Diversified Energy Share Discussion Threads

[fordtin] 15/2/2024 09:54

“the Tender Offer will be 105% of the average market value per Share for the five business days immediately preceding 27 March 2024”

If we assume the like of M&G are the target audience, it’ll be in their interest to attempt to push the share price up for those 5 days.
Obviously a gamble, but any smaller investors who want to sell might be able to achieve a better deal if they take the dividend and attempt to catch the peaks on market during that period.

[bountyhunter] 15/2/2024 09:38

The Oak Bloke is onto this one very quickly! Another link for the header.



So if the price is higher at the time of the tender it's probably worth it for all, if about the same maybe not worth the bother for PIs but a good option for the likes of M&G.

[bluemango] 15/2/2024 09:34

#1091 and #1092

Correct me if I'm wrong, but I suspect some are reading unnecessary complication into this tender offer.

The amount allocated to this by the company ($42m) is the same, regardless of how many take up the tender offer and in what proportion of their shares. They do not have to find 'extra' depending on how many take it up.

The big advantage for the company is that this is using an existing dividend cash allocation to buyback shares and thus save on having to pay any future dividends on those shares. Yes it's mainly aimed at institutional investors and could be significantly advantageous to the company if enough of them take up the offer.

[nigelpm] 15/2/2024 09:31

I think it is targeted at the likes of M&G - oakbloke sums it up perfectly.

[fordtin] 15/2/2024 09:29

Presumably the people who loaned shares for the purpose of shortselling will be excluded from participating in the tender offer unless they recall the loaned shares before the cut-off date.

“ all Qualifying Shareholders who wish to participate in the Tender Offer should ensure that their interest in the Shares is capable of being settled in CREST at 6.00 p.m. (London time) on 1 March 2024.”

[bountyhunter] 15/2/2024 09:23

My interpretation is that the last four posts are all broadly in agreement. I probably won't go for it as it's not worth the hassle (unless the price rockets before I have to decide!) but an ii who has been offloading in the market for their own internal reasons like M&G might, and so the offloading for them would cease and DEC would reduce the shares in circulation as a consequence of the tender.

[tag57] 15/2/2024 09:22

I would have thought DEC have plenty of the cash allocated to buybacks left over to finance this tender, as shares repurchased so far (at a far lower price than planned) has been quite low.

[louis brandeis] 15/2/2024 09:22

Yes, previously committed capital.

PS: Have you worked out the well capping liabilities yet? You'd be stupid to take Rusty's word at face value.

[bountyhunter] 15/2/2024 09:19

Of course the cost depends on how many opt for the tender offer. It's so complicated that most PIs may just take the divi leaving some ii holdings to be tendered. There is a bit of a gamble on the price at the time but if DEC can payout some of the divi in return for bought back tendered shares which is what I suspect they are bargaining on I see that as a good thing due to the reduction in the future dividend bill. Also those shares would not have been sold on the open market with a negative impact on the price.

[alanpro1] 15/2/2024 09:18

Dec mcap just now approx £430m.Dec have allocated circa £35m of extra funds in a one off buyback of shares. So they are offering to buyback around 8% of the shares. A substantial amount. Any larger holder who has been drip feeding the price down of late may decide to stop as they know they can sell a large portion of thier holding in bulk at a premium, and will get a better price if the share price is higher on the WVAP days that count.I see this a good step forward and hope some of the sellers take the offer up. Shorters will be squirming as the number of shares in circulation is continuing to reduce whilst they are shorting more to keep a lid of their position. All whilst the current low gas price is of little significance as 2024 is fully hedged.

[fordtin] 15/2/2024 09:14

I agree with bountyhunter's suggestion that it's targetted at institutional holders.

The RNS says; "Following consultation with shareholders and after careful consideration of the feedback received"

They definitely didn't consult with me and I'm guessing they probably didn't consult with any other posters on this thread.

[bluemango] 15/2/2024 09:04

#1085 Whichever option shareholders take, receiving the dividend or accepting cash for their shares, the payment by the company for that shareholder remains the same.

From the RNS:

"This Return of Capital allows shareholders to be paid the same total amount of the previously declared Third Quarter Dividend while providing optionality for shareholders ..."

[imnotspartacus] 15/2/2024 09:01

Probably overlooked because of the tender offer but the 60,000 buyback is pretty significant; that’s 1.2 million shares pre consolidation.

[louis brandeis] 15/2/2024 09:01

Obviously the company no longer has the capital to pay the dividend AND partake in share buybacks AND purchase more assets to keep the whole business model working.

Now crazy schemes are being invented in order to hide the issue.

My advice is to sell on the market now.

[croasdalelfc] 15/2/2024 09:01

I fundamentally disagree if 50% take it up then the company will need ~£200m to buy them back having saving £20m on dividends . Where do they get the extra £180m from! Impossible - so they will pare back the waiver The £20m above would buy back around 2m shares - or 4% - instead buying back say 50% of your 10000 shares they would buyback 4% but you just lost half your dividend.

[bluemango] 15/2/2024 08:53

#1082 I fundamentally disagree.

It works, because if enough shareholders take up the buyback option (particularly some of the larger institutional investors) the savings on future outgoings by the company will be significant. The future ongoing dividend pot will be concentrated on a smaller number of shares, far smaller than via the traditional buybacks in the market, and will therefore greatly help preserve the level of that dividend, which in turn makes this far more attractive as a long term investment.

[croasdalelfc] 15/2/2024 08:46

The aggregate amount of funds the Company will utilise in relation to the Return of Capital will be approximately US$42 million, which is the approximate amount of the Third Quarter Dividend announced on 15 November 2023.....No extra funds .This doesn't work unless extra funds above dividend are allocated ~$50m imo

[croasdalelfc] 15/2/2024 08:41

Not really -. In everyone elects to keep 90% of shares for a divi payout but give up 10% of divi then it only frees up $4.2m for use in buybacks . 10% of $42m10% of 47.7m shares is 4.77m worth around $60m . So in my scenario they would only be able to buyback ~1/15th of the shares The whole thing is a waste of time and involves fees and costs .

[bluemango] 15/2/2024 08:39

#1074/#1075 Don't judge merits of this on a short term market reaction which could be unrelated anyway.

Imo market will see this as a potential significant saving on future outgoings (if enough shareholders take up the option; particularly institutional investors) and will see this as positive.

[nigelpm] 15/2/2024 08:38

I think that's right bounty - probably meant for institutions or those that want a quick exit without fiddling in market.

[sbb1x] 15/2/2024 08:38

Tender offer price should be at a nice premium:)

[sbb1x] 15/2/2024 08:37

Time to buy more

[bountyhunter] 15/2/2024 08:37

For the sake of argument if the share price is the same as now when tendered a UK ISA investment is due to receive ~7.5% dividend minus 15% withholding tax = 6.375% vs a 5% premium on the tender offer.

If liable to the full 30% witholding tax on the dividend then the shares would only have to be ~0.25% higher for the tender offer to be worth it as the yield as now would be 5.25% Could be attractive to M&G or other large institutional holders?

If the share price rises the extra 5% could beat the current 6.375%(ISA holders) or 5.25%(non ISA/sip holders) yield due to be received?

At least that is my understanding. Nai and dyor.