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Premier Oil Share Discussion Threads
Showing 26851 to 26871 of 26875 messages
|As with everything on the stock market - literally anything is possible!
Genuinely think that PMO's biggest problem at the moment is the army of jittery private investors that make up a larger than usual proportion of the share register. Absolutely everything leads to over-reactions and once a snowball is going downhill it's hard to stop.
How PMO finally sealing a massive financial restructure, that will secure its future whilst at the same time allowing for selectively picked growth opportunities, can be seen as anything but extremely positive is stunning to me. Not to mention another 25kbbls/d net production (33% uplift) due to start coming on-stream 2H2017.
However - the markets are never wrong.... until they turn and people wonder "wtf just happened there". Hopefully that starts with an RNS next week confirming all the parties are locked-in to the re-finance.|
|And what about me and Beano's input???
No I have to say; awsum posts electro|
|Excellent posts theelectrolyte = we need more from analytical types with brainpower...!|
|I've little doubt that the wobble is the conv. bond holders initiating their arbitrage which has then led to PIs throwing a 'wobbler' and it snowballs.
PMO are looking to have reduced net debt by $1billion by 2019 to have it stand around $1.7-$1.9 billion. If you estimate the effect that this would have of the share price, you really think PMO are then going to hand some convertible bond holders a massive slice of the company 2years later when there's more logical alternative avenues (i.e. just buying back the convertible bonds).
Chrysoar paid Shell $3.8bln for c.100kbbls/d production, inc. some aged assets and nowhere near the 700mmbbls reserves that PMO has. PMO currently producing 80kbbls/d with Catcher due on stream to take above 100kbbls/d (exc. any Solan remedial work in 2018). PMO today valued $700million LESS (inc. debt) than the Shell assets despite the similar production and disparate reserves levels.
Ithaca was about to produce around 20kbbls/d and had $600million debt. PMO produces 4x the amount (soon to be 4.5x times) and has 4.6x the debt. PMO is effectively more than 4x the size of Ithaca (i.e. you could break up PMO into 4 segments and each would produce as much and have as much debt). Ithaca equity value is £500million whilst PMO, despite being demonstrably >4x the size, is LESS.
|I'd have thought with Catcher alone they can repay the debt to bond holders and then cancel the shares then electro. That is v reassuring since it suggests the share price wobble is scaremongering related and as you say "Total red herring"|
|It would be akin to giving away free money. Not many businesses make such a decision...
That's why there's a threshold on when companies can re-buy convertible bonds at par value. It limits the gain that the convertible bond holder can make on the equity part of the bond as if the underlying share price rises above the threshold, it makes more sense for the issuer to re-buy the bond.
Example - Strike price is £1, PMO can redeem at £1.30. GBP:USD 1.25. Conv. Bond value £196million
Share price in 2021 is £2. MCap £1.1bln.
PMO can either:
i) Give convertible bond holders £392million worth of stock (36% of company) or;
ii) Buy back the bonds (worth £392million) for £196million. Either via cash or equity raise. An equity raise, even allowing for a 10% discount to the share price would still be approaching half as dilutive as allowing the convertible bonds to be converted.
The higher the share price above the redemption threshold price the more it makes sense to re-buy the bonds, even via equity.
Total red herring.|
|It would be pretty odd to give debt holders accounting for 8% of the debt 30% of the equity.|
|What needs to happen now is to get the "debt deal woes" narrative off the table once and for all. The "update on finance with a few days" should hopefully confirm the lock-in to the terms and then it's the legal portion to finish off.
Then "ta-da" - the focus moves to operational performance, the oil price and upcoming griwth via Catcher. At least two of those can be controlled!|
|They will have an option to redeem at par plus interest (at PMO discretion) as long as the share price is a certain % (typically 30%) above the strike price for a certain period (~30 days) at any point prior to maturity.
So if we reach 2020 and the share price is £2 - clearly the correct move would be to either pay them off with cash or even raise equity at that point (as would be less dilutive and would wipe a similar value of debt off the balance sheet anyway. In the meantime they'll (the convertible. bond holders) will be establishing their hedge via a shirt as is part of the arbritrage situation that a convertible bond presents.
SP goes down? Value of bond goes down but they make money on the short.
SP goes up? Value of bond goes up but value of short decreases.
They'll have it somewhere so the effects are close to neutral.|
|The original CBs had an early payment clause, which I assume is why $4.7MM of them didn't renegotiate in '12.. But I didn't see a similar comment for the renegotiated bonds... but then there were fewer details published at that time.
Early repayment now may not be an option available to us.|
|Good post. However 200m shares would be ' materially dilutive ' And PMO do have the headroom to pay off these bonds if needed. Again it's a tough deal which short term hits the share price thru VWAP targets. I would like to see converts at £1.50, either way given the market cap there's decent uplift from here. We just need closure - the debt renegs have hit for nearly a year now.|
|I've been looking at the convertible bonds in some detail..... no apologies for the length of this post...
$250MM Convertible bonds were originally issued in May 2007, with 2.875% coupon payable semi-annually until maturity in 2012, and with a conversion price of 1582, based on a 45% premium to the days VWAP of 1091p.
i.e. $31.24 based on $1.9745/GBP, so the $250MM would have resulted in 250/31.24= 8.0 MM new shares (9.76% additional shares at that time).
In May 2011 there was a 4:1 stock split. Thus, the effective conversion price became 395.5 (actual price at that time was approx 454p), and the number of new shares increased to 32MM.
In Oct 2012 they were renegotiated for 2.5% coupon (2/yr) and the conversion price was renegotiated from $6.69 (so effectively $1.69/GBP at that time)to $7 maturing in 2018.
The share price at that time was approx 320p, so the conversion price of $7 (or 414p) represented a relaxation to a 29% premium.
There were $245.3MM acceptances, the remaining $4.7MM were repaid. Therefore there were potentially 245.3/7=35MM new shares to be issued. There was no methodology given for the change in the conversion price.
The current renegotiation is taking place with both a very weak share price and also a very weak GBP.
Since the coupon has been increased slightly to 3.25% (in line with all the other debt), it might be expected that the conversion premium is increased somewhat. (I'm just guessing here.)
Assuming a 45% premium as per the original issue, this would suggest a conversion price based on fridays close of 67.75 of around 98.25.
At $1.25/GBP this is just $1.23, which would result in the issue of an additional 200MM new shares (almost 6 times more than would have been issued based on the 2012 renegotiation), or almost 40% dilution from the 510MM shares currently in issue..
Now I can understand why the convertible bond holders are shorting so aggressively...! It's a pity we couldn't have just paid them off...|
|Did SpaceC made the presentation himself? Whoaaa!!!!|
|Giles, have you been in hibernation?|
|Good post space cake|
|Going to be buying here, a lot. I cannot believe it has gone so low. Have I missed something?|
|Well good luck, will see what the press has to say over the weekend and act accordingly; but think it will fall further next week if my name aint Mr big britches Marvin the great!|
|Not sure that trendfriend is the font of knowledge that he believes himself to be. On the basis of today's RNS, that I did find reassuring, I've bought back all that I sold this morning, but at a lower price. Last time TD said "in the next few days" the subsequent RNS was two days later. So, I'm expecting an RNS to confirm that the bondholders are locked in, Tuesday or Wednesday of next week. Meanwhile, the share price appears to have stabilised at 67/68p, so the world moves on - onwards and upwards, hopefully.|
|Read trendfriends post on 3i guys says it all|
|Nasty auction here more drops next week likely|