Member Info for OofyProsser

What do you think the Sound share price will do when they pull out of the Angus “bid”?

CrystalBallBroke: I see, thanks.

I don’t understand the interest in Mr. Holland. None of the three companies of which he's currently a Director has been in being for more than fifteen months and none has yet produced accounts. The other companies with which he’s formerly been associated as a Director have either been dissolved, or he’s no longer with them. What’s the big deal?

petroleum1: please excuse my responding to a message addressed to another poster.

The terms of the Angus Debenture specifically preclude any more borrowings, or asset sales, without the specific permission of the Lenders. It’s all in the Charge document listed on the Angus Companies House site. SEL is guarantor to the loan and its Charge document is also worth a read.

All Angus can do to meet a prospective cash shortfall is 1): get the gas out and sold ASAP, or 2) negotiate with the Debenture holders for a bigger loan or for permission to look for one elsewhere, or to sell Balcombe/Lidsey/Brockham or 3): raise more equity capital. They’re very poor at 1 and 2, as discussed earlier but reasonably good at 3. FSP, anyone? What’s going on in the data room? Sound Energy have three weeks to confirm their “bid”.

Zaphod: if Mr. Forrest has shadowy Russian backers , they were ill-advised to allow it to get this far. The £12mm loan will have to be repaid and part of that will be the value of the hedges, which will, if current prices prevail, cost them many, many millions. If SEL had not guaranteed the loan last year, Angus would have been obliged to sell the Saltfleetby project. Why not buy it then? There’s an 8% (of turnover) royalty to be paid to the Lenders once the loan has been repaid too. That’s going to cost a lot to get out of. I’ve mulled over lots of possibilities and have come to the conclusion that the simplest explanation appears to be the best: Angus have made it up as they’ve gone along and proved that they can’t budget, can’t negotiate and can’t project-manage.

Within a year of the expiry of the hedges, the volume of gas produced at Saltfleetby is predicted (in the CPR) to fall off quite sharply and continue falling. I suppose that if the shadowy backers want the Saltfleetby field for storage long-term, they may have cast a slide rule over that. But then, why sell it for £1 and give the buyer £2.5mm to take it away with them in the first place?

ELREY: I don’t know what the timescales are, how tolerant Companies House are. Quite tolerant, I think, if the few small companies I’ve seen given a first gazette tag in the recent past are any guide. Yes, they’ll have to comply sooner or later.

ELREY: the first strike off action notification, if I remember right, can be suspended if the company concerned requests it and informs Companies House of the steps it's taking to comply. You see it quite often with small companies, there’s a small fine involved.

Isn’t this conversation jumping the gun a bit? Angus has got to find the time and the money to bring Saltfleetby into sustained production before the payments on the loan become a problem and before the hedges kick in.

ELREY: no, sadly I can’t shed any light on this. I’ve concentrated on the bottom line, which is that I can’t see any chance at all of the old Finablr’s shareholders getting anything out of it. Perhaps UAE law is different or perhaps they’re making it up as they go along. Or maybe some step was taken in the process that we haven’t heard about. I’ve no idea. It’s new to me, that a company is sold without apparently being put through a process of administration. I do feel great sympathy for the shareholders, who’ve been robbed in record time, with no recourse.

ELREY: Shetty’s assets in the UAE and the UK are frozen, I think. I don’t think he’d be allowed a voice in what’s happening to Finablr. In the UK, where a company is insolvent, you’d normally see an Administrator or Receiver appointed and he’d get on with working out whether it could be rescued and if not, what its assets were worth and how they should be shared out. There’s a set schedule for this, orders of priority, starting with HMRC (I think) and the lawyers/accountants handling the dissolving of the company, then secured lenders and then unsecured lenders/trade creditors/employees etc. If there’s insufficient assets to meet every one of these creditors, the equity owners (shareholders) get nothing. If there’s a surplus, it’s shared between the shareholders pro-rata. In Finablr's case, the chances of any surplus are infinitesimal. In the UAE, I’m not sure what the process is. It ought to be very similar but I don’t recall an Administrator being appointed, just a couple of investigation firms appointed to inquire into what had gone on and a creditors’ committee set up. So precisely how they got from being declared insolvent to being bid for at £1 by Prism, and that bid accepted, is a mystery to me. The important thing, however, is that it was insolvent (very) and there doesn’t seem to me to be any way, in any jurisdiction, in which the shareholders would be involved in any vote to decide its fate, or receive any financial payout.

