Fortune Oil Share Discussion Threads

[del44] 18/12/2014 22:29

Hi guys...Not been on recently as I have had very little to offer here but have continued reading avidly...As some of you will know, I took a 3 year investment view when I bought into FTO in November 2011, with the view to selling in November/December 2014.
After going through the recent interim results announced, I had decided to hold for a potential rally, as I felt they were clearly very undervalued at current prices. But each day, when I returned from work I was dismayed to see yet another new low for the period in which I have held them.. So very happy to see a near 50% rise today when I arrived home....Of course I also knew that it was not a rally but something final for sure, before I even looked at the rns....I saw a 10p cash offer and my initial thoughts were....thank God...a way out of this horrible little investment holding company....Very cheap but a way out none the less..:-).....I am one of those who took the large divi pay out last year in drips, instead of cash. It significantly took my average price right down into single figures and it was truly brilliant when the share price was up around 13p little more then 5 months a go..

However the loss of the dividend was a glaring red light to me as it changed completely the company I had invested in. The rolling fall in the share price since then has been, to my mind a clear indication that the company was going private. As to how low it was going to go was the only real question...I watched the daily trading gazumped by a late UT, no where near the actually trading during the day. This raised my suspicions!
I agree with viacom....this brings all the clarity we need...We have all suspected this final outcome would arrive, albeit, not at this price.
10p allows me to get out with a decent profit over 3 years, from a dismal loss yesterday.
Regarding the share, I remain a holder for now and will watch with more then a little interest as to how it eventually unfolds, as there may still be a twist or two left in this old dog of a share..

I would also like to echo the comment of another poster, regarding the enjoyment I have gleamed from the many who have posted here over the 3 years that I have been posting.
I would like to say a big thank you...you know who you are....and to absent friends, namely JCpetes....I wonder what he would have made of it all...:-)

[topvest] 18/12/2014 21:19

What's the view on the CVR - > 50% probability in my view?

[tel5] 18/12/2014 21:02

whats happened to Del did he sell out ?

[topvest] 18/12/2014 20:27

Well I'm delighted with today's news. I bought at 8.5p and have held for 18 months. 10p.... I'm happy with given the special dividend. 15p would be absolutely fantastic.

My Chinese value portfolio has been a very rough ride. Prosperity Minerals and Fortune Oil have been very good investments. Just three dogs to ditch: Camkids, Naibu and Asian Citrus. