Ben Richardson, CEO at SulNOx, confident they can cost-effectively decarbonise commercial shipping. Watch the video here.
Does this steady share price fall not have all the hallmarks of the prelude to a low ball bid? Walk the price down on the back of a persistent stream of small transactions, then make an offer at a price which is higher than the price it’s fallen to but less than it started at.
The $45m per lift was described in the RNS as 'net' revenue, which you would have thought would have included AM share, opex etc. After 25% WT, the $45m net would be $33.75m. At that rate, it would still only take just over 3 lifts to generate the balance of $111m cash to pay all the capital distributions. Surely a bit conservative. Each lift after that at $33.75m would be worth almost 1.5pps.
Something curious about the RNS today.
The total value of the potential capital distributions is $210m - $70m in Q1 2023, $110m in 2023-24, and $30m in 2025.
The value of free cash on 31 October 2022 was $99m.
October's oil lift of 545Mbbls produced $45m of net revenue.
The difference between today's free cash of $99m and the total of potential capital distributions of $210m, is $111m.
That's the equivalent of only about 2.5 lifts - say until February 2023.
Where's the mistake in this?
Interested to read why you think the share price might have been lowered yesterday, to fabricate a justification for issuing shares to the convertible bond holders instead of redeeming them for cash next month. The only bond prospectus I've been able to find says the following: "The bonds will be convertible into fully paid ordinary shares ... with the initial conversion price to be set at a premium in the range of 22.5 - 27.5 per cent. above the placing price [of the shares issued at the time of the bond issue]." It doesn't set out the conversion rules, explain why it refers to the "initial" conversion price, or why there is a conversion price range. It then says "Unless previously converted, redeemed or purchased and cancelled, the Bonds will be redeemed at par on the fifth anniversary of the Closing Date." Nothing is impossible here, but why would a bond holder elect to receive an ordinary share at, say, 7.5p in place of a bond repayable at 100p. There must be another bond document somewhere, because the one on the company's website is hopeless.
That's the question, isn't it. At 10,450 barrels ppm and a price of even $85, that's a gross of about $26-27m. More than enough to repay the convertibles, and about 1.3 cents/1p per share per month - before expenses and Capex etc. Would that deserve a re-rating? Probably not in the way in increase in reserves might.
CA will probably have analysed the shareholder register. If they hold 30%, they would need another 45% before any offer went unconditional. Unless someone has access to the register, there isn't really any way of telling how many shareholders there are now who acquired their shares at, say, 30-40p for whom an offer at 14p might not be attractive. Or how many shareholders who acquired at less than 10p, for whom 14p might be very attractive. Not obvious one way or the other.
I think that's right. They haven't done what they've being doing for the benefit of others. I wonder how many long term shareholders are still on the register and for whom an offer at a 25% premium to the current share price would still leave them with 80 or 90% losses?
They'll need to be quick. The restructuring only requires Court approval; existing shareholders don't have to approve it. So what happens if EGM replaces BoD after Court approves it? Shocking deal. With a bit more determination and some conventional debt refinancing, the company would have had enough cash to repay the bonds on their due date with no equity dilution.
What it might mean is that the BOD now accumulates enough cash to repay the convertible. The worst cash for shareholders would be if they spent the money on drilling, couldn't then repay the bonds, shareholders get diluted out of existence, the drill is a success, and the bondholders reap the reward.
No doubt in my mind - 5. Accumulate enough cash as quickly as possible to repay the convertible. Otherwise, when push comes to shove, existing shareholders will be diluted out of existence.
I'm an investor and well under water too. Lots the Board cannot control. One thing they can control is cash flow, and there is quite a lot of it. Shouldn't their priority be to use it to accumulate enough free cash to repay the convertible and avoid the risk of the bondholders diluting the shareholders out of existence in 18 months time? Time enough after that to indulge in grand strategy.
It would be quite interesting to see what his hit rate is. How many stocks have been included in his earlier bucket lists which have quietly dropped off when they have crashed? When your current list only include stocks which have actually done well and good prospects, it's bound to look pretty good.
If HUR produce 12k bold for 30 days and sell at $55, their gross income is $19.8m; at 90% availability, say £17.8m. The annual interest on the convertible is about the same as 1 month's gross revenue. Their last reported cash position was about $100m. It would take about 8 months worth of gross revenue to accumulate enough extra cash to repay the convertible; they have about 16 months. Unless they have a real production problem or they go off on a frolic spending lots of cash, it must surely be more than likely they will be able to repay the bond in July 2022?
Destination now showing as Cromarty, ETA 9am Sunday. More than a bit of new paint?