Member Info for Fibonacci112

A few points as regards bonus entitlement and OM.

First, any entitlement to bonus is set by the Remuneration Committee ("RemCo"), not the Executives, and is set against agreed bonus criteria in the form of the Key Performance Indicators (which are at page 9 of the 2020 Annual Report). The RemCo is chaired by an independent non-executive director (currently John Summers). The duties of the RemCo are set by the Companies Act 2006, s.172. You can have a look at these obligations on page 19 of the 2020 Annual Report.

Second, the relevant KPIs (page 9 of the 2020 Annual Report) are:

> Progress the Ombrina Mare arbitration
> Preservation of the Company’s cash position

Whilst a positive OM outcome is built into the bonus scheme, it is balanced by both (i) the Companies Act 2006, s.172 obligations (including the obligation to promote the success of the Company having regard (amongst other things) to the likely consequences of any decision in the long term; and (ii) the need to preserve cash.

It is easy, with the benefit of hindsight, to criticise the decision to buy the MOG assets. However, the decision to purchase those assets was done with a view to both having a diversified income (which was necessary when the talk was of RKH joining the main market) and also to produce income in order to reduce/stop cash burn. It didn't happen due to a third party event (the decision of the Italian Government). If the MOG assets had been allowed to proceed to production, the Executives would doubtless have been rewarded with a bonus for production.

Bonuses are part of corporate life. You are all adults and you have all made an investment decision to invest in an AIM listed company on the hope that it would be worth multiples of what you invested. AIM companies are risky investment decisions. If the decision has gone against you, bad luck. But it was your decision and you could have sold out.

It is likely covered by after the after the event ("ATE") insurance which would be put in place by the RKH legal team. ATE insurers usually write such policies after being provided with a QC's opinion on the merits of the case. Assuming such a policy to be have been effected, given the exposure to the insurer if they were to lose, they will not have written the policy unless they had been given good prospects of success (typically 60% or more).

Agree. The likelihood is that the draft award has been sent to the parties, embargoed, to consider for typos. That process usually lasts a week.

Ballpark, you said "Isn't this all hypothetical. Surely if a substantial amount was awarded the Italian government would just ignore the law in a specific and limited way. The Guardian may have a touching belief in international law, but they don't have to win elections". The answer is that Italy are a conrracting party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards . As such, if they ignore, Italian assets held in New York Convention contracting states can be seized to satisfy any award made in favour of RKH.

Outcome - https://www.opec.org/opec_web/en/press_room/6512.htm

Indeed. But annulment is not an appeal. It results in the whole process being restarted.

No appeal against Arbitration awards

Looking at the Rockhopper AIM rule 26 statement, you are indicating that you own about twice Sam Moody's 2.5 million shares. It would not "tank the market" to sell circa 5 million shares over a period of days. A rational person would have done that. Which suggests that either you do not own the shares to do it or that you are not rational.

"We, most of the people that post are long term holders... pre Sam"

Bit difficult to be pre-Sam; he is one of the founders of the company.

"An unusual word to use, ''award'', not ''case''. Perhaps someone with friendly communication with one of the greedy piggies could see if they could clarify what was meant by award??"

Award in the context of an arbitration means nothing more than the judgment.

Actually, I think it depends on the nature of the transaction. These may be held on call options giving a right to buy the share.

One possible reason for the short position is that when added to the other shorts, if the shortholders control more than 25% of the voting shares, they can block any special resolution in relation to the debt refinancing. Hence the reason they may be asking for a fee to remove their tanks from PMO's lawn. Likely also connecte to why TD is trying to push back the debt maturity date.

Hi Auson

In response, no, I do not know of him beyond what is on the web page; he is a 10 year PQE Senior Associate.

However, as to the way in which such firms work, new client instructions on matters like this do not go into Senior Associates, they go into Partners or Counsel (as they have in US firms, such as K&S and to be distinguished from Counsel in England which is another word for barrister).

Partner/Counsel then runs the client relationship and strategy on the case, and Associates and Senior Associates do the leg work. At 10 years in, he will be pretty much running the case day to day.

To be absolutely clear about K&S, they are a class act in this field; this is not no win/no fee on ASU insurance, it is big ticket litigation and they will have taken a cautious approach at risk committee level before running this given the value of the time that would otherwise have to be written off if they lose/ do not get execution of judgment debt.

On that last point, there is no particular time frame in which execution would happen. As I said before, do not necessarily expect an extra several hundred million in Q1 2020 from this.

F

Hi Auson

It did it again (*Again - and also tried to change Auson to Austin this time around).

Got to hate autocorrect!

F

Hi Again

I agree with all of that. And apologies for the autocorrect typos.

F

Hi Jonny

Re your point about there being a difference between
income tax and capital gains tax, yes for individuals, not so for companies who pay corporation tax under the Corporation Tax Act 2010 at a flat rate (albeit different reliefs, allowances and expenses apply as between corporate income and capital profits).

F

Superrich

That is not how it works with litigation of this type. In order to get the backing of both a risk committee at the firm, and more importantly, the litigation funder and the after the event insurer, prospects of success of 60% or more, with a supportive leading counsel's opinion, are required at the outset.

Ax I have said before, no lawyer will give more than a 75% chance of success on a case due to the concept of litigation risk, that is, that things happen in a case which are outside the control of the legal team (a judge/arbitrator does not like an argument, a witness does not perform and so on).

That is not to say that the risk in a case will not change during the course of a case, but at the outset, this will have been given good prospects of success at K&S.

The bigger issues on the ON litigation are: 1. getting execution any time soon if RKH win; and 2. the fact that a lot of the damages, if recovered, will be eaten up by King & Spalding, the litigation funder and the after the event insurer (together with the 12.5% insurance premium tax on the ATE insurance). I have said before that anyone thinking that hundreds of millions are riding in over the hill in Q1 2020 could be in for a nasty surprise. It is perhaps more likely that the judgment debt receivable would be sold at a substantial discount if cash is needed.

Because everything relevant to RKH's future is outside its control. It has no control over UKEF, it has no control over if or when it will receive money from OM (and then there is the fact that there will be a first charge on monies received in favour of the litigation funder and ATE insurer) and, most fundamentally, it has no control over if/when SL will receive FID (let alone sanction).

From an institutional investor perspective, this is uninvestable; it is nothing more than a binary bet. I hold but with the full knowledge that I could be wiped out.

Much makes a number of good points. FID will not happen this year. UKEF likely will not be in a position to make a decision until after the election. PMO are prioritising debt reduction with a view to refinancing. They can do that until they are sub 2 billion (which should be year end).FID will likely take place after a final bidder is chosen for Zama and after the money has been received for it. Even then FID likely won't happen immediately; the internal project submission documents have to be finalised at PMO, the matter then has to be approved at the next meeting thereafter of the relevant investment committee; it is not TD just sitting there waiting to sign off on a deal. FID is mid to late 2020 at the earliest.

In the meantime, RKH has to get by on its dwindling cash reserves.

TGF

A good post, with points well made.

As you say, from Annual Report 2018:

"Potential mitigating actions could include non-core asset disposals, collection of arbitration award proceeds, deferral of expenditure or raising additional equity."

We have just seen the first on that list with Egypt. Let's see the extent to which we run through the rest of it.

F

Very interesting article on Ian Taylor, CEO of Vitol, in the Times magazine today. Quite apart from the human interest piece about his recovery four times from cancer, and his philanthropy to others with cancer, there is his/Vitol's view that their oil trading business will die over the next ten years and that oil demand will peak by 2028-2029 with Vitol moving into renewables.