RE: Stock on loan6 Mar 2019 09:13
ADVFN is the other channel:
04:32 Ref. the S-o-L figures. Back in late 2015 through 2016 as we recovered from the very low oil price (and the suspended trading during the EON deal) there were around 6% stock on loan as a minimum. As it became apparent that we would fail the covenant tests and the refinancing discussions & proposals got underway this figure steadily increased to 15-16% by early '17 when the CB re-pricing proposal was announced. During this period the details of the warrants were announced, and the increase in loan stock was approximately equivalent to the number new warrants that would be issued. During the "VWAP period" the stock-on-loan had increased to around 28-29% - the share price during this period had been driven down from 70-80p (with an earlier increase to 95) to below 60p resulting in a VWAP average of 62p which was the minimum price to be used as the basis for the revised conversion price for the convertible bonds. The revised CP was set at 74.7p, although and due to a very low $/GBP at that time, to just $0.9144. The previous CP was $7.00, over 400p, so the revised CP would result in almost 8x as many new shares being issued as originally implied. On completion of the refinancing in July '17, there were still around 29% SoL (which was around 40-45% of the total new shares that would result from the CBs & warrants), until the CB's were "requested" to convert in Jan'18. As a result of the majority of the CB's taking the enhanced offer, the shareholding increased by c. 30%, and the SoL dropped by an equivalent amount to 19%, and then further to less than 9% in Feb (or 70% of the remaining CBs+Warrants). The SoL remained around 8-10% until the remainder of the CB's were forced to convert in Aug, at which point it dropped to less than 6%, which is approximately the same number as there are warrants remaining. The past few months have seen the SoL increase to almost 20%, which represents around 3x the number of warrants remaining. So, the question is, why? Unlike previous high numbers of Stock-on-Loan which were more than offset by "newly becoming available shares" from CB's or Warrants, there are now insufficient "still to be created" shares to replace this loan stock. I estimate that there is over 100MM of loan stock that needs to be returned. This is over 10% of the total stockholding, which is a huge number of shares that need to be bought in the market. Unless, there is to be an equity fund raising of some kind that the market has not been publically made aware of.... which then begs the question; have some "potential" lenders have been approached and they have used this "inside information" to increase their shorts to manipulate the price.? Of course this would be totally illegal - at least in my understanding. So IF there is to be some equity raised (perhaps for Chevron assets, or for SeaLion, of for some other deal), then one would hope that it would make "good business sense", and the result would be a longer
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