Afren Share Discussion Threads

[mrwhits1] 13/10/2015 14:43

ha ha ha, the proceeds have just disappeared from my equity balance at IG, messaged them to ask what's going on, as I haven't had written confirmation they have "paid out" but there is a settlement of my short positions at 0p...

regards

[mrwhits1] 13/10/2015 13:59

mine too...

maybe it was my email and the administrators report stating nothing for shareholders that triggered it earlier today.

who knows.

anyway, releases funds for another fourage...

regards

[tinware] 13/10/2015 13:50

IG just settled my short...

[mrwhits1] 13/10/2015 13:23

order of ranking for payout re afren plc,

As prescribed by UK insolvency legislation, the creditors and shareholders of the Company will be paid in the following order of priority:

- holders of fixed charges will receive the amount realised from the assets subject to those fixed charges (net of the costs of realising the assets);

- the expenses of the Administration;

- preferential debts (primarily limited to amounts due to employees);

- the prescribed part, which is set aside (up to a maximum of £0.6 million) for unsecured creditors from floating charge realisations;

- holders of floating charges will receive the amount realised from the assets subject to those floating charges;

- unsecured creditors; and

- any surplus to shareholders.

regards

[hpcg] 13/10/2015 13:10

Is that your only short position then? I'm paying finance and borrow on my open and trading shorts, but I'm not sure I am on the open but not trading Afren shorts. I'll check the P&L on those trades tomorrow to see if there is any change and then I'll know definitively.

[hpcg] 13/10/2015 10:37

JakNife - I'll get back to you tomorrow on the cost. I've taken a data point. There definitely isn't a funding charge as that would be accruing in 1 ten thousandths of a penny per day. But as IG put the margin up to 100% I am clearly not borrowing money so this will obviously be zero.

The stock borrowing charge could conceivably be accruing. If it is then it is doing so at a rate of 0.02%. Or to put it in context a trade worth £100 on an open to zero basis has accrued a total borrowing cost in its 100 day life of £2. Or a £100 pound note is costing me 2p to store. I actually think that cost was accrued whilst the company was still listed.

Put it this way, I can easily live with those numbers. The trades I was able to put on at the end had a 99.99% probability of a 100% return within 365 days. Those are odd I can happily tie money up for. I can very patiently wait, and if it costs me 6% so be it. In any case the latest this can run to will be the end of the tax year as if the administrator haven't formally wound up the company people will be getting it put on the HMRC list of negligible value share so they can offset losses for capital gains tax purposes.

[dangersimpson2] 13/10/2015 09:28

Liquidation is absolutely the best thing that could have happened for those short since it pretty much guarantees 100% gain. So those who want to boast have serious bragging rights now. Public crowing and good long term investment results rarely go hand in hand though.

Waiting for a declaration of zero value on the equity can be annoying for both shorts that want to free up margin and shareholders who want closure but that's the way the system works and the higher return on the short should at least make that part of the waiting worthwhile.

Given that there are news reports are doubting whether the $200m Senior Bank Debt will be made whole and there is then $1.5b of other debt before the equity, the end result is never in doubt just the timing.

[hpcg] 13/10/2015 08:36

Shorting can never cause a company to go bankrupt. That happens when the liabilities overwhelm the cash generating capacity of the business.

[htrocka2] 13/10/2015 08:33

you people make me sick. you've shorted this into oblivion...and now you want your money back....you waited for the promised Scheme of Arrangement and the share price to go Sub 1p so that you could boast how much money you made...but it never came, they went into liquidation instead...get onto the back of the conga line.

[mrwhits1] 13/10/2015 08:12

@hcpg, spreadbets work the same, their is a finance cost...

[hpcg] 13/10/2015 08:09

My short is a spread bet. No charges here as there is no margin. Spreadbets are a derivative so the relationship with shares is notional. I imagine IG hold a nominal number but their book is probably about balanced. I just wait.

[biggerthus] 12/10/2015 22:59

mrwhits, thanks for the detailed answer. I get the Admin bit, but it's the end-game I'm uncertain on.

My understanding of CFD providers is that they simply take the exact same position as the punter, only in real shares; meaning that if the share price rises, they win and can pay you out from the profit and vice-versa; taking their slice from the spread/commission/borrowing costs.

