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Gary,
I imagine the "debt" from MfDevCo will die. It has been provided (as noted in NUOG accounts) as equity finance. Thus it is a right of the shares.
The consideration would appear to be the 1.2m owed to RMRI less the funding provided to MfDevCo (about 900k I think from MfDevCo accounts).
Net consideration 300k or so. They were strangely quiet on that aspect in the RNS.
In terms of the placing there will have to be a reorg. A consolidation itself is not enough. They deferred 90% of the equity and I imagine will do similar. The devil, if any, will be in the detail.
They could however place a new share class. Caution would be required to figure the ewuality of rights to both classes of equity.
It is a reversal of a trade executed in error.
Mainshare, I dont believe SHP want to get their hand on the deep rights.
The rights were split because the parties could not agree on targets. Splitting was the solution.
Even if their view has changed over time they could not try anyway until such point as fracking is allowed or DNR allow something different. The DNR have been very clear that their view of the accord act is that Shoal Point may only enter 3k 39 and the fracking situation disallows this anyway.
MM,
The maximum holding c4 can have is 29.9%. This will be because they will have to launch a takeover offer with anything more than that (it could happen but would need a GM to allow the change).
But the cap is "rolling". They could convert some debt, sell those shares, convert more and still stay within the terms.
With respect to the tax losses there will be some complications. A lot of them are in EOI and within the canadian entity. These will only be offsetable against profits generated there. Some of them will be expiring from (i think) 2026. There is canadian tax credit potentially available of 1.7m.
If they generate UK profits there will be some potential offset againt those - provided they are generated from the same line of business. There is 8.3m of potentially offsetable taxation.
It won't be as simple as reversing in a producing asset and claiming back 8.3m. It would normally only be offsetable against forward revenue.
But there is potential value there.
"How can NUOG become a cash shell while owning physical assets in Newfoundland?"
I am struggling with that too.
"Where the effect of a disposal is to divest the AIM company of all, or substantially all, of its trading business, activities or assets"
The accounts had a carrying value of the oil assets of 813k and deposits of 477k. Perhaps there is a revaluation (downwards) on the horizon.
Hublot, that is correct. The current nominal of each share is 0.1p. They cannot issue below that.
In order to issue at 0.5 the minimum they can do is restructure to defer at least 50%. (The lat time they dod this they deferred 90%).
Lets say the want to reduce the nominal to 0.25p then they will split each 1000 to 250 new and 750 deferred (unlisyed and with no real rights).
So the 1.5 bln goes to 375m.
They then issue 1bln new at 0.5p.
That is obviously very significant dilution.
Whilst it may he a 2.5m debt we have no idea how much shard sold it for. Probably a lot less.
The debt was secured over PL2002 so calling it would not have yielded anyrhing. Also the terms of the debt were such that the company could for Shard to accept shares.
I guess Shard probably came to the conclusion that selling the debt on for whatever they could get was the best they could hope for.
It seems they have already convinced some to part with 0.5m that is a bit baffling. I can see a scenario where that ends up back in the incomers pockets as loan repayments or salaries.
I can see no reason whatsoever to vote for. The disposal of the MfDevCo shares to forgives the debt from MfDevCo and gets the mintys off the pain.
Administration would achieve nothing for shareholders. But would at least give some chance of pain to clan Minty.
An administrator does have a bit of a stick with which to bash MfDevCo to some extent. That being the debt owed by MfDevCo to Nuog.
There is also the debt owed by Nuog to RMRI.
An interested concert party could be disruptive by bidding for the assets owned by Nuog (the RMRI shares).
Buy yes, a likely outcome is MfDevCo pay what they can and RMRI acquire the holding.
SBP,
It is hard to judge the basis of the claim (perhaps it is a negotiating tactic). I would guess that is has to be based on some sort of non public side agreement or some sort of bad faith argument.
It is also the case that EOI are the respondents not Nuog. EOI have no funds to settle any judgement anyway. It is not a given that any judgement would have any direct impact on Nuog who are a mere shareholder in EOI. It doesnt seem particularly likely that they could pierce the corporate veil, and even if so enforcement of the judgement may be tricky.
What impact would EOI failure have on NUOG ? Loss of a non productive non developable asset mainly. And loss of the 250k deposit held of course.
However that is a rose tinted view. The fact that the judgement is unlikely to directly impact NUOG is probably moot. There may be guarentees in place to the DNR as a result of the failure of the licence holder.
Even if not the NF assets are pledged as security to Shard. It is unckear the extent of that but it seems inevitable EOI failure would result in Shard calling the Nuog loan.
Against that backdrop, notwithstanding the technical issue of the 0.1 nominal value it seems unlikely that funding would be particularly successful.
Lod, into the mix you need to throw in that MfDevCo owe RMRI cash. The administrator (if it gets that far) is obliged to collect debtors before servicing creditors.
In teality it wont help sgareholders. There would be the usual horse trading and it may cause a slightly larger dividend to creditors.
Though I imagine they will find some way of financing for a bit longer.
SBP, it doesnt actually "need" a reorganisation, but it is certainly the most likely way.
