article ...part 23 Oct 2019 17:40
The company had a longstanding debt with Shard Capital, which it demonstrated zero ability to repay, and today we are told this debt was purchased by C4 Energy Ltd. We are not told what C4 Energy paid for this debt, but in my view £1 plus a bag of Golden Wonder crisps for each director of Shard Capital would have been fair. The proposed plan will see this debt re-stated at £2.5 million with this sum being convertible into shares at 0.05p. So that’s 5 billion shares to be issued in the future.
We are also told that, subject to this deal being voted through at an AGM, a further 1 billion shares will be placed at 0.05p raising £0.5 million with persons or bodies corporate introduced by C4 Energy. We are also told that Mr Jayanta Bhattacherjee, formally with Aminex (AEX) and Andrew Dennan, currently a director of Coro Energy (CORO) will be joining the board and effectively taking control, and that they are shareholders in C4 Energy. That’s rather interesting, as Companies House records, last updated on 27th September 2019 (last Friday) re-confirms the two directors and only shareholders of C4 Energy as James Parsons and Marco Furmagalli. Perhaps these records will be updated?
If this proposal goes through, the company will become a cash shell. At best it will have the £0.5 million of cash from the proposed placing, less of course the costs and residual liabilities after elimination of the RMRI debt. I would suggest its value would be no more than its listing value – say about £0.5 million assuming it retains sufficient cash to pay the corporate costs until an RTO can be sorted.
Current shareholders own 1.5 billion shares, but on a fully diluted basis there will be 7.5 billion shares in issue. So current shareholders would effectively own 20%, or £100,000 worth of that £0.5 million nominal cash shell value. With the shares trading at 0.05p as I type, that values the current equity at some £750,000 or 7 ½ times fair value in my book.
There is also the matter of the ongoing litigation in Canada. This litigation is between Enegi Oil Inc, a wholly owned subsidiary of the company, and its partner PVF Energy Services Inc. I can only assume this liability with either be resolved at minimal cost or the subsidiary, Enegi Oil Inc will be cut free, via an administration process or the like.
It would appear to me the attraction of this deal to James Parsons and Marco Furmagalli is both the convenience of having a listed shell and the accumulated losses, some £43 million at the end of last year, which the company has managed to accrue from spending shareholders cash to achieve nothing of any value. If my view on the debt purchase consideration is correct, Parsons and Furmagalli are currently risking £1 plus a few bags of crisps. Sounds ok to me.
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