We would love to hear your thoughts about our site and services, please take our survey here.
https://www.ft.com/content/3e227f73-d421-4b9e-bd57-1723d16becdb
Thanks Sibloggs,
I see that Lufthansa have secured a rescue package to the tune of €9bn in return for a stake of 1/5th of the Airline, and the UK is now discussing a sovereign fund to do similar for our large transport companies. I wonder how much BA will get.
A 20% dilution isn't what's needed down at these prices.
So yet another airline has files for bankruptcy, even though these had $1.3B cash on hand.
https://t.co/AMxLxNIsH1?amp=1
I hope we're in a better situation, but does anyone know roughly how much cash we have left? I know we entered this with a large holding, but even with a start in July, I can't see the cash burn stopping just yet. Infact I would rather we didn't fly until load facters were higher as flying an aircraft even half full burns more cash than one sat on the tarmac.
I'm a big holder in this, but concerned non the less.
antigua18
You raise a very valid point with your debt to equity concerns, and if you look at ARCM's actions in total you can see what they have been driving to.
They have shorted the SP for quite a while now, trying to drive the ordinary share price lower and lower. Then they delay their debt restructuring by disagreeing with future plans and forcing a court case and appeal. This then pushes PMO to the wall on their debt meaning that PMO will likely fail on their covenants. The result is that PMO has to go back to their debtors/bondholders and renegotiate the terms, which is likely to mean debt for equity swap.
Bondholders win, whilst shareholders get diluted!
:-/
No trading update tomorrow.
It's due for release on the 13th.
Krakenoil
Agreed TD won't like it at all.
But alas he is powerless (to a degree) to fix this problem quickly. ARCM are winding down the clock knowing that the court of appeal takes time, knowing that the underwriting of new shares has expired and knowing that the debt ratio test at the end of June are looming.
Unfortunately, this deal looks doomed!
I think this quote says it all and is the biggest risk to the business:-
"Mr Durrant and Premier are in a race against time, however. Insiders fear Premier will breach its covenants on its debt when key financial ratios are tested at the end of June.
In such an event, Premier would be left in default of its loans and be forced to seek ARCM’s consent to restructure its finances."
IMHO I don't see any of this being done in time to prevent a default. Their only option would be to scrap the purchase (for now) and get the restructuring agreed asap. If PMO default then credit down the line becomes very tricky & expensive to source.
HeresHopin
You are quite correct, the purchase price will be in USD which indeed works out better than GBP....but not by much.
Krakenoil
The asset is only worth what people/company is willing to buy it for. So the asset is [at the moment] only worth c$500m. Now for its potential produce, that's one that only a long term investor will benefit from.
However on the bond 'problems' I completely agree that they are generally for the long term investor and can have many pitfalls, but can also give some valuable benefits that ordinary shares don't [more security & stability].
I currently hold a sizable amount of both flavours, however I suspect that in the short term PMO ordinary shares will sink back and are at risk from a flatlining Oil Price for this year along with potential dilution.
Just be aware with the bonds, that if this debt restructuring passes the courts and PMO buys the BP field then the bonds (PMO1) will be extended from a maturity date of 2021 until November 2023.
Yes, it has good upside potential, however it may not achieve it within your timescale.
As we all expect the debt restructuring to occur and the purchase of BP assets to go through, the question is do you think that PMO [ordinary shares] will rise above your 56% within the 3 year time frame? And at what price do you think the 'Placing' / 'Rights Issue' in PMO will be at?
The company have already stated that the purchase of PB assets [c£500m] will be paid for via raising equity through the ordinary shareholders by a placing.
The current market cap of PMO is c£250 with 840m shares in issue at a price of 30p.
I'm sure you can do the maths, but for the company to raise capital through a placing for c£500m they will have to issue a lot of shares.
Lots of variables and lots of uncertainty in the short term.
Yes more shares to come by the looks of it, certainly after they confirmed the deal was still looking to go ahead.
As for how many shares are to come, well you just need to look at the purchase price (c£500m) and the current market cap of c£221m.
Lets put it this way if they want to raise just £221m then that would mean doubling the current shares in issue or halving the current SP.
Of course, as others have said, the purchase will raise the production (as well as their overheads).
A fair write up from CityAM of the transaction today:-
https://www.cityam.com/tullow-oil-shares-jump-as-firm-sells-uganda-assets-for-575m/
This line sums it up quite well:-
“Further efforts to reduce costs have also yielded results and, as a result, Tullow looks better placed to weather the current market turmoil than many larger companies, at least in the short term.
“New CEO Rahul Dhir is taking over a business in much better health than anyone might have expected.”
Well the whole situation is pointing to an ultimate uptrend in the price of Oil. Yes, there will no doubt be swings along the way but if Trump does block imports or puts tariffs on them, it will just force the Saudis & Russians to turn down the taps.
Whilst most of the stuff he spouts out is rubbish, there is one thing he is good at...and that is being a tough-nosed businessman. Simply put he will not allow US oil (shale or otherwise) to fail. It brings in too much revenue for the US.
As for a target, well US Shale break even is rumoured to be about $50
Some countries are starting to cut already....
https://twitter.com/LiveSquawk/status/1252858277345390593?s=20
It's often the case that people de-ramp a share just before they buy-in!
You have to ask yourself why these people are posting a load of wild allegations and trying to talk down the SP. It's not because they want to do those invested in this a favour. :-D
Whoops, wrong link!
https://www.straitstimes.com/business/companies-markets/opec-ministers-and-allies-discuss-dramatic-oil-market-situation
https://www.barrons.com/news/danones-sales-increased-heres-why-the-stock-is-down-51587490497
No one wins with the Oil price down here! It's a buyers market for sure, but just watch this bounce hard when further cuts are announced.
Not that this affects us too much, after all we are hedged for most of this year.
https://www.nasdaq.com/articles/saudi-says-ready-to-take-extra-steps-with-opec-to-stabilise-oil-market-2020-04-21
No one wins with Oil down here! It's a buyers market for sure, but just watch this bounce hard when further cuts are announced.
Not that this affects us too much, after all we are hedged for most of this year.
https://www.nasdaq.com/articles/saudi-says-ready-to-take-extra-steps-with-opec-to-stabilise-oil-market-2020-04-21
It's truly amazing when the pump and dump team arrive.
However....this news has been out there since Dec 2019.
https://www.reuters.com/article/uk-uganda-oil/uganda-reaches-deal-on-tax-dispute-paves-way-for-tullow-stake-sale-idUKKBN1Y612G
There is nothing new in this new article....other than a deal is on the way, which we knew about in December!
Ah but that's the thing, most companies don't buy just for today. They invest in future prospects and whilst oil is taking a dip, it will rebound. Look back at history, every time oil drops, it recovers. And this will be no exception. The time it takes to recover however is variable.