Angus Energy Share Discussion Threads

[jtidsbadly] 21/10/2021 10:37

1347: no. It’s repayable in cash, that’s what convertibles do, they give you the right, but not the obligation, to convert your loan into shares. There’s no clause stipulating that the thing can run and run, Anguish would have to do another or change their terms again with an RNS to say they’re doing it.

In practice, of course, it amounts to almost the same thing. Since Anguish won’t have the money to pay the thing back in April, they'd have to place some shares. So a similar number of shares would have been coming onto the market in April, whether the loan was repaid in cash or in shares. But the fact remains, convertible loans give the buyer of them the right to convert, not the obligation, and they’re for a set term. Anguish would have had to stump up the full £1.4mm, plus interest, on 17 April 2022.

[clottedq] 21/10/2021 10:35

Wise words JA:

When assessing "ANYTHING" to do with Angus Energy - ALWAYS READ THE FINE PRINT!

In all my years investing on AIM that warning has NEVER been more appropriate!

CQ ;-)

[ja51oiler] 21/10/2021 10:25

JT

Yes, Thanks for the explanation.

But what Gaffer73 has posted and what Angus said yesterday are at odds.

Angus said yesterday " All other terms of the Note remain the same."

The original quite clearly says "The New Loan Note is unsecured" It quite obviously is not now.

Just pointing out to the new guy to do a LOT of research when it comes to Angus and the accuracy of the information they provide!

[1347] 21/10/2021 10:20

JT Got your specs on? Nowhere does it say they have to be paid in cash, yes they don't have the obligation to convert into shares in which case they can simply let it run and take the interest.

[jtidsbadly] 21/10/2021 10:14

JA51: yes, but I think that the charge in favour of Knowe was also a condition put in place by Knowe to allow Anguish to take this kind of loan from the Lenders. The fact that a charge is appropriate proves that it’s a loan, not deferred equity.

However, to prove to myself that I’m not going nuts, I looked it up. This is from Harper James Solicitors, and is clear and well written. See the final item. The failure of the published terms of the Anguish/Knowe Convertible to make this clear was probably the result of an assumption on their part that investors were familiar with the term:

“What is a convertible loan note?

A convertible loan note is a type of debt that is convertible into shares (equity) in a company. In the context of venture capital funding, convertible loan notes are typically issued as a short-term bridge facility ahead of a venture capital investment.

A loan note represents a single debt and can be issued to a sole noteholder or multiple noteholders. In either case, a noteholder’s entitlement is evidenced by a loan note certificate. The loan note certificate describes a noteholder’s share of a company’s debt.

For larger loan note programmes, a trustee will normally be appointed to hold the issuer’s covenant to repay on trust for the noteholders. Where a trustee is appointed, a single loan note is issued to the trustee and the issuer’s obligations will be owed to the trustee, who acts on behalf of the noteholders.

Convertible loan notes may be secured or unsecured, publicly listed or unlisted. It is common to see convertible loan notes used as a form of deferred consideration (instead of cash) under a contract for the sale and purchase of a company.

Convertible loan notes represent the right, but not the obligation, to convert the loan note into shares of the issuing company.”

[ja51oiler] 21/10/2021 10:01

Welcome Gaffer73

This is Angus and nothing is ever clear!! Like having a charge over the company for an unsecured CLN!

[gaffer73] 21/10/2021 09:48

"Angus Energy plc (AIM: ANGS) is pleased to announce that it has today issued a 4% per annum GBP1,400,000 Convertible Loan Note (the "New Loan Note") to Knowe Properties Limited, a significant shareholder in the Company. The New Loan Note is unsecured and is convertible at maturity after two years at the lower of (a) GBP0.01; or (b) if there is an issue of Shares or options in respect of Shares (excluding options granted to directors, managers or employees) by way of a single or directly related offer to the public with an aggregate subscription amount of GBP250,000 or more made without the prior written approval of the Noteholder then the price attaching to the lowest of those issues (the "Conversion Price").Alternatively, and at the Company's option, the Loan Note is repayable in part or whole at any time up to two months before maturity with an accompanying grant of warrants equal to the face value of the amount repaid. The warrants are exercisable at the lower of 1.3 pence or a 30% premium to the Conversion Price. Additionally, the Company has undertaken not to issue options to directors or staff at an exercise price below GBP0.01 during the term of the New Loan Note." The terms are pretty clear to me.

[1347] 21/10/2021 09:24

HITS - We'll have to disgree then, dilution that results in an equivalent payment of circa £110 k cannot be positive for any company unless what you get in return is an asset that is worth something.

JT - Yes repayable after two years, but by the right to convert into shares. I agree with HITS on this one I don't think Knowe have the right to demand payment in cash. However we don't have the full details of the agreement, only what's published in the RNS.

[jtidsbadly] 21/10/2021 09:11

HITS: I think there has been confusion over the terms of the Knowe Convertible since its issue. It’s a convertible. Knowe has the right to opt for shares or for repayment at par on the second anniversary of its issue. Convertibles are never convertible solely at the issuer’s option. It doesn’t work that way.

The Interim MD realised that Anguish wouldn’t have the money to repay it in April. So he’s found it advisable to pay up now with a small share issue so that he has at least some chance of fluking a successful sidetrack, which could get him out of the fix he’ll be in come the date when he needs to pay back the first interest and instalments to the Lenders. He’s Mr. Micawber. This is what this share issue is telling us.

