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I've been watching this stock as previously posted and monitoring for some resolution on the Nigerian legal matters and clear path to dividends, without too much cash being diverted to Niger. I tend to agree that the legal damages claim are not material to the stock - only negative on the sentiment. But the related risk that needs to be eliminated, even if a low likelihood, is the Seven minority shareholder injunction and the request to set aside the Savannah transaction (at least according to this news article).
https://www.chronicle.ng/2021/01/shareholder-battles-seven-energy-13-others-over-restructuring/
The underlying Nigerian assets are clearly delivering compelling cashflow, so will review once these legal matters are in the rear view mirror, there is clarity in Niger funding requirements/farm-out and the 2020 annual report published - I can imagine real institutional demand at that point, with the early investors getting the multi-bags and later investors getting immediate and reliable dividends from long-term gas sales revenues. Was very encouraging to see the downward revision of the opex/G&A costs too.
GLA / DYOR
Great perseverance Agadem on the Q&A...some useful clarifications especially on RIverfort Loan repayment
....the only practising lawyer on the non-exec board resigning without notice during litigation is a red flag for an investor like me still sitting on the sidelines...I note he has been paid over $300k in last 2 years, as the second highest paid NED and Head of Compliance and Member of the Risk & Audit Committees so he must have had a very good reason/insight to depart suddenly...time will tell why...I'll wait to end Jan to see outcome of the litigation to get a clear view of the risks in this stock
Strange. The old Savp major shareholders had SL at 77,411,856 shares on 26th Nov 2019...now 82 million but the TR1 %'s changed by much more than that....
Fidelity, Ashmore and IFC all seem to have left the register this year.
See companies house filing by EY re court case section 1.12
https://s3.eu-west-2.amazonaws.com/document-api-images-live.ch.gov.uk/docs/93wYeXuQYXWHH_YiwE9rdebDF2xb-HwhNfv39xprNPo/application-pdf?X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Content-Sha256=UNSIGNED-PAYLOAD&X-Amz-Credential=ASIAWRGBDBV3A5CYFPVW%2F20201123%2Feu-west-2%2Fs3%2Faws4_request&X-Amz-Date=20201123T095528Z&X-Amz-Expires=60&X-Amz-Security-Token=IQoJb3JpZ2luX2VjEEEaCWV1LXdlc3QtMiJHMEUCIBpf%2FAPgs%2F%2BrfKHYWLgsYGQAlHcgTYqOKxWAZ8ZK9WeQAiEA2Aej3lrnZSHnMwUpCNgAqv7%2FyrjQ7btTem0JHSYLFJ8qvQMIuv%2F%2F%2F%2F%2F%2F%2F%2F%2F%2FARADGgw0NDkyMjkwMzI4MjIiDEA%2BDmFwpW0iQmJG5SqRAxLNCH0mNTRaXe%2FBsdI8zkCcXD6M%2BbRqBMUn6x7QRR%2BFCsVwNlJfUgpapzWk1ua6A8KcUv7nO5aum%2FKYeSONo%2FbrD5aN9Jdoi0H0Nn9lK9aJO9K3jv8vUHsGSnE6KEYFuwGOdPYq2H3GGsFm64vz5YO1hWYBJ%2Bs%2BolKQQb8j6y1S1CPn87qfGs9Od3JnU30HxbDvRAwOH8AyAHRQiCHNfG3glXZrh2V%2F%2BmfxNdA3nvFJ66TsCKWor7cj%2BWRnC3OnpWChr9INXqSwlpmyNvVoIXtBe2XW38z4xfEMY2ZpC1KHDMYozSU8qDWl8gIVvb4UFP0Kllg4ePkXmVf%2Fh0m6tqcr%2F1XCEesT387RLiEokcYCNV20C7L7IVxO983uWQIrL%2BlxyNq1BMAlMp%2Bt4xhg4xuGz13IXnIzcpEtU4%2BXxszbfmj19ByRbEsstO1abq7y2St3PeeWWJRCTXfq9Qzgp3YWARqZvn%2Fz5KOPr47ge9TW9vfOSp0Buag2CylvRqjM4jURjhcCP%2B%2FrzxGEwh6BOXvRMO%2Fo7f0FOusBdUYLGX5zqFrz12e%2BrC1NlKUJlM9vNjftPNI4z5BRTDZSM9H8sBwv6xmYx2zqyepR4uO53WG3jXFvVjQWU1ytliaurWfq4JkwDqImG7I%2Bm7ksvG%2FbkK%2B3A9mL4t0nwjFsFbLI8u4zMj4WqX77p3pBn3r1nxmDm0q%2FDgEO8XCatP8pMdwgKRHgrIDfEHnlAs4DuEUr%2B8N%2BVHMkeMnkI8%2FQSuHBNvGvv8SP0o8lKvC44fhWDWOUB59XtS6hwHAuEHB8istSt7ahZK4IW75WBpuz7xasHpaLx%2B8FJkSYyB9E4YsPgcLdtEjmJB5U9A%3D%3D&X-Amz-SignedHeaders=host&X-Amz-Signature=ea54e88669df7e27a25654ac261bf2be94a2448b2ab89ee9a7360caa8d0c5b66
My suggestion was to simply ask IR for an update since a poster was asking for IR questions and I couldn't find anything definitive but understand that the case has been heard
Been keeping an eye on this stock and was encouraged again by the Finncap reinforcement of my own cash machine view of the Nigerian assets' potential...however I had a diary note to check-in again after the EY post-admin disclosure of the Nigerian legal case scheduled for 16th Nov against the Seven transaction transfer of assets...need to understand this risk as its material to refinancing and dividend upsides that will drive the share price up
Did some asking around over the weekend...appears it was heard and argued over 2 days at the Nigerian Federal High Court, so can't be frivolous ? Judgement has been scheduled for end Jan. There appears to be another more substantive case joining it too. Will check in again on this stock after end Jan...but worth adding to your IR question list...?
