Member Info for okenia

jenks - two types of disclosure requirements. a) significant shareholdings. Once anyone (e.g. me or you) go above 3% we have to send in a TR-1 notification which gets RNSed. And then every 1% above that (and ditto on the way down, the last notification being when you fall under 3%). It's up to the shareholder to notify the company, and sometimes this can be a little (cough splutter) 'delayed' in some cases. AMI as you say were a good example of a shareholder not disclosing particularly quick or in detail. b) share buybacks by the company (for cancellation or addition to the Treasury). These are actions by the company and thus come under the AIM company rules which require immediate notification of any such trade, irrespective of the size. As pointed out before, this is important because there always needs to be an uptodate and accurate record of the total voting rights. [there are also Directors Deals, which require immediate notification and have no lower limit on size of transaction, so are like blend of (a) and (b).] In this case irrespective of the size of the buyback, Obtala would be required by the AIM company rules to notify the market without delay. Critically however they don't need to notify before they execute a trade, provided of course that they have the necessary approvals to buy back shares. They can go ahead and do a trade, and only afterwards notify shareholders via RNS. The 1.53m trade on Friday is therefore interesting because it is unusually large and comes so soon after the AGM. If (big IF) that was the first of a programme of buybacks then the next step would be an RNS sometime this coming week to state they had bought 1.53m shares (and what had happened to them - cancelled or treasury). If there's no RNS by Friday I think we can conclude that it wasn't a buyback but someone else taking what was quite a whopping punt! If it is an existing shareholder it could trigger a TR-1 (that trade was ~ 0.5% of the share capital).

Which I read as they don't need to advise in advance of buying back, but they do need to notify once they have got going. As we know with Director's Deals on AIM, that can (cough cough) take a few days or so to get the paperwork done. That 1.53m trade on the 14th could thus still be the first of a buyback, with the proviso that I'd be expecting an RNS by the end of this coming week if so. If it hasn't popped up by Friday coming then I agree it's pretty much certain to be something else.

from the 2014 Aim rules for companies document: "Disclosure of miscellaneous information 17. An AIM company must issue notification without delay of:  any deals by directors disclosing, insofar as it has such information, the information specified by Schedule Five;  any relevant changes to any significant shareholders, disclosing, insofar as it has such information, the information specified by Schedule Five; ...  any decision to make any payment in respect of its AIM securities specifying the net amount payable per security, the payment date and the record date;  the reason for the application for admission or cancellation of any AIM securities and consequent number of AIM securities in issue;  the occurrence and number of shares taken into and out of treasury, as specified by Schedule Seven;" "Schedule Seven Pursuant to rule 17, an AIM company must make notification of the following: (a) the date of the movement into or out of treasury shares; (b) the number of treasury shares of each class transferred into or out of treasury; (c) the total number of treasury shares of each class held by the AIM company following such movements; (d) the number of shares of each class that the AIM company has in issue less the total number of treasury shares of each class held by the AIM company following such movements."

Do TVRs include shares held in treasury? OBT has the power to either cancel or leave in treasury any shares it buys back (see clause 50 in the M&As). http://www.obtalaresources.com/pdfs/memo-and-articles-obtala-resources-ltd-5aug.pdf

gfb: "Surely if OBT issued an RNS stating they're buying back shares the SP would rise, costly OBT more to conclude the buyback" same thought as what I was having, just not as verbose as me :) It's not 100% clear cut, which makes it interesting ...

And at £75 a pop an RNS isn't expensive. I would have thought a buyback was a 'price sensitive' matter that could be disclosed via RNS. I do have a naturally suspicious mind when it comes to AIM companies and there's a slight niggle in mine at the moment that we are both thinking with the mindset of a shareholder with a company dedicated to getting returns for us shareholders. Let's tease this apart. At the moment £3m will allow them to buyback 20% of the shares if they don't shift the price. If the price rises they end up buying back less for that amount. Thus, if they announce a buyback they will be able to buy fewer shares. There will be less anti-dilution for the sum of cash deployed. Let's consider an extreme situation where there is a forced seller (AMI for hypothetical but recent example). Now as a shareholder what I would like OBT to do is to buy up as much as possible of that liquidating stake as possible and cancel those shares. Critically, it's my money they're using to do that, so I'd want them to get the best price for those shares and not waste cash. At the end of the process they announce they've bought all the shares in off-market transactions and cancelled them, SP re-rates. Outcome: maximum reduction in share number for minimal cash outlay. Now if we take that logic (and this may be flawed!) one stage further on, replace AMI with the wider market. If I was OBT and harvesting by buying shares for cancelling, again would I not want to do that on the cheap? Again, if I want to generate the maxim reduction in share number for £3m deployed then I'd do it quietly so I could buy cheaply. If I announce it the SP will rise and that will mean I can get less share reduction for the same cash. In other words, it depends on what the long-term aim of a share back is. Is it to get the maximum reduction in share number for the minimum cash deployment? Or is it to provide a temporary boost to the SP by dint of there being an active buyer in the market. Share buybacks are temporary, the anti-dilution effect is permanent. When any special dividend or whatever comes from the forestry sale, my key issue will be what percentage of the company do I own - i.e. who am I sharing that cake with. If a share buyback in advance occurs then I would be proportionately more of the profits from the forestry. Does any of this make sense? In no way does it go against the (extremely valid) point you make that simply announcing a buyback is likely to be positive for the SP. I guess my point here is that there is a downside - which is that such an announcement will mean they can't reduce the share capital as much as they might otherwise have been able to do.