[headinthesand] 21/10/2021 09:04

1347, I still state on balance that it is positive - but only in as much as one looks at the other options.

Yes, as you and I have both said, it's effectively £110k for a three month pushback - and that's a huge amount (£110k on £1.4 million for three months = an equivalent annual rate of interest of over 30%). But it has avoided the need for what would have been a 12%ish dilution one way or the other by April next year.

ANGS has (very expensively) bought itself another three months in which to see how much they can get out of Poundland. I suspect that George is praying that he'll show sufficient gas production levels by end Q2 next year to cause a substantive rise in the SP, so he can then place and pay Knowe off before it has the option to convert at 1.0p in July 2022.

What this does show IMO is that ANGS itself is clearly not expecting the share price to be appreciably higher by April next year.

[clottedq] 21/10/2021 08:57

It's like someone riding a motor scooter across my screen:

put... put put put put put put put put put put put...

Filter bin is cool - wish I'd discovered it sooner.

CQ ;-)

[sincero1] 21/10/2021 08:46

i see the resident old grey window lickers are in full supposition mode to try and be as negative as possible....mendacious, disingenuous, duplicitous...

agian uclot best you google those long words..... I still await your apology for your ignorant, abhorrent post....you cretin

[gaffer73] 21/10/2021 07:58

George Lucan, CEO, comments: "This extension strengthens the Company's medium term capital base and in particular will relieve the Company of a possible cash outlflow in the early months of production at Saltfleetby and will be greatly beneficial to all shareholders." That suggests they will be producing early next year imo.

[1347] 21/10/2021 07:47

HITS No it's not positive, Anguish have had to pay the equivalent of £110 k to push back conversion by 3 months as they wouldn't have been able to repay the loan (plus interest) by April next.

For Knowe it was the lesser of two evils, get a shed load of confetti next April or wait a bit longer on the basis that Anguish should be able to pay at least some of it in cash by July onwards.

At the end of the day it's another salami slice off whatever value there is in Poundland to the detriment of exsting shareholders, excluding Knowe.

[headinthesand] 20/10/2021 23:24

PS I can categorically state that I have not been in the least tempted to stick even the smallest toe back in the ANGS lobsterpot.

[headinthesand] 20/10/2021 23:21

JTids...

"HITS: I think, with respect, that you may be missing the point a bit re the deferral of the repayment of the Knowe loan. It seems to me that Anguish don’t think they’ll have the means to re-pay it this coming April. Knowe won’t get the full £1.4mm out if Anguish goes into liquidation in April...

I don’t think the loan was ever going to be converted to shares, much as Anguish might have liked it to be."

I think it's you who have missed the point, JTids. Of course ANGS must know they wouldn't have had the cash to repay the £1.4 million (NB by Feb next year, not Apr). But that's not the point.

According to the CLN terms (as per the Apr 2020 RNS), it was effectively entirely ANGS's choice whether they repaid some or part of it early (by Feb 20th next year) or let it run, to be converted into 140 million shares at 1.0p on Apr 20th next year (or possibly 155 million shares at 0.9p). It was never Knowe's call on this.

The more interesting question remains: why did Knowe (who clearly had to agree to the extension) believe it to be more beneficial to them to get an extra year's interest (£56k) and 11 million odd free shares, rather than simply getting 140 million shares next April at 1.0p? (Or 155 million shares at 0.9p, if they didn't agree to the Sep 20 placing in writing)?

It does make one ask oneself, if Knowe is so confident in ANGS's future prospects (and thus in a substantially increased share price over today's levels), why would it effectively turn down the guarantee of getting 140 million shares at 1.0p in just six months' time?

Of course one answer may be that they have just been given approx £110k's worth of shares (using today's share price as a valuation) for absolutely free, in exchange just for what seems to all intents and purposes to be a mere three month extension (because from the way I read today's RNS, Knowe can start converting from July next year, if it wishes).

Separately, those 11.2 million free shares Knowe's getting immediately... anyone else reckon that the noticeably increased ramping attempts and all the "new" uber-positive IDs over the last couple of weeks have been to create an environment for Knowe to forward sell these more profitably into? It would explain a lot about the more recent frenetic BB activity...

[3put] 20/10/2021 21:39

1347 - please never buy in

[3put] 20/10/2021 21:37

HITS 'the deferment of the CLN is definitely and without a doubt a positive thing' -----I'm not enjoying this new hits. I want the old one back

[3put] 20/10/2021 21:33

Pink Floyd , leave them out. Have some respect

[3put] 20/10/2021 21:31

Unfortunately I think HITS has bought back in

[1347] 20/10/2021 21:30

CQ It took you far too long to work that one out. HITS is still working on it though, but he mixes things up anyway, like Pink Floyd and Tennessee Ernie Ford.

JT I don't see the lenders wanting to take control of a clapped out gas field and processing plant, if they did I'd expect they'd flip it to someone else who knew what they were doing. Not sure what other value there might be here, I don't see anything else.

My view is that the company may well be taken private when they no longer need to raise funds from the London Laundromat, though who'll be the marjor shareholders then is still an open question.

[jtidsbadly] 20/10/2021 21:08

1347: if I were the Lenders, I’d prefer to dispense with the services, and salaries, perquisites etc. of this lot and take not just the margin on the hedges, but the whole lot. Who knows, they may see a future in gas/hydrogen storage?

I agree about the investment case, or absence of one, and with your view on the importance of integrity and openness on the part of the managements of quoted companies.