Member Info for sandancer

Evanescent - its worth checking worth your broker if they do actually loan shares from nominee accounts. I'm not sure if any actually do - but if they do then you can certainly change to one that doesn't. Barclays clearly state in their terms and conditions that they do not loan shares from nominee accounts.

Omars - Please wake up to reality. They are creating new shares out of thin air to distribute as part of bonus schemes. They do this every year - most companies do this. There has been a small dilution of existing shareholders without any money being raised. This exercise has absolutely nothing to do with any capital raising which might be required. Personally I wouldn't be using this as a reason to buy even more shares - but each to their own.

Mary - The narrative was turning into 'this is going to be £1 plus within the next two months' without any real justification other than if there was a takeover offer shareholders would accept it - which is almost as baseless as Dogger repeatedly saying 'its over'.

I'm just suggesting that it's worth thinking this through before people start convincing themselves that this is the only possible outcome. I think that's why its called a discussion.

Cuban - Yes you can make some assumptions to demonstrate that $1.5 - $2.0bn might be fair value - and you might be right.

The reality is that the 'market' values this at less than $700m right now - $250m RCF $300m Bonds $150m Equity.

So the question remains - if there is a potential buyer out there who can see that this is worth $1.5bn plus to them and they can potentially snap it up at under $1bn why are they not acting now or at least starting to building a stake at lower cost?

Cuban - I think people are suggesting that the price could be £1 plus - on little more than someone might make a bid. Well yes it's possible that someone might make a bid - but why should it be that high?

The enterprise value is currently about $1bn in debt and equity - and people are posting that this could be bought out at $1.5 - $2bn. The point I'm making is that if someone really did want to buy them out it could equally be much closer to the $1bn - because they can already pick up a chunk of the bonds and some of the equity at much lower levels. A big company with deep pockets will play hard ball - they aren't just going to hand over a huge chunk of money to existing shareholders if they don't need to.

Its over to the board to start resolving the finances and demonstrate the value of the order book. Until they do that its difficult to know what fair value is - but at the moment the market says 25p.

Well yes we'd welcome a buy out offer obviously........but why do you think it would be a high offer?

Surely for anyone with really deep pockets starting with a low ball offer now makes much more sense?

You can point to the the $8bn dollar backlog..... but what is that really worth? It's fine if they can complete it for $7bn....not so good if it costs them $9bn. At the moment we don't have any guidance on this. I'm just saying.

If you have the ability to buy out the whole lot including the debt - before the finances have been resolved - then a low offer makes much more sense. What's the alternative for shareholders?

A low offer lets the shorts out - without triggering a short squeeze - which as a buyer is the last thing you want.

And if you can afford it why wouldn't you be working away in the background snapping up bonds at less than half face value. If you really wanted to take control wouldn't that be a good place to start?

Why not be buying shares at 25p - you wouldn't be visible until you reach 5%.

I'm not saying this to be entirely negative - just don't think this can only go one way.

Great if it does - but more likely a longer, harder slog over time - and one which could well involve shareholder to put more money in first - so at least be prepared for that possibility.

Omars

"Spreading lies with no reference

My price target is 100-150 in 2-3 months"

In that case can you please explain exactly your reasoning as to why this is going up 4 - 6 fold within the next 3 months.

I think the bottom line is that the company will raise capital - because this is effectively what they've said in the RNS.

Both the RNS of 4 December and 5 March say 'materially strengthening the company balance sheet'.

In the December RNS they clearly set out the range of short term measures which they are looking at to improve liquidity then go on to say 'as PART of an OVERALL PLAN these transactions would result in a material Improvement on the balance sheet. The company is ALSO exploring potential financial options across all its classes of capital.

In the conference call in December I think the requirement to raise new capital was again quite explicitly made.

This week in the RNS they state ' ensuring Petrofac has the appropriate capital structure and liquidity to support the strength of its backlog and future business prospects'.

I don't think this is a mistake, or that the RNS is badly written - they are basically saying they will need cash going forward.

Now here's a question to my simple way of thinking:

At the moment the business has an enterprise value made up of debt and equity. Effectively they will be looking to change the balance of this enterprise value away from secured debt on which they pay high interest towards more equity which is unsecured and on which they pay no dividend. But if the order backlog is such a pot of gold the shareholders (and yes that includes me) will be happy to pay up to secure the business?

I know it must be the definition of madness buying Harbour shares ahead of results and thinking they might actually rise....but I topped up earlier in the week. Sold yesterday afternoon at 2.74 for a small profit... and bought back this morning at 2.60..... and already under water!!! The best can be said is that at least the average is coming down.

The biggest unknown in all of this is the 'value' of the order backlog. The company tell us that they have an $8bn order book - but really unless we know if this is going to generate profit and cashflow this is pretty meaningless.

.....and Warren Buffett might come riding over the horizon on his white charger and snap it up with loose change.....but I'll not bet the house on it.

