The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Remember a buy back cannot be used to affect the SP and certainly not support the SP It is a passive tool. If MS are using a 200p limit , their trading logarithm will only participate in a small % of the daily turnover going through the LSE and other exchanges, normally 5% of daily turnover. Institutional investors can approach the company , via MS, with larger blocks of shares however. If the SP moves sharply lower then the buyback can increase its % , say to 10%, of total daily turnover.
Hurricane SP fell from 65p to 0.5p after the board over stated the reserves of oil and the flow from the well head , which has a huge amount of water ingresses. The board then recommended deleting the equity so the bond holders could get a payout.
A court case found against the board and they have all been sacked. Chrystal Amber is the white knight and the equity now stands at 10p. The point is BOD tried to steal the business off the shareholders at a greatly reduced price against the asset.
The $200m proposed share buy back is a folly. This whole tender offer and buy back is designed to help the institutions and not the smaller investors.
After the BOD have used our cash to buy out the institutions I wouldn’t be surprised if they take the remainder of the company private and that will be a nice earner for their pensions.
We need to vote down the tender offer and buyback and could do with a white knight to achieve that purpose. See Hurricane Energy debacle and how under hand a BOD can behave.
Institutions will offer more shares than they hold assuming that they will be scaled back during the tender process. What will be the SP after the tender offer? If you haven’t sold any shares in the tender then your current holding will take the hit down to the ex tender price.
ABRDN wants out of this stock and doesn’t want to risk being scaled back in the rush to tender shares. Clearly they feel the company has little or no value after the India monies are spent. There may also be a technicality which prohibits this passive fund manager from holding the shares after the tender offer.
VWAP for the 5 trading days including the closing date of the tender offer, which is the 5th April.
So the VWAP period starts on the 30th March . Max price is a 5% premium to VWAP to attract more sellers.
Now we know why JP Morgan took a 3.15% holding….to “stabilise “ the share price!