ELREY: yes, you’re right, there’s virtually zero chance of shareholders rescuing anything from this disaster. Shareholders have been extremely unlucky, the management has been either wholly incompetent or corrupt and the system is not designed to offer them any protection or compensation.

AIM seems to me to be worse. The market there is virtually unregulated, shocking really (though you’d also have lost all your investment in NMC, Finablr’s FTSE100 sister company). I think the only reasonably safe investments are among FTSE100/250 companies with a UK domicile and UK management. There’s no worthwhile due diligence performed on any of these overseas-domiciled companies which get a quote in London. The investment banks introducing them couldn’t care less about investors and nor could the regulators.

Bowlers12: the thing is, if Finablr plc is struck off and dissolved, the LSE denial of permission becomes academic, surely? I’m no lawyer but that would be my guess. I’m sure there are legal avenues by which a company dissolved in this way can claim back its assets (if any) from the Crown at a later stage but I imagine it is a rigmarole, time-consuming and expensive. And I don’t think Finablr has a company Secretary currently, does it? The reason for the move to strike it off seems to be Finablr’s failure to file its accounts. They don’t seem to be n a position to do this, and don’t seem to be in a hurry to satisfy Companies House.

ELREY: I’m sure people on here will have seen this, but in case they haven’t, the Companies House pages for Finablr plc include a First Gazette Notice informing its readers that “unless cause is shown to the contrary, the company will be struck off the register and dissolved by the Registrar of Companies at the latest by 11 March 2022.

ELREY: I think the Finablr situation has been complicated by the multiplicity of jurisdictions in which it operates and the inexperience in these matters of the UAE authorities. In addition, Finablr’s fx company in the UAE was the biggest remittance agent for money from workers in the UAE to the sub-Continent, and the UAE has been extremely keen to keep it operating. There are bank creditors in the UAE and in India - lots of them. The fact that it’s quoted in the UK is largely irrelevant to the UAE authorities, whose problems are more complicated than the interests of UK shareholders. The attachment below gives a sense of the issues:

https://www.tamimi.com › a-tale-of-...
A tale of corporate insolvency options for distressed debtors - Al Tamimi & Company
As a result of the internal investigations conducted at the parent entity level (Finablr), in early March 2020, the UAE Central Bank announced, ...

ELREY: well, I sympathise very strongly with you and with other investors who’ve lost money in this. It’s quite an unusual set of circumstances though. A largely overseas company headquartered in the UAE, majority-owned, even after listing in London, by individuals who are nationals of neither the UK nor the UAE. And with the means, if they should need it, to salt money away and to cover their tracks as they do it. It’s also wrong to place much confidence in the opinion of any professional experts, in any walk of life, whether auditors in an investment context, surveyors when buying a house or “competent persons” lending their reputations to a resource company’s prospects. There’s been a number of dodgy companies brought to the London market in the last twenty years or so which should never have been allowed. The investment banks introducing them have clearly had a far greater interest in the fees they’ve earned than in protecting the interest of investors or the reputation of London as a place where fair and honest dealing is the norm. And you’re right, the overseers in London are toothless, as a result of being either grossly underfunded or else wholly incompetent. Someone needs to be made an example of, to discourage the others.

As to the rights of shareholders - they own the business and hire the management. If the latter are so dishonest or incompetent as to drive it to bankruptcy, the shareholders are always the ones who carry the can. They can’t expect to benefit from the potential upside in their investment without accepting the risks. If they lose their investment following the creditors’ needing to safeguard their own interests by appointing a receiver, then they are de facto disenfranchised and lose control of the company, along with any financial interest if there are insufficient funds remaining to meet the claims of the creditors - and the claims of the accountants, lawyers etc. who swarm over companies in this situation.

I think the investment banks introducing such companies to the market should be required to examine their businesses and accounts in detail, and give an opinion on them, for failures in which they should be liable, at law and in a financial sense.