I think the bottom line here is that the company will need a cash injection - not necessarily just to survive - but certainly to be able to move forward, to deliver on and grow the order book. I don't think this is a secret as they effectively said this in the conference call in December. The only question is when that call is coming and how much will they need.

Now at this point I think the interests of the board and shareholders may not be entirely aligned. I'm suspect that Tareq Kawash would rather draw a line under the past as quickly as possible and not want to be continuously fire fighting just to keeps heads above water. So I think the subtle message in the RNS yesterday was that call might be coming sooner.

I'm sure they are trying as hard as they can to bring cash in through the various measures they have outlined previously - but this on its own is unlikely to be enough to support the company moving forward. We also know that asset sales are likely and that they will need agreement of bondholders. My feeling is that they will say yes - interalia that the company also raises cash. As this will put the company on a much more secure footing it would be in the interests of the bondholders to agree - as the bonds will rise in value. If they don't agree where does it leave them - D4E possibly. Now I don't think this is a good option for bond holders - probably as they won't want shares - but also because ultimately its then going to put them on the hook to make up any cash injection too - and they certainly won't want to do that.

So to me it looks fairly certain that existing shareholders are going to be asked to cough up, probably in the form of a placing, and possibly with a new major investor. With the present low share price a new investor is going to be the issue - as they are going to want a bigger piece of the cake, which will dilute the existing holdings. So the question comes back to how much will they want - and what price can they get it away at?

To me this looks like a holding RNS that's been put out to try to stem the slide in the share price from last Thursday. We don't know the reason for this - was it due to the removal from the MSCI index or was it Schroders further reducing their steak - but either way the share price has clearly softened again. Do the board actually think the share price has gone too low now - or is the drop buggering up their negotiations?

The RNS doesn't say a lot more than the previous announcement in December - things are still ongoing with apparently nothing ruled in or out - and for this reason I'm not sure this announcement is actually going to offer much support. It doesn't offer much reason to buy now - and tells the shorts that they've potentially got another 6 or 7 weeks to play before the results. The wording does leave open the possibility of a further announcement on funding before that - but it doesn't seem likely.

The wording 'materially strengthening the Company's balance sheet' is probably key in this. It is clear that this does need strengthening beyond the short term issues - they can't continue to limp along for 2 or 3 years trying to progress the $8bn order backlog without a much stronger balance sheet.

From the RNS in December to me it looked like they were trying to resolve the short term issues through the various initiatives outlined in the RNS and hope that this would improve the share price significantly. That would put them in a stronger position to deal with the longer term issues. Three months on is that still the plan and is it achievable.

I think it will be interesting to see what the shorts do in the next few days. Do they see an opportunity to increase their short positions? Do they think this is a s good as its going to get and start reducing. If they all want to make an orderly exist ahead of the results then they are going to have to start making a move now.

Companies no longer need to advise of results announcement dates in advance - so I suspect Petrofac wont be giving a date. I would anticipate that they'll wait if they can until they can make an announcement on the financing at the same time as the results. We already more or less know what the results are going to be from the Trading update in December - and it's not going to be great - so making these as a stand alone announcement probably isn't going to help our case anyway.

Positive news on financing will make last financial results look like old news anyway - so I think its a case of just waiting however impatient we might feel.

SM66 - we have not been delisted - and this is absolutely nothing to do with a take over or bankruptcy.

The change is simply that Petrofac has been removed from the MSCI Global Index of UK small cap companies - because of the drop in the market cap of the company Petrofac no longer qualify for that index. They have now been added to the micro cap index instead. There will be companies that track the index - and they may have had to sell out of Petrofac if it is no longer in the index. Some institutions may have rules that allow them to invest in small cap companies, but not micro caps, so again this may have forced some to sell out.

As there are so few institutional investors in Petrofac personally I have to say I was surprised at the size of the shares traded on Thursday and Friday - I didn't anticipate it would make that much difference. But then maybe it wasn't all directly due to the change in the index.

I think that this is a case where although or shorting friends might not have inside information on the company - they will know a lot more in terms of what impact this change of index might have - and whether they would be able to trade on this.

Someone with more knowledge might be able to shed a bit more light on this.

Just to correct myself - there will be no TR1 if Schroders have sold out. As Petrofac are a non UK company the threshold is 5% and Schroders were already below that.

Well 32m shares were traded yesterday - so something obviously happened - and as usual the mug PI's will be last to know.

If the shorts reduced we wont find out until Monday apparently.

And if Schroders reduced or sold out we'll probably find out in about 6 months when somebody can be bothered to produce the TR1!

Are we going to find out tomorrow that Helikon no longer have a short position? Might be coincidence but 15.7m shares almost exactly matches their last reported short position.

It will be interesting to see if Helikon have been active again today. I suspect that they will have been - and its going to be somewhat annoying if they've managed to reduce again whilst keeping the price down.

At that rate its going to take a while to make any meaningful reduction in their short position. Maybe they are just looking to trim a little - given how exposed they are - and took advantage on a day when there was no buying pressure. It will be more interesting to see how this develops over the next few days - was it a one off or the start of a larger reduction.