Also, concerned by the recent loss of a third of the institutional shareholders and shareholdings which must be more than just ESG related - because the Accugas gas business like most emerging market gas businesses that I focus on is a great ESG story (decarbonising by moving from diesel/firewood to natural gas + increasing energy reliability/access/cost for the countries involved)
gla...dyor
I think its true that EY & the BoD do not see a material risk here (they are very vested in the actions they have taken, of course), but something is keeping out material II's, even at this price level and I suspect the court case is an impediment for II investment, or Nigerian debt refinancing/dividends from a compliance/governance red flag risk review perspective. So, as long as the court case and injunction is live, then this stock's risk remains priced in - so I'll wait and monitor the court case then consider jumping in when there is clarity there, as that will allow a re-rate, II investment and Nigerian debt refinancing to longer terrors and lower interest rates...
I keep an eye on this as I like gas players for their long-term cash generation / dividends and the Accugas business was properly built by the Seven guys and Savannah's public results are showing it is very cash generative - and shouldn't actually be correlated to oil prices or international gas prices due to the long-term nature of the broadly fixed price nature of their contracts from the public statements.
The current entry price looks great and the business moves consumers away from firewood and diesel to low carbon gas...so also has green credentials to mitigate the ESG movement away from oil stocks.
The near-term catalysts to share price appreciation IMO seem to be Nigerian debt refinancing at lower rates and longer tenors to release more cash, dividend announcement and institutional demand.
However, there must be some reason that it persistently trades so low and can't attract new intuitional investors.
I note from dd that the Nigerian injunction is still in place and wasn't thrown out according to the EY mid-year post admin report at companies house, and won't be heard until November and their narrative suggests further potential delays.
Is this what is keeping out the institutions ? Probably will be difficult to refinance debt in Nigeria or pay out dividends from Nigeria with an injunction in place ?
So, it is a bargain and my dilemma is whether to jump in now we are seeing the cashflows and cash balances but is it worth the risk, or wait until the smart big money can be tempted in when the court case is resolved and the institutions can see a line of sight to refinancing and dividends?
I really admire what Accugas is doing and the assets were well put together by the Seven guys, so I'm keen to invest. But under Savannah there is a trademark of mis-direction that makes it impossible to know what is really going on. The Kurdistan co.'s have had similar problems (receivables, difficult country) but were able to commit to communication that brought investors back in (until the OPEC+/COVID crises made them flee again !).
The SAVE math doesn't add up in a material way:
INFLOW
$0. Opening cash at Seven deal close (assume SAVE nor 7 had any cash)
+$54 AIIM investment in 20% of Accugas (RNS 15th Nov "...US$54m which has now been received.")
+ $96mn Cash collections (RNS 1st May "...from Savannah ownership to date.")
+0 Oragroup $11.4mn loan renewal (assume cash neutral)
= $150mn cash inflow
OUTFLOW
$1mn per month G&A from Dec 2019
$2mn per month Opex per Seven from Dec 2019
$0mn per Capex (nothing announced)
$40mn principal reduction (RNS 1st May, although still somehow its $520mn vs p27 corp pres $409mn (80% of $109+402mn))
= $58mn outflow to end May 2020
Difference = $92mn
Where did the $92mn go ? Interest ? Capex ? AK bonus ?
Why is the debt so high at $520mn ? I hear of potential $100+mn debt to Nigerian sovereign wealth fund but can't find evidence.
Then there is the ongoing serious litigation in Nigeria by the Seven shareholders over the UK pre-pack, where the Nigerian courts have now asserted jurisdiction (I guess not surprising given the assets and lenders are Nigerian).
These are very easy questions that the CEO and Board could clarify, rather than mis-direct. I'm very disappointed that the high quality NEDs on the board are allowing this conduct at the expense of their reputations, never mind the NOMAD.
If Wirecard, a DAX 30 company can mis-guide their shareholders and auditors, then maybe we shouldn't be surprised that an AIIM Nigerian Gas can too....
Over to the BoD...
Got a Google alert on the following article... ongoing legal case and interim injunction/standstill on Seven transaction in Nigeria. Can't see any SAVP RNS on it but apparently been ongoing since November. Anyone else heard about it or addressed with AK ? Been thinking of piling in at this price cause its gas but incorrectly dragged down with the oilies...not so sure now...
https://www.legit.ng/1311459-opinion-the-nigerian-local-content-act-curious-case-seven-energy-by-hassan-abubakar.html