Member Info for jun_man

Someone must be buying, and no reason to assume they are irrational. It's definitely a more interesting situation than most. I've decided I'm just going to hold and see what happens. My in-price is £1.62, and I had a £3 target price for sale. If it does go at £2.36 it won't be the end of the world, but it does seem there'll be more put on the table. GLA.

They could just as easily be being made by GIH though?

Interesting about standard vs premium, I hadn't realised it was ending.

If what you say is true (and I don't disagree) Carnival or MSC should just chuck in an offer. It would be enough to derail the current proposal. Market cap is what £200m? It's spare change for those guys. And if you can derail the current offer, then it gives you time to figure out if the company's actually for sale, at any price.

It's difficult to predict how this will play out. There are only two ways you can make a takeover offer, either Scheme of Arrangement or a 'contractual' takeover offer. Given the threshold requirements of a Scheme (which includes a threshold requirement by number of shareholders) I'm not sure that's their best option because the c.59% block only counts as one vote. You'd be taking a gamble on how the remaining shareholders might vote. And if you fail the vote, the offer is dead (although if it passes its binding on all shareholders).

If they went the takeover offer route, normally you'd put 90% as the threshold for acceptances in order to be able to complete the minority squeeze out, but it can be as low as 50%. So they can guarantee the success of a takeover offer, but they don't necessarily end up with 100% of the company. You may as well just do a delisting.

Some of the wording in the announcement is a bit messy (IMHO), and it will be important not to confuse what decisions are required to delist, vs what decisions are required to complete the acquisition, and what obligations arise from being listed, the Companies Act and the Code. From the Board's perspective all they need is someone to offer £2.50 a share and they are in a bind. Even the Chairman can't recommend his £2.36 offer over a £2.50 offer (if they are both in cash). I can see why this business might be attractive to private equity, but I don't think anyone would spend much time on it if they didn't know he was a seller of the majority stake.

The BoD has four members, the Chairman plus one member who appears to have worked with him for years, so not sure would be treated as independent. Not sure about the other two. Does the Chairman have the casting vote? Lots of uncertainty.

I guess we can all agree that £2.36 significantly undervalues the company.

I think that’s exactly what it is, with the direct threat that if my offer is not accepted, I’ll delist the company. It’s going to be an interesting few weeks.

It was always a risk - we'd better hope the NEDs do their job. It's curious that the share price remains above the offer price, usually that would be because either there's expectation of a higher bid or that a higher offer from GIH would be needed (but why?). Presumably Kutman doesn't want to sell to a third party, so I guess the assumption is he'll have to offer more. Interesting to note that he's not got financing in place yet.

That word was 'P' 'A' 'R' 'S' 'E' but apparently it needs to be blanked out

hi all,

hoping that someone wiser than me can help me p**** today's rns. i had thought the life of the master fund iii was out to june 2028, so i have failed to understand what today's announcement is driving at. it appears to be suggesting there would be a compulsory capital return in 12 months?

i guess in any event there will be a similar redo like was done for the 2017 shares in due course, but grateful for any insights as to the significance of today's update. tia.

Where do you hold your shares? I'd talk to your broker in the first instance as they are probably the legal holder on the shareholder register, so would need to register on your behalf or some such equivalent process.

Agreed. Not sure I'd go as far as £5.50, but my target price is currently £3+ per share. After the strong performance up above £2 I expected it to be range bound for some time, but the quarter on quarter delivery continues to be on track / impressive, so I am hoping that the market starts to see more here and pushes the share price up again. The debt is still high, but ratio to EBITDA in better shape. I do wish they'd include a cashflow statement in the quarterly results, but will have to wait for YE for that. Happy to keep holding here.

Sorry, just to be clear ref HL, I get my divis in GBP as well, it's just that the conversion from USD to GBP is executed by HL using their rates and fees. I don't get the rate published by DEC themselves. If anyone has been able to get HL to receive the dividend directly from DEC in GBP using DEC's published rate, I'd be keen to know, as there's a small saving there not to have to pay HL's FX fees (and they have previously advised me this was not possibe)

This is also true for HL, unless they've changed their approach recently. I enquired about the GBP election and they said that they receive the dividend from the company in USD and don't plan on changing that. I think it's because it's not possible for them to split the election, so as legal shareholder they either get it all in USD or all in GBP, and since they can't force shareholders to all move to GBP, they stick with the USD.