However in this situation, with no buyers for the CFD providers' short positions, you're saying that the official (legal?) trigger to close the transaction is a statement from the Administrators or court that equity is worthless ?

If that's the case, then I guess the longer the admin' process continues, the better it is for the CFD broker & other stock lenders as they continue to rack up the charges, no ?

[mrwhits1] 12/10/2015 19:23

Closing a short with a delisted company is easy, as you go through a "provider", in my case IG.

my position is a CFD short.

IG Index reflect their clients positions in the market with CFD's so when you get paid in this respect, they do, and not before unfortunately.

As regards what happens to the company, when they "delist" all they have done is delist the shares from trading on an exchange, the equity still exists but isn't really tradable in the open market. It could be traded privately but the holders are technically IG in this case, but if you held equity in a crest account you could privately trade it etc even if it's delisted.

To resolve this issue, I.e. Short positions, it has to be proven the equity is worth something, or worthless. So, when it come ps to being sorted out there is a pecking order of who gets paid first according to company law, and is basically something in the order of typically, HMRC, senior debt holders(typically banks and bond holders) , junior debt( could be banks, bond holders, private debt etc), creditors( people/companies owed for services/goods), then shareholders etc.

In the case of Afr then they have something like $1.7B of debt, they get first dibs in this case as Afr are loss making.

Assets will be sold by the appointed liquidator, appointed by the administrators.

They raise as much as they can in an auction etc and share the proceeds out.

As you can see, the shareholders will probably get nada. And when the administrators/liquidators declare so short positions can be settled.

IG will have also taken out a position to hedge, so they won't miss out on paying out a supposed 100% loss, as they will have probably balanced out the long/short aspects of their client positions, so where a long will have lost 100% a short would have gained that 100% etc. IG aren't exposed as such overall, they collect the spread/commission. They may also make on any borrowing costs if they have charged more than it costs them to borrow stock etc.

All in all I need Alixpartners to make a statement, either now or when they have finished the asset sales, releasing. How much has been raised, or stating the shareholders are getting nothing.

Sooner rather than later would be better for me.

Hope that helps to start to explain what might happen.

The last option is that they "pre pack" the company and sell it for a % overall, but then the debt also get transferred at that %, say 10p in the £, I.e, 10%.

I can't see that happening here though as the debt is ridiculous compared with any immediate assets available that can be realised now, not developed in the future.

Regards

Mrwhits.

[biggerthus] 12/10/2015 17:47

mrwhits, am wondering how it works for those short.

To close your position you presumably need somebody to buy, but with shares delisted and therefore no market, that cannot happen.

So if AFR is never re-listed, do you lose the lot ? Or is this a spreadbet thing whereby IG are obliged to settle at 0 even though there is no market?

Also, do the asset sales have to be approved by the NG Gov before it's all put to bed? That could take as long as a year apparently.

Interesting stuff.

[mrwhits1] 12/10/2015 12:41

OK IG replied, no "official" news so nothings changed, and they can't/won't match my position with the opposite as they reflect both long and short in the market....which doesn't exist at the moment...

so that would leave them exposed, even though it wouldn't, as matches would cancel out any liability on either side of the equation etc...

so, waiting for an "official" announcement, so its back to alixp for when/where, i.e. london gazette/rns etc.

regards

[hpcg] 12/10/2015 12:13

Alix will presumably write to shareholders letting them know their share certificates can safely be used to line cat litter trays, made into christmas decorations, or used in hundreds of other fun, exciting and creative ways. Creditor vote was only on Friday so it is not unreasonable that this hasn't happened yet.

[mrwhits1] 12/10/2015 11:16

IG latest news is that there is no news! asking brokers next(?)...

regards

[hpcg] 12/10/2015 11:08

mrwhits1 - if you get knocked back I'll ask the same. The delta between the asset value and debt is so large that it is obvious that the equity is worthless. If nothing else it must be apparent to IG that there is no risk to themselves of satisfying shorts even if longs are still in some nominal bucket marked I suppose in any case it looks like more or less everything goes out the door by the end of the month, so not much longer to wait.

[mrwhits1] 12/10/2015 11:00

asked the question of IG also...

awaiting reply...

regards