Diversified Energy Share Discussion Threads

[kaos3] 15/2/2024 10:56

and stiefel - the arranger - is managing the bb

he can drive share price lol

[kaos3] 15/2/2024 10:52

also takes care of FTSE 250

a master stroke

[kaos3] 15/2/2024 10:51

ii are forced sellers - redemptions and esg ... so bod provided

[kaos3] 15/2/2024 10:50

i see it in simple terms - 42 m additional buying power emerged. at a 5 pc premium

puts a floor under the shares imho

good for the selling shareholders imho and for the remaining

i like this BOD. proactive in shareholder value - in a decent and transparent way - caring for all groups - not just a specific group of shareholders

a masterstroke just in time

[aleman] 15/2/2024 10:48

Don't forget there is a 1.5% stamp duty charged on UK sales into a foreign depositary nominee. I presume this only holds for the temporary 6 months that the Depositary Nominee is in place from December to May? (Google "Diversified Energy 19437-23"). Nobody has mentioned this in recent trading but I assume it applies to anyone selling in the UK until May.

[1knocker] 15/2/2024 10:39

As I read it, the price which is to be paid for tendered shares is 105% of the ex d share price (the market price on 27 March). Tenderers waive the dividend. Thus those wishing to sell shares can tender shares and in effect receive the market price of the shares they tender plus the waived dividend as a capital payment.

This is broadly neutral to those who wish to sell and would be liable to 30% withholding tax if they took the dividend and sold their shares in the open market, as they take the dividend as capital (and thus free of the withholding tax). There is no advantage to those who are only liable to 15% withholding tax as ISA holders save a saving in sale costs which are unlikely to approach the value of the dividend (less additional capital payment) forgone, and it is plainly unattractive to SIPP holders who are not liable to any withholding tax at all.

The price the company is paying for the tendered shares is in substance market price on 27 March (an ex div price) plus 5% (as a capital sum) in lieu of an income dividend amounting to approximately 7.5% (at current market price, which should logically fall when the shares go ex div) of the price payable for the shares tendered. 7.5% less 30% withholding tax is 5.25%, so 5% received as capital rather than 5.25% as (net of 30% withholding tax) income is only attractive if the holder would have more UK income tax to pay on top of that.

Of course, if the market share price is higher on 27 March than today, the value of the 5% additional capital payment in lieu of the income dividend rises. Since the 'basic' price of the tendered shares is the same as that available on the open market on the day, the value of the 5% capital sum as against the net of tax value of the income dividend is the only material consideration.

The upshot, as I read it, is that no ISA or SIPP holder should take up the tender offer, and any other holder would have to take account of his wider income and capital tax position to decide whether it is likely to be favourable to him to do so. For most. unless there is a significant fortuitous RISE in the share price by 27 March (significantly increasing the value of the 5%) taking up the tender offer is likely to be broadly neutral as against selling shares in the market and taking the dividend as income.

Or have I got it plaited? I shall read comments with interest - possibly embarrassment !!

[bluemango] 15/2/2024 10:35

There could well be the amusing situation that many PI shareholders will be planning to opt for receiving the dividend, whilst also hoping most other holders take the opposite option and go for the buyback choice.

[plutonian] 15/2/2024 10:21

I assume that this is designed to be tax-efficient.

Is the return of capital subject to US withholding tax?

Does the return of capital trigger a CGT event? I assume it could crystalize a CGT loss for most people (outside a SIPP/ISA), due to Avergage Cost accounting.

A dummies guide would be helpful.

[97peter] 15/2/2024 10:21

Louie Randais you are a fool , go away . Oh sorry Louis Bandais or whoever you are? De-damper!! Or on drugs?

[97peter] 15/2/2024 10:16

Louise, just joined have you? De-tamper paid or just a saddo wanting attention and no friends?

[con90210] 15/2/2024 10:02

This has become a great trading share. Last few sessions gone from 895p to 920p frequently.

[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.