Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Important point with EPL: Surely just because we were only charged just under $5m in 2022 doesn't mean the charge wouldn't be higher in 2023+.
I thought one of the reasons out EPL bill was so low is the fact we simply didn't declare that high a profit. That would surely change in light of the bond repayment.
Feel free to email the same question - it's quite a big discrepancy to leave out
savings.audit@hmrc.gsi.gov.uk
I have emailed the following to comms@hurricaneenergy.com:
"""
Hello,
In question 5 of the Q&A document, the hurricane standalone figure is markedly lower than both 2023 and 2025:
2023: 3.32p
2024: 0.83p
2025: 2.07p
Would you mind clarifying what else we are paying for in 2024 that offsets the profits from oil (Which I would expect would give somewhere between 2.07 - 3.32p per share) - or in other words, why the return is only expected to be 0.83p per share in 2024?
Many thanks,
A hurricane shareholder.
"""
Will post the reply I get (if any)
Can someone explain why the Hurricane standalone figure drops so much in 2024?
I'm guessing it has to be some one time company event? I would expect the profits from the oil revenue to be somewhere between 2.07-3.32p (The profits the year after/before respectively)?
Without a firm answer to this, I will be voting a hard no.
A lack of guarantee over ISA tax implications (Something IIs do not have to concern themselves with) means the 12.5p bid could be as little as 10p per share (and that's supposing the 6.02p dividend will be tax free).
Absolutely zero point taking on the extra risk of the DCUs for what, even by the board's own account, would be an extra 1p (The logic being that dividends from the existing company structure could be handled tax free).
I'll take the punt that something funky is happening with well 6 (which given the last 2 CPRs' numbers may be correct).
Quick update: I have received an automatic replay stating that they may take 30+ days!
Anyone else able to find any way to reach out to the HMRC over this?
So straight off the bat, apparently a reply could take 30 days or longer (!)
Thanks Scott, also sent my email:
"""
Hello,I am writing to ask for guidance over the following tax issue. I hold a number of shares in Hurricane Energy PLC in a stocks & shares ISA.Recently, an offer has been made to purchase the company by a private company called Prax. The offer is comprised of 6.02p per share as a dividend 14 days after the transaction has completed, and 6.48p per share in Deferred Consideration Units from 2023 - 2026 as 17.5% of revenue from oil production in the new company.As such, I was wondering if you could shed some light on the following matters within the next fortnight:1) Will the dividends issued fall into the ISA's tax savings?2) Will the Deferred Consideration Units, and their profits, be subject to the ISA's tax benefits?Please find below a link to the offer in question:https://www.hurricaneenergy.com/download_file/force/741/346Please let me know if any further clarification is required.
"""
Will let eneryone know!
I will be emailing them this afternoon to ask if they could clarify our offer... I will of course post the full email, and its response, once I get the time.
If others could also write emails describing the deal (Perhaps with a link to the scheme), that would be helpful as the more emails related to hurricane we send, the more likely one of them will be answered.
Hello all,
On the following government site I found an email address which might be helpful in clearing up our tax issue: https://www.gov.uk/guidance/stocks-and-shares-investments-for-isa-managers#changes-to-investments-held-in-a-stocks-and-shares-isa
Under the section "Changes to investments held in a stocks and shares ISA":
"Complex reorganisations often involve more than just the issue of one set of new investments. There could, for example, be a bonus issue of shares, which are replaced in turn by other shares, which are then sold, or converted to other investments. If the intermediate investments are not qualifying investments for a stocks and shares ISA then, strictly, the final investments, or cash proceeds, cannot be held in a stocks and shares ISA even if the final investments themselves are eligible.
However, where ineligible investments are issued as an intermediate stage, and those investments are short-lived, or are automatically replaced by cash, HMRC will consider whether it is possible to look through the intermediate stages and apply the guidance on qualifying investments to the initial and final investments alone. If a reorganisation involves intermediate ineligible investments managers should submit full details to savings.audit@hmrc.gsi.gov.uk, and if possible well before the planned reorganisation date."
I suggest we send some emails regarding hurricane's offer to:
savings.audit@hmrc.gsi.gov.uk
So we can once and for all close off the questioning around the tax implications of the deferred consideration units.
"They then aggregate the numbers fore or against and pass on the vote for the highest figure rather than as individual votes. So if they receive 1 million yes votes and 999,999 no votes they will send 1 million yes votes and disregard the no votes."
Okay, this SURELY can't be legal. Why on Earth wouldn't they just send the tallied yes and no votes?
"What value would you put on a share for a company that no longer exists as a legal entity?"
@kooba posted the part of the offer that deals with this - namely (as you also implied) that the shares will fully be replaced by dividend + DCUs if a vote of 75% or greater is received
Thanks for the help both!
So it sounds like:
" It is intended that the Acquisition will be effected by way of a Scheme, however Prax
reserves the right to implement the Acquisition by way of a Takeover Offer, subject to the
Panel’s consent."
is rather saying if the scheme fails, prax may offer some other bid in a more normal manner (likely a lowball cash offer)?
Thanks to both @asimpleinvestor & @kooba, makes sense
@asimpleinvestor - thanks for the info, are you certain that is the case? In the FSP document, I note they state:
" It is intended that the Acquisition will be effected by way of a Scheme, however Prax
reserves the right to implement the Acquisition by way of a Takeover Offer, subject to the
Panel’s consent."
It sounds more like they're trying the scheme, and in the event of them not getting it they will make a further takeover offer for the remaining 25%?
"shares won't be worth the paper they're printed on" - this surely can't be legal for so many reasons
What happens in this scenario?
My understanding is that investors cannot be forced to sell their shares to the bidding company in this case. Does this mean:
- Prax would be happy to have a minority of shareholders in their future ventures?
- Prax would be unhappy to have a minority of shareholders, and so after taking 75-90% of the company would place a further improved bid to get rid of the remaining 10-25%?
- Prax would be unhappy with having minority shareholders and so rescind their offer entirely?
From the half year results H1 2022 (Latest available):
"Restricted cash of $60.8 million at 30 June 2022 relating to decommissioning obligations and FPSO charter (31 December 2021: $45.7 million) - Restricted cash is in addition to Net free cash"
From the above, it doesn't seem that whole $60m is for the BW charter, but also for decommissioning the well?
How much does a decommissioning actually cost? 3.5p per share equates to $70m. Considering I thought we had already put away $60m for decommissioning, does this mean we expect it to cost $130m?
@Mariog touché