have been paying for borrowings.

MLPL's P&L loss for the year was E17.7m, of which San Leon's 40% share was E7.1m. As MLPL has no real function other than investment holding, its expense, apart from an audit fee, is likely to be entirely interest payable.
So the borrowing cost looks horrendous.

So, in essence, one lot of debt, the Loan Notes, is being repaid by creating a further pile of debt with terms not disclosed. No wonder KPMG's Audit Report keeps growing just like Pinocchio's nose. Despite MLPL's losses, KPMG saw no reason to qualify or unravel the fantastical E29.9m profit labelled 'Bargain Purchase' in the 2016 Accounts.

It may prove futile to point out to you, as I am sure you are already aware, that the Nigerian Department of Petroleum Resources wrote to SunTrust, copy to San Leon, confirming what I have written. I'm only replying to you for the benefit of those who may give your words a modicum of veracity. Paragragh 6 of the letter states "Therefore any claim by San Leon plc to the ownership of 2.7% interest in OML18 through the acquisition of Suntrust's shares in MartWestern Energy Limited without the Ministerial consent is false and illegal pursuant to Nigerian. " Now BlueRill, just what part of that did you not understand? For those interested, the full letter can be read: http://suntrustoil.com/file/2018/05/DEPARTMENT-OF-PETROLEUM-RESOURCES-NIGERIA-OIL-INDUSTRY-REGULATOR-%E2%80%93-POSITION-REGARDING-THE-SAN-LEON-V-SUNTRUST-MATTER-1.pdf By the way I make it a point not to repeat insults on these blogs, no matter how ignorant the comments.

2017 Accounts publication is just 3 weeks away and it should represent another collector�s item. Remember that last year (2016) San Leon spun a profit by a magic book entry. Basically, they represented that their investment in MLPL was somehow now worth E29.9m more than the price they paid for it. Somehow, KPMG didn�t find this a tad extravagant. Not a blush that this was described as a �Bargain Purchase� in the actual body of the published Accounts (see Note3). The so-called �fair value� of the investment was calculated, no doubt, using the florid production/pricing figures in the Expert Persons Report for the discounted cashflow calculations. Well, as the oil price has increased considerably, maybe the same stunt will be repeated. But KPMG may have a bigger problem. As things stand, the official, written advice of the Nigerian government, through its Department of Petroleum Resources is that the share transaction between SunTrust and San Leon, is illegal and therefore nul and void. So, unless San Leon clear this litigation out of the way before 30 June, KPMG will be unable, in my view, to give an audit opinion, unless they are prepared to take a quasi-legal position themselves....that is they will have to review San Leon�s purported legal advice, if it exists (they will have to do this anyway), and support it against the Nigerian government�s current ruling. Better still , if this occurs, the basis of the dissenting legal opinion will have to be spelt out.

Re-reading DPR's letter to Suntrust, it does state that the Assignor (in this case SLE) is the party to gain ministerial consent. It doesn't mention getting agreement of the Assignee (SunTrust) . Good news but does beg the question why SLE didn't just retrospectively look for consent as soon as SunTrust started their antics?? Judiciaries anywhere, not just Nigeria, don't take kindly to avoidance of legal procedure.

QF, I agree that the points of law may not be totally clear for a transfer of a minority shareholding but on the basis of their own guidelines the Nigerian Department of Resources has determined in writing that San Leon are in breach of their regulations (and on my own, admittedly non-expert reading it seems so)..see Clauses 6 & 7 of the DPR letter on the SunTrust website. All we have is an RNS that SLE had contrary advice. Typical of SLE, instead of being pro-active in nailing this one, of which they must have been aware for several weeks, they stuck their heads in the sand. It looks like a very underhand performance by SunTrust but idiot OF should be aware of what doing business in Nigeria was like and dotted all his 'i's and crossed his 't's. I hope for the benefit of shareholders that they can get out of this one. If SLE need SunTrust's cooperation in a re-application to DPR they'll demand a high price.

QF, I know what SLE say..... now read the DPR, S official published regulations.

I'm beginning to wonder if OF used Trump's incompetent lawyer,Michael Cohen to get his legal advice on the SunTrust transfer. Reading the attached procedure, it looks pretty clear that any assignment of equity shares reflecting an interest in an OML would require approval of the Nigerian Government. (Mind you, the misspelling of 'guideline' wouldn't fill one with confidence!) https://dpr.gov.ng/wp-content/uploads/2018/03/Giudeline-on-Asset-divestment-16-10-14.pdf

BlackSwan, doesn't it strike you as odd that SunTrust would have accepted shares, rather than cash, from San Leon in the first place. With OF's history and reputation, they must have been smoking dope.

This doesnt look good for SLE at all. The letter from the DPR regarding procedures states in Clause 6 that the DPR has no record of the correct permissions being sought or granted. Clause 7 states that consequently the transaction in illegal. Clause 8 states that the only way to rectify this is to go back to square one and apply for the necessary permissions. So, we can conclude that unless someone has really mislaid paperwork, the transaction has been deemed nul and void by the Nigerian authorities. Second, how will San Leon get SunTrust's cooperation in making the application!!! Seems they might have OF by the goolies. It seems that SLE posture of ignoring this and hoping it will go away aint going to work.

BlackSwan, it's very hard to see what's really going on here. First, it's a bad sign for SunTrust that two of the named defendants are Nigerian government entities....very hard to beat city hall. Also, if SunTrust thought the share transaction that directly involved itself was defective, it might have a hard time proving why it did not frustrate the relevant transfers at the time they were made. I agree that if there were improprieties it mainly concerns the original shareholders.....but then this is Nigeria and it doesnt matter a damn if SLE say the litigants have no jurisdiction. They obviously have ....and it doesn't matter if San Leon or Martwestern Leon were registered in Antarctica, the assets are sitting on Nigerian soil.

https://www.thisdaylive.com/index.php/2018/05/21/oml-18-san-leon-energy-six-others-dragged-before-court/

Jasonsax, thanks for pointing out my error.

The RNS states that the outstanding debt was satisfied by the issuance of San Leon shares in September 2016. If so, can anyone explain why Suntrust was not listed as a 'Signicant Shareholder' as required under AIM Rule 26?

BS, I'm in a similar situation...however I don't think III is much better...maybe a little more polite.

BS, I'm in a similar situation...however I don't think III is much better...maybe a little more polite.

Eroton are currently losing approx $15/bbl on each barrel hedged versus the open market price. It would be interesting to know if this is a custom hedge as was the deal with Shell, or on a commodities exchange.

The suggestion of bypassing Bonny Terminal is new and hardly a detail. Interesting given that Operator is capital bereft building new offshore export facilities is pie-in-the-sky for the foreseeable future, i.e. years. Sounds like a crude negotiating ploy to get better loss sharing terms from other NCTL users and Shell at Bonny.

Naibob, I think it's 6 months....AIM Rule 41.