There are theoretical ways round. But they would all smell of abject desperation. Long term warrants, a new share class, reversing into an entity incorporated where NPV shares are allowed are possible.
It will be interesting to see what they decide (same as last time I expect, a 90% deferrment of the existing common stock with no real right over any of the asset and no listing).
A simple consolidation (with no restructuring to allow placing) would be slightly in shareholders interests. But only in as much as it is likely to reduce the spread and possibly stimulate a little market activity.
RMRI has had quite a lof of revenue over the years. It is a bit hard to unravel with its changing structures sine '09 and I will st the motivation.
I believe a portion of its revenues arw Minth Clan sakaries from Nuog (though I can be certain).
The limited accounts filed give no ndication of what Mintys have drawn from RMRI is actual salaries, however it does seem to have an accumulated valance sheet vakue of apptox 2m.
Thus profits over and above no doubt generous sakaries appear to be historically a total of approx 2m.
EMRI turnover seemed to incrwase substantially during the period ST3 was being drilled. I would guess they were providing the services that NUOG then ENEG were consuming. And taking a margin as well.
Of course EOI were presumably also taking services and as a private compsny in Canada the publically file nothing at all (though as a subsiduary the are consilidayed into Nuog results so the impact should be shown there.(.
It is all as clear as a very opaque thing. Quelle surprise.
In reality Barry SHP has had nothing whatsoever to do with NUOG since 1070 was split shallow and deep. That was due to an inability to jointly agree a target.
However, the inverse isn't actually true. NUOG are dependent upon SHP. They cannot do anything until auch point as an SDL is gained - i.e. no time soon.
Barry, you may be right. But the purposes of the placing are for the new Kansas farm in. Quote:-
"Use of proceeds will be to fund the Company’s obligations under the Mt. Evans farm-in agreement and for general corporate purposes.".
It is a stretch to me expand general corporate purposes into anything in NL.
It is one director. Quote:-
'A director of the Company is a subscriber for Units in the Private Placement, and as such that director's portion constitutes a related party transaction under Multilateral Instrument 61-101".
Of course non board level managers (are there any?) may have bought in. That may not need declaring. I am not certain.
As for NL they are stuck for a while. Showing they can raise millions to the board doesn't help. They can only progress NL under one of the following:-
1. They magically decide 3k-39 can be conventional.
2. The government (and consequently the board) decide to allow fracking. (There are some signs of a softening).
3. The board reverse their decision ref reentering 2k-39. Seems unlikely given SHP did not contend the boards well reasoned view of the Atlantic Accord Act was erroneous.
So, whilst SHP seem to have found fresh impetus in Kansas NL is stalled until one of the above can occur.
I guess, however, there is some possibility of SHP doing something to get their earn in right on EL1120. However nothing seems to have happened since 20!2 when the explo well was being talked of.
Good luck in Kansas for SHP, but at the moment there is stuff all association with NL so even the tenuous link tk NUOG via EL1070 shallow is not furthered.
Interesting Barry. They closed the placing yesterday at 0.08 for a share and half warrant. One of the directors bought in the placing.
They closed early citing immediate funds needed for farm in. I assume that is Kansas related.
I doubt it is relevant to EL1070 and thus of peripheral relevance to Nuog but nevertheless looks useful for SHP holders.
WW, I think they would struggle TBH. Any transfer is only with the consent of DNR anyway. DnR are holding a $250k bond. I imagine (but am not certain since I don't have a copy) that there are a lot of covenants in it relating to any change of control of the license owner.
It is perhaps unfortunate that the licenses are neatly packaged within EOI as a standaline entity (albeit 100% owned by NUOG).
I
Marbur, again probably not that simple. Though I don't question the sentiment and eventual effect.
The PL2002 licences are security for the Shard loan. There are also some shares pledged. The balance is about 1.7m accruing jnterest at about 209k per year. Sometimes some interest appwars to be physically paid, others it is rolled up. The loan is convertible to equity, but the terms are not disclosed.
It seems reasonable that they cannot delist without triggering a default event. This would surely cause shard to "get what they can". Stuff all. However shard would end up with 50% of MfDevCo. But I doubt that would be of much interest to them and they would likely seek to offload it to anybody interest. For a pittance.
Same with the license. But the license conditions would need to be met and DNR approve. It seems more likely it would be offloaded somewhere for a pittance. Or surrendered.
Of course the license is not owned by Nuog. It is EOI.
The overall result is likely the Minty clan gain control of the entire MfDevCo enterprise but without the NF licences.
Of course that is a doomsday scenario. Whilst they can dilute shareholders that at leastcleaves a glimmer of hope. If they fold there is definitely nothing for shareholder.
Marbur, you mat be right. But it can happen that way. They cannot simply consolidate (reverse split) and issue. This is because all that would happen in that scenario is the nominal value would double so they wouldn't be able to issue under 0.2
What they need to do is split the shares into 2 classes again and restric the rights of one class. Lat time they did this they called then "deferred shares" which basically have no rights.
It is entirely doable but will need shareholder approval.