I don't disagree that an RNS stating they've started a buyback would be proof that they had started a buyback, and that they have no obligation to do so as a result of passing Special Resolution #8 However, the moment they announce it that would shift the SP. Thus, as an investor I am looking for clues that might support an entry and position BEFORE a change in SP, not after. And I remain intrigued that they've changed the amount they can buyback. It may mean nothing, but it could be a clue as to intentions.

Two interesting quirks though bottmzup. First is that the share buyback authorisation (which as we both agree has been done before) has been doubled this year. It's not a simple cut'n'paste of the previous year's one. That may mean nothing but it's intriguing. Second is the big buy a couple of days later. Again, could be coincidence. Now your comment "When/if they decide to go ahead with it they will announce it via RNS, not necessarily every purchase but just that the programme has started with the details of the total amount they intend to purchase." - is that true? Now that they have the authorisation, do they need to further announce it by RNS? Of course they could choose to do so, but are they required by the AIM regs to do so given they have just obtained shareholder permission to do so? [I don't know the answer to that one btw]

The 1.53m at 7.88p Buy on the 14th August. Is this a buyback trade? Well one way to check is to note the requirement in the special resolution which means any buy has to be at no more than 5% above the 5 day trailing price. Looking at the closing prices it seems that 7.88p trade would be within that rule, so it can't be discounted as a buyback trade on that basis. Whether it actually is one is another matter of course. From special resolution #8: "the maximum price (excluding expenses) which may be paid for any ordinary share does not exceed five percent above the average closing price of such shares for the five business days on the London Stock Exchange prior to the date of purchase;"

OK quick scan over early AGMs and it looks like the issuance/pre-emption thing is a standard authorisation thing they do each year, this year is no different. The intriguing thing is the doubling of the share buyback authorisation (esp when coupled with a £100k buy just two days later).

OK breaking this down. 263,260,664 ordinary shares of 1pence each are in issue. Resolution 6 gives power to issue shares to a nominal value of £789,518.73 (in other words, 78,951,873 shares) That's equivalent to 30% of the share capital. Of these, £394,759.36 worth (at 1p nominal, so 39,475,936 shares) have their pre-emption rights waived. So (for example) if they wanted to do an acquisition and fund that partly via the issue of new OBT shares to the vendors (such issuance would thus require waiving of pre-emption rights) then at the moment the can issue 39.5m shares to do that, equivalent to ~ £3m at the current SP. To be honest this resolution 7 to me looks like a rolling authorisation at each AGM - if there is a rainy day I may go back over the earlier AGM notices and see whether this is indeed just a standard approval at each AGM. In essence though it gives them rolling authorisation to issue upto 15% of the capital as new shares, to be used for whatever purpose. Far more interesting though is resolution #8. This changed this year - they DOUBLED the amount they can potentially buyback. That's interesting ...

This isn't a new one and the 2015 AGM had exactly the same wording as the 2014 AGM References are as previously to the two PDFs of the annual reports, where the wording of the notice of resolutions is set out. Here is one: " Allotment of shares 6. THAT the directors be hereby generally and unconditionally authorised, in substitution for all previous powers granted to them, pursuant to Article 8 of the Company’s Articles of Incorporation (“the Articles”) to exercise all the powers of the Company to allot and make offers to allot equity securities (as defined in Article 8 of the Articles) up to an aggregate nominal amount of £789,518.73 provided that this authority shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2016 save that the Company may before such expiry make an offer or enter into an agreement which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities in pursuance of such offer or agreement as the authority conferred hereby had not expired. Disapplication of pre-emption rights 7. THAT the directors be authorised and empowered, in substitution for all previous powers granted to them, pursuant to Article 9 of the Articles to allot equity securities (as defined in Article 8 of the Articles) for cash pursuant to the authority referred to in resolution 6 above as if Article 9.2 of the Articles did not apply to any such allotment provided that this power should be limited to the allotment of equity securities: a. on a pro rata basis to the holders of ordinary shares in the Company where the equity securities respectively attributable to the interests of such holders are proportionate (as nearly as may be practicable) to the respective numbers of ordinary shares held by them, but subject to such exclusions or other arrangements as the directors may deem necessary or expedient to deal with any fractional entitlements or any legal or practical problems under law of, or the requirements of any regulatory body or any recognised stock exchange in, any territory; b. with an aggregate nominal amount of £394,759.36 otherwise than pursuant to paragraph 7a above; and c. this authority shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2016 save that the Company may before such expiry make an offer or enter into an agreement which would or might require relevant securities to be allotted after such expiry and the directors may allot equity securities in pursuance of such offer or agreement as the authority conferred hereby had not expired."