ELREY: there’s been almost no news on this company for more than a year, has there, until the FCA notice that they’re not permitting it to de-list from the LSE? But the fact appears to be that it’s been sold for £1. I can understand the Board’s desire to tidy up the Group but I’m not sure what real difference the FCA’s decision will make. Finablr clearly doesn’t want to maintain a London listing and its shares have been suspended for nearly two years. It’s very late in filing its accounts as well. Its registered office is in London but the bulk of its business and its focus appears to be in the Middle East. If I were the CEO, I’m not sure the FCA’s ruling would make any difference to me. If they’re not filing their accounts, the distinction between suspension and de-listing is probably academic, the potential cost of a fine balanced by the end of paying listing fees. I dare say they’ll just be struck off sooner or later. Typical of the FCA though, tilting at windmills instead of investigating and prosecuting wrongdoing.

Re the legality of the sale, there’s no update on it since about December 2020 and no one seems to be raising a stink about it, other than the few contributors here - for whom I have huge sympathy. But whatever the legalities, the fact is it was bust and the Prism deal was the best offer they got. It seems to have preserved a lot of jobs on the sub-Continent and in the UAE. If the deal were to be overturned (which must be highly unlikely) the shareholders in the original version of Finablr are no more likely to see a return on their investment.

Re Travelex, they bought it in 2019 and, if I remember right, one of the conditions was that it remain a separate business, a subsidiary, not a branch network of Finablr’s existing businesses. I don’t know enough to be able to say how their management put the Travelex business up for sale! I was as surprised as you are when that happened. Oddly, the ransomware hack, which started in late December and was resolved (allegedly on payment of $2.3mm) happened at Travelex. The Finablr management had been warned of software vulnerabilities at their new acquisition several times over the months between acquisition and the hack. Odd that they chose not to address it. I’d have been frantic to resolve it asap if I’d been the CEO.

ELREY: yes, it’s quite possible Shetty was involved, though the brothers could as easily have done it without his knowledge. He seems to have become a bit of a figurehead and a glad-hander. He was always essentially a salesman, not an accountant.

There will be no chance of redress for the shareholders in terms of their having no vote in the sale. Once a company’s liabilities grossly exceed its assets and it’s unable to cover its debts, as was the case with the old Finablr, it’s the courts that decide these things. Equity shareholders are the owners of the business which has borrowed all that money. There’s little point in offering them new shares in a rights issue, they’d need to be priced at a multiple of the the share price (even of the share price before the problems blew up) and no one would want to take them up. So the business is sold by the Receivers to the best bidder, in consultation with the creditors, who do have a say in it. Any money found subsequently is shared by the secured creditors, then by the unsecured creditors, employees (outstanding wages etc). Anything left goes to the shareholders but there’s seldom anything left.

Only specialist investment managers and hedge funds have the investment analysis resources needed to do the kind of work required to spot this kind of fraud as it develops. Only Muddy Waters seems to have taken the time and trouble. So much money is now invested through low-margin index funds these days too - they’re generally required to invest pro rata in the stocks in the index they’re replicating, so would have had a full weighting in Finablr (if they were FTSE250 Index funds) and in NMC. The law of unintended consequences.

Denny: I’m no expert but it seems to me that the Finablr entity bought by Prism in late 2020 was Finablr Ltd, the Finablr Group’s operating company, with all the assets within it. The company that remains quoted, though suspended, and which is the subject of this dispute over its current status, is Finablr PLC, the Group parent, which, following its sale of Finablr Ltd, has no assets. Only if the missing money is found in amounts that exceed what remains owing to the old Finablr’s creditors will Finablr PLC shareholders see any of it. There’s no way of telling for certain whether sufficient money will be found but it seems pretty clear that the process will take years and will be expensive. If I’d been milking my company for years and that company were an fx company, and if it seemed I were about to be found out, I’d arrange a serious systems outage lasting many months and thus cover my tracks and I’d leave the country where I’d been doing it. Does any of this seem at all familiar?

Soundasapound1: well, it’s been pleasant for me dropping in on this board, it’s a lot more rational and polite than most others I’ve contributed to recently. I’m interested in Angus but the LSE bb is full of rudeness and antagonism. I wish you good luck with Sound, I hope the Moroccan deal comes good.

Indomie: yes, I understand that. The last reference I can see to the 25% was in December 2020. A maximum of $190mm. to be payable to creditors, then to shareholders. Maybe the hope of getting some payment in this regard is why Finablr plc is still extant. It’s got no business any more. But the chances of finding anything much in the rubble of this shambles are extremely low and, in view of the massive shortfall in its accounts when receivers were appointed, anything they do find is likely to go to the creditors - of whom there’s likely to be quite a number, with large claims - not shareholders.

I don’t want to appear a Job’s comforter though, so shall bow out.