Afren Share Discussion Threads

[hpcg] 16/7/2015 16:00

I'm short, as I have said many times before. I now expect this to go into administration, or the equivalent, like the assets being sold to another party, for example partners in the producing fields. Any party not intimately familiar with the current operations would take months of due diligence to purchase. They are worth less than the debt. This looks likely to never trade on the market again.

Soon after I started out I had complete losses with Aero Inventory and Rok, and they both had just paid a cash dividend. It was instant. One day they were listed the next in administration. Most will have some experience. Debt is a company killer.

[biggerthus] 16/7/2015 15:58

Why do you guys keep banging on about full repayment of the bonds? or is the financial industry simply very unimaginative ?
Looking at the ridiculously convoluted Recap offer, they're not ... or perhaps that's just to try to justify the mad fees...

We have a Seplat quote from their recent AGM saying that they're still interested in Afren. That (and their former offer) might not be an outright takeover offer, but a 'combination' as it was described last time.

I can see how that might work, and it would present an interesting choice to BHs; either back-off and see the new investor take an equity stake of x% in return for a capital injection and for ensuring debt repayments, or take your chances on a fire-sale when SHs vote no.

I know what the responsible choice would be for any BH with underlying retail investors. All imo.
---
They'd have to offer $1.2bn to buy out bondholders plus fund $150m cash for capex

[dangersimpson2] 16/7/2015 15:36

I agree, zero chance of a bid imo.

They'd have to offer $1.2bn to buy out bondholders plus fund $150m cash for capex plus whatever the whole is after yesterday's announcement before offering shareholders anything. Default means that bondholders can demand full payment before equity gets anything. They might accept a haircut but not if it gives any real upside to shareholders.

BT, if you really think an equity bid is likley you should be buying the bonds hand over fist since they are seriously undervalued in that scenario. Bonds too risky for me though even at current prices.

[mrwhits1] 16/7/2015 15:20

@Bigger,

always a possibiliy, but think about it, who in their right mind would want a company who has already defaulted, has mahoosive debt it cant repay, AND still leave something for common stock holders?

you couldn't even asset strip this dog.

it's current ratio, at the last IMS was 0.31, i.e. it couldn't meet its short term obligations if it wanted to, all in it couldn't meet its tangible obligations, it's basically insolvent.

who would bid for that? they would have to pay a madman to take it off their hands, or, do a d4e swap with the bond holders who would get back anything they could and the common stock holder would get nothing, zero, zilch.

I'm sorry if anyone lost money on this, hell I've lost like this when I first started out in Marconi, it hurts, but I learnt from it, and found out why.

I can't see how this is going to end positive for any existing long share holders unfortunately.

regards

[biggerthus] 16/7/2015 14:57

If you are short mrwhits, you'd better hope that nobody comes up with an opportunistic offer taking advantage of yesterday's production warning.
It wouldn't be the 1st time it's happened.

[mrwhits1] 16/7/2015 14:39

@ever,

unless you are short.....

[everhopefull3] 16/7/2015 14:12

Two investment areas to avoid like the plague, Africa & Middle East, unless you wasn't to lose all your money that is !?

[hpcg] 16/7/2015 12:00

Where bonds are trading now refi is quite possibly not worth it - at least for anyone in at par.

[cashandcard] 16/7/2015 11:55

BH Very significant losses VS complete wipeout for SH. The mistake was putting SH in a position where they have nothing to lose.


Cash

[horndean eagle] 16/7/2015 11:43

Not going to get much sympathy but bondholders whacked very hard on yesterday's news. Down over 30%. Not sure why equity holders don't seem to acknowledge that bondholders also facing very significant losses from the shambles surrounding Afren. Im guessing bondholders will have to take another very significant haircut on their positions in order for AFR to have any hope of continuing. That would still be better than triggering change of control clauses.

[bullinachinashop3] 16/7/2015 11:15

well done all, fair play BHs got screwed too.

[htrocka2] 16/7/2015 10:44

NY.. I sold out at 6p..(at a loss I might add).but have empathy and compassion for those still left in...and, for future reference, am curious to see how this will all pan out.

[ny boy] 16/7/2015 09:50

I wouldn't waste your time, the crooks have taken your money, just move on and buy other opportunities that have nothing to do with Africa.


Invest without emotion, right off the losers and move on, all investors make mistakes from time to time, it's part of the business even the rich players take hits from time to time.

[hpcg] 16/7/2015 09:45

htrocka2 - just because the Nigerian government has first refusal does not mean it would take the assets. Nor would it necessarily be the case that the assets would be picked up for pennies. The further from fair value the more competition. Neither the government nor companies will want to annoy the big hitters amongst the bondholders because it could directly, and certainly indirectly, increase their cost of capital. However in just about every case it is difficult to see how the assets could be sold for more than the debt.

I think it is conceivable that their production partners are causing a slow down, but that hurts them as well with oil prices where they are. Problems with pipelines, equipment on a rig, development work or simply getting paid are just as likely and frankly normal for oil companies.

[htrocka2] 16/7/2015 09:34

Good post Ldlv.... The FCA, as a publicly owned, body will have to give you some form of reply...

[whiskeyinthejar] 16/7/2015 08:52

Plan B (No vote) is an asset sale, but they aren't planning administration to do this. So avoid breaking licence rules.


But I'm not sure this is legal. Should the Bod not really have the courts approval to sideline shareholders?

[bobsidian] 16/7/2015 08:44

"...I believe the Company can face the future with confidence given the quality of our assets, the good relationship with our partners, the injection of capital and the attraction of very competent people into the Company"

The problem with the above view is the use of the term "our".

There is so little credibility attached to any financial utterance from the management of the company. And though the restructuring exercise has been so convoluted the debtholders may yet be able to enforce security on the income generating assets and sever them from the group structure.

The recent vote and the apparent absence of a clear cut opportunity to dissent may still have worked against the machinations of the debtholders. The timeliness of the latest RNS is suggestive that this may be the case.

[htrocka2] 16/7/2015 08:31

I believe that the bondholders are up a creek without a paddle....A poster suggested that the bondholders may force this into admin and then buy the assets back on the cheap...unfortunately, under Nigerian Law, the Government have first refusal on the sale of all assets, even distressed assets. If they went down this route I think you'll find that SEPLAT or some other indigenous Nigerian company would end obtaining AFRs prime assets...for 'pennies'....and the bonds would end up the same value as the shares...'0'.

[ny boy] 16/7/2015 08:14

Lights out all out, this was great to make money out of on the dead cat bounce to 10p in the winter, after that why would anyone still be holding, it was clear as day, this was going to zero. Bunch of crooks at the helm.

[ldlv] 16/7/2015 05:41

Legal action team updateDid you read this?Afren shareholders seek investigation 

[julcester] 15/7/2015 20:11

Kulvinder, it is almost copy/paste of Yell/Hibu.

[mobyrich] 15/7/2015 18:05

In summary, the last 12 months have been far from what we planned and results have been disappointing and have led to a very sharp drop in our share price and a loss of confidence by stakeholders. However I believe the Company can face the future with confidence given the quality of our assets, the good relationship with our partners, the injection of capital and the attraction of very competent people into the Company