Oh hang on, I see what you mean - one is a sell (1.4m matched to 1.4m). See, I need that cup of tea. But the 1.53m one seems lacking a matched trade to be a rollover unless you can see something I've missed on the list of trades?

where's the matching trade though?

Let me go check the wording of #7 - again, there was a similar one last year. However I need a cup of tea first.

AGM was 11 August 2015, all resolutions passed including one that authorises OBT to buyback unto 20% of the share capital. Two days later we suddenly see MASSIVE trades in OBT like I've not seen before, three of them over £100k in value and don't appear to be rollovers. Now, thinking this through, would you start a share buyback just before the AGM and run the risk that the renewal resolution might not be passed (especially since there is a new 'activist investor' on the BoD). Nope, probably not I think. You'd wait until the AGM and then get going as soon as possible afterwards. A buyback in August is likely to be more effective too, since volumes are going to be lower during the holiday season and thus a decent buyback will shift the SP more and generate momentum. Now look at three trades from Thursday and Friday 13-Aug-15 13:45:40 8.15p 1,400,000 Buy £114.10k 13-Aug-15 13:45:55 8.20p 1,400,000 Buy £114.80k 14-Aug-15 13:16:38 7.88p 1,530,000 Buy £120.56k I wonder if those are buyback shares? The two 1.4m ones are done at the same time so must be the same person buying. Overall these three buys make up 1.5% of the share capital. If that is an existing significant (>3%) shareholder topping up then we'd expect a TR-1 for the threshold breach. If we don't, then it could be the buyback (rules for disclosing that unknown). Interesting week ahead - I can't see us not getting some sort of RNS given the size of those trades.

I'm familiar with Investment Trusts that have a discount mechanism (they regularly post their share buyback action). However this is AIM, and I suspect the 'lighter touch regulation' here means OBT may have more freedom to do it without RNSing every single purchase. Certainly we'd expect to find out by the time of the next AR of course. Permission was granted 11 August for the 56m but of course they already had permission for 26m from the previous AGM, thus there's no reason why they couldn't have started prior to the 2015 AGM using that previous authorisation. We shall see. I'll be keeping a closer eye on the trades in OBT (which I have to say have always been a tad weird anyway)

At what point does a buyback process have to be RNSed? (i.e. "Obtala purchased XYZ shares which have been cancelled blah blah")?

A couple of things of interest here. First, the number of shares is very specific and unusual (52 652 132 for this year). Why that number? Well OBT have 263,260,664 shares in issue. 20% of 263m = 52,652,132. So they have authorisation to buyback 20% of the entire share capital. Now look at 2014. In that resolution the only asked for permission to buyback 26,326,066 shares. That's 10% of the share capital. Why the increase? I suspect it has to do with the SP and the amount in £££ terms they are thinking they will use to do a buyback. Last June (when the 26m buyback authorisation was proposed) we were at 12p, so 26m shares would equate to ~ £3m being used for a buyback. Roll forward a year and the SP is closer to 7p. By doubling the amount they buyback they can deploy roughly the same amount of cash in a buyback (£3-4m). Bottom line is that this sounds like they expect to generate some free cash, of which they'll use £3-4m for a share buyback to bolster the SP. And of course it gets better than that - the moment they start buying shares the SP will increase (one would expect), which soon means that 56m shares (20%) is no longer £3.5m in value but is now much more, and so they would be able to spend much more money doing the buyback. Let's assume the forestry gets sold for a decent wad and the news of that triggers a first re-rate in the SP (20p for argument's sake). That's already an uplift to £10m for the 20%. And you'd expect a share buyback process itself to bolster the price by virtue of momentum and a buyer, so let's say we get a further doubling of the SP as part of the buyback. That would push the amount they could deploy closer to £20m. What's the current estimated value of the forestry?

Now for the really nerdy amongst us, I would note that OBT already had a buyback authorisation in place for the previous year (these things go for a one year period, AGM to AGM). The text of the 2014 AGM notice and resolutions is here, see p51: http://www.obtalaresources.com/SimpleCMS/app/web/upload/84d1b81e9fe8b8af17928e8217fa49a7.pdf This is the relevant text of the 2014 resolution: " Buy-back of shares 8. THAT, the Company be generally and unconditionally authorised for the purposes of Article 50.3 of the Articles to make market purchases (as defined in Article 50.5 of the Company’s Articles) of ordinary shares of the Company on such terms and in such manner as the directors of the Company shall determine provided that: a. the maximum aggregate number of ordinary shares which may be purchased is 26,326,066 ordinary shares; b. the minimum price (excluding expenses) which may be paid for each ordinary share is 1p; c. the maximum price (excluding expenses) which may be paid for any ordinary share does not exceed 5 per cent. above the average closing price of such shares for the five business days on the London Stock Exchange prior to the date of purchase; and d. this authority shall expire at the conclusion of the next annual general meeting of the Company unless such authority is renewed prior to that time (except in relation to the purchase of ordinary shares the contract for which was concluded before the expiry of such authority, in which case such purchase may be concluded wholly or partly after such expiry)."