Current situation of shareholdings24 Sep 2023 09:53
So to post something about Harbour today, I decided to copypaste a comment I wrote on another (private) channel...Some words on the current seller situation: with Noble's offer to settle a maturing bond with shares in Harbour instead of cash, Noble's stake has fallen from 9 to less than 1%. But this has not resulted in the bondholders now holding 8% of the shares, only 4%. The other 4% - it has now emerged - has already been bought by the hedge fund Taconic. Taconic was short 4% of the Harbour shares and has completely liquidated its short position through the buyback. What does this mean in plain language: 1. many had speculated what bad things Taconic might "know" about Harbour, that they go short with a whole 4%. Answer: there was/is no bad news, but Taconic merely participated in Noble's exchange offer. 2. in the short term, however, 4% of the shares remain, which now belong to some bondholders who, after all, do not want to be Harbour shareholders out of conviction and may sell the shares promptly. 4% of the shares is equivalent to about 32 million shares or $100 million. Should Harbour launch a buyback programme of this size (the current one now expires on Monday), this 4% would be off the market in the foreseeable future; if not, the price is likely to remain capped until the end of the year by the foreseeable pressure to sell or, depending on the "pain threshold" of those interested in selling, it may also go down.
3. After the sale of this 4% is completed, we will be in a situation where EIG's old customers still hold 6% of the shares and EIG itself 19%. This should only put pressure on the share price if EIG wants to reduce its stake, which I don't think will happen at current prices (otherwise it would have been done long ago). What I can imagine is that EIG is looking for a buyer for Harbour. Many people only think in the direction that Harbour could take over a company (which could also be the case). But I think it is also possible that EIG is improving Harbour's balance sheet (debt-free) and structures (400 people are being made redundant) in order to attract a potential buyer. It would fit into the picture that they are now doing extensive exploration drilling in Malaysia from October to March and hope to increase the value of the company in order to achieve a better sales price for Harbour. The share buybacks also have the effect of making the company cheaper for a potential buyer, as there are now only 770 million shares instead of the original 930 million. For us as shareholders it should not matter whether Harbour itself takes over a company or is taken over. In the latter case, we (as well as EIG) should clearly benefit. A buyer would certainly have to pay a premium of 20%, possibly more.
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