Ha - and they canned the tender offer because it was illegal in the US. Some adviser’s getting fired.

Dividend cut by two thirds. There it is.

So I've been kicking this around for a while now. On a pure maths / corporate finance / capital structure basis, I have not yet been able to determine a strong logic behind the tender offer. It's possible that it's simply a way of buying back a large number of shares in one go. The company was able to buy back about 200,000 shares in February at a cost of let's say £2m. They may be aware of institutions wanting to participate in the tender offer that could mean they are buying back 5x or 10x this number in one go. That has benefits for the capital structure that should lead to a share price increase over time, of a more meaningful nature than the drip-feed nature of an on-market buyback programme (which the market doesn't seem to appreciate anyway).

I do wonder if there isn't a more 'sentiment' based plan here, along the lines of taking some short term pain for long term gain, that has been put together by the company and it's largest shareholders. This is all speculation, but:

- it appears to be agreed by all except the shorters that DEC is chronically undervalued. Even at 70p / £14 I thought this was low, and we are 40% below those levels at the current time

- nothing the company has done which might be considered customary has made any difference. Operational updates, strategic divestment, share buyback, rebuttal statements to the market, NYSE listing; and the share price is still in the toilet

So then we assume that the company and it's largest shareholders (for the sake of argument let's say it's shareholders representing between 30% and 40% of the cap table; I haven't worked out how many parties this is) get together to come up with an outside the box plan to make a change.

The company knows it's going to publish strong Q4 results, and as part of its ongoing dialogue with its largest shareholders, they have confidence in this also.

You structure the tender offer such that the results are published after it launches but before the price is set. You all take the chance/view that post announcement, the share price increases a meaningful amount, say 5% or 10%. The institutional shareholders commit to the tender offer, so you know you'll be deploying $15m to buy back shares. That's a meaningful number. That also gives you more freedom to announce a 10% increase in the dividend, for example. This is another reason why the share price kicks up post results.

Then there's a bit of momentum behind the share price, and it's above £11.50 or £12. Then when the tender offer comes around, you're not selling your shares at £10.50, you're selling them at £12.50. The shorters are now 25%+ underwater and forced to close out their position, putting further upwards pressure on the share price. At this point, you've snapped the sentiment and the share price is on it's way back to £15+.

That's all speculation, but my guess is the company and shareholders are trying something less common just to snap the share price out of the slump.

I’ve now received my instructions from HL. Unlike II they have understood it correctly. Note that the text about not knowing how many shares you will end up selling is in bold in their original message:

“Diversified Energy Company plc wants to return approximately USD42 million to shareholders. By default this will be by way of a third quarter dividend payment of USD0.875 per share.

As an alternative, the company is giving you a chance to waive the dividend and instead receive approximately the same amount of cash via the sale of a number of your shares in a tender offer.

You therefore have the following two options:

Option 1: Retain all your shares and receive the dividend (DEFAULT)

If you don’t want to sell any shares, you don’t need to do anything; you will receive the third quarter dividend on or around 28 March 2024.

Option 2: Sell some of your shares and receive the cash as tender offer proceeds

You can instead ask to receive approximately the same amount of cash via the sale of a number of your shares in a tender offer. The key terms of this alternative are outlined below:

By electing for this option, you will not receive the third quarterly dividend.

You’ll receive approximately the same amount of cash as you would have received via the dividend, but your holding will be reduced by a number of shares.

The number of shares your holding will be reduced by will depend on the tender offer price that is set. This will be 105% of the average market value per share for the five business days prior to 27 March 2024. You’ll then have sufficient shares removed from your account at this price to give you approximately the same amount of cash you would have received under the dividend. You will therefore not know in advance how many shares you will sell in the offer.

