Member Info for sandancer

Things might get interesting for the shorts if any equity raise comes in the form of a new strategic investor - particularly if they are subject to a lock in agreement of say 12 months. What price would a new investor pay - a discount, parity a premium? Simply removing the short term uncertainty should result in the share price moving up significantly. With the shorts at over 10% (realistically probably more like 12 - 13% in total) they would be left scrambling to close these positions out of the 55% of shares presently available - the other 45% held by long term investors, and none of the new share available to them. Could get interesting?

Exactly. This was never going to progress upwards in a straight line - we're going to be dependent on the news flow from the company. They said that they weren't going to provide ongoing updates on progress - so we will have to wait for the next announcement which requires an RNS. In the mean time the shorts are going to keep playing. But what I do believe is that at some point this is going to be worth a lot more than 42p.

They can obviously outspend PI's at the moment - but trying to hold out until a refinancing would seem to be a hugely risky strategy. I think any refinancing in the form of a placing or rights issue would be the last part of the jigsaw - and the company will be hoping it can be conducted at a higher share price than at present. Short term finance, bringing in money due from contract completions, potential asset sale and new contracts are all likely to be announced ahead of any refinancing. In effect the company will be saying they've fixed the short term issues - this is our order book going forward - now give us the finance to see it through.

What we don't know is if the shorters are also now building long positions.

With momentum out of the share price rise from last week it seemed incredibly easy for the share price to be walked down yesterday on incredibly low volumes. At these levels shorts could be starting to mop up any loose shares that become available. As far as I am aware they only declare actual short positions - so would only have to declare a decrease when they return shares - they don't actually declare their net position if they are also long.

A rights issue wouldn't be a disaster if a capital raising exercise is required. Certainly its not as bad as a placing where a few favoured institutions are able to pick up massively discounted shares and leaving existing PI's high and dry.

The most important thing on Wednesday is going to be demonstrating that they have a credible plan to plan to move forward. That should stabalize the share price in the short term . Any interim financing arrangements or asset sales should then buy enough time if a capital raise is required. This wouldn't be a disaster as long as they can raise enough to put the company back on a firm placing - and existing shareholders get a chance to retain their stake. Its not going to be a quick fix - but equally I don't think we are going pop just yet.

I get the feeling now that Wednesday may not be the crunch date.

I think it will turn out to be another holding update which will provide more information than last Mondays RNS without actually providing resolution either way. It looks like some form of capital raise will be required - but they'll try to do it after after stabilizing the company with some asset sales - so probably wont' be announce just yet.

The question will be how much they can raise and how long will it take to execute. Will it be enough time to allow a rights issue involving existing shareholders or will it be a stitch up with a placing.

I'm fairly confident that the company will survive in some form, and the update will make a lot about protecting all the skakeholders. It's just that existing shareholders will as usual turn out to be bottom of that particular list.

For shareholders the uncertainty will continue and the shorts will see no reason to close just yet.

Rather like someone on HBR who posts endlessly but still doesn't know the difference between there, their and they're.

If anything it should be the company contacting the FCA to request them to investigate - not individual PI's. From our perspective it seems highly likely that the market has moved on information which was not in the public domain. The company should have acted much quicker to respond than it actually did.

As chairman it should have been the responsibility of Rene Medori to have made sure the board acted both appropriately and quickly in response to these movements in the market. I would also hope that company have instigated in internal inquiry to investigate any possible leak - and requested their advisers to do the same.

Because the cash is flowing to the government rather than the shareholders?

The problem with investment in the North Sea now is that isn't enough visibility to take the risk. Projects that stack up now with the present tax regime may well not be viable if prices are lower by the time they come into operation. Hunt has made pretty clear they aren't reducing the tax even if prices fall.
Hunt isn't likely to be around that long but things aren't going to improve under Labour are they? They may well increase the tax even further and reduce the value of the tax breaks so why would anyone take the risk of making long term investments.

You can make your feelings known at the next election when you'll be able to vote for Labour, Lib Dems or the Greens instead.
Or maybe not.

Companies generally pay tax in the tax jurisdiction where the profits are earned.
Foreign ownership wouldn't make any difference as they would still be paying tax on UK earnings to HMRC including the EPL.
This is exactly why BP and Shell pay so little tax in the UK as most of their profits are overseas.

It's worse than nationalization. They want to take the majority of profits when times are good, but none of the risks when times are bad.
Even allowing to offset against investment is a waste of time with the extended timescale, as profits from those investments will be taxed at the higher rate.