The number of shares you’ll have removed will be rounded down to the nearest whole number, so you may receive slightly less cash than you would otherwise receive in the dividend.

If you elect for this alternative, you will be unable to trade your entire holding from 26 March 2024 until your remaining shares are returned, which is expected to be from 28 March 2024.

Tender proceeds are expected to be paid on 28 March 2024.

As outlined below, it’s expected that anyone receiving the cash via the tender offer will still be treated for tax purposes as if they had received a dividend equal to the amount paid.”

@Jarvaman I don't think you're correct, and if what you have written are the instructions from II, then they have got it wrong also. To repeat what has been said myriad times - you cannot tender your entire shareholding.

Quoting from the Circular, Chairman's Letter, page 10:

"Specifically, Qualifying Shareholders can elect to either:

Do nothing, in which case they will remain unimpacted and will be paid their respective Entitlement to the Q323 Dividend on 28 March 2024; or

Elect to waive some or all of their respective Entitlement in consideration for the ability to tender their Shares in the Tender Offer at the Tender Price (which will include a premium) up to the amount of their waived Entitlement. "

Note it does not say you can tender shares, all you can do is waive some or all of your 'Respective Entitlement'.

Entitlement is defined on page 38: "the amount of the Q323 Dividend as declared by the Company on 15 November 2023 that the Shareholders are entitled to respectively as at the Record Date"

It is not a number of shares, it is an amount of money. So what you are being asked to waive is some or all of the Q3 dividend that you would otherwise receive if you did not waive your entitlement to it.

The amount of money you waive will be used to buyback a number of shares, currently unknowable because the reference price has not yet been determined. Only once it is calculated, will anyone know the NUMBER of shares that they have tendered in the offer.

@TheWednesday - yes.

I expect that the transaction steps plan would be something along the lines of:

1. The shareholder receives an instruction form from their broker, let's say it's Halifax for the sake of argument

2. You as the shareholder provide the instruction to your broker that you wish to participate in the tender offer in the amount of £105. The broker is authorised to receive that instruction because they are authorised for the receipt and transmission of orders, and arranging or bringing about deals in investments (if e.g. authorised by the FCA). They are an execution only broker, and the instruction is binding on the shareholder (i.e. it can't be revoked).

3. Your broker (Halifax) communicates your instruction to either the company, or direct to the company's broker, Stifel, or both

4. Once the transaction price is determined (e.g. £10), the price for the buyback is fixed (£10.50 per share).

5. Stifel communicates this to the counterparties (including Halifax) and likely puts out an RNS. The instruction received in Step 2 allows for the buyback of 10 shares at £10.50 per share

6. Halifax removes the shares from the investor's account (in accordance with the instructions received in step 2), and they are transferred to Stifel.

7. Stifel and the company complete the legal steps to cancel the shares.

8. The shareholder has their original holding minus ten shares, plus £105 in their account.

@davidspellacy - this isn't correct. Assuming you tender enough of your entitlement to allow the company to buy back one share, then you will be left with your original shareholding minus one share.

Hi @TheWednesday

I guess it's a matter of opinion whether the Halifax has expressed itself clearly. I am not a client and haven't seen the communication directly myself, but going on what Hoarder posted earlier:

"In the Corporate Action notified tome this morning there are three options:

Do nothing

Tender my entire holding (no mention regarding dividend to be waived at all)

Tender a part of my holding and receive dividend on the untendered shares.

All tendered shares will be removed from my account until after the process is finished and any scaled back tendered shares will then be returned.

All tendered shares, potentially my entire holding, will be bought from me at the average price stated plus 5%."

The reason I think this, at best, confusing and, at worst, wrong, is it still refers to tendering a number of shares, which is at the heart of the confusion that has been running through this Board. It would be clearer, in my view, if they talked about giving up the right to receive the dividend (which is what is happening). I think there is every chance someone reading that thinks that DEC will buy back their entire shareholding for price + 5%, which as we know is not possible. It's definitely a Consumer Duty breach, in my view at least. There are no circumcstances where you can "Tender your entire holding", you can only tender 100% of your share of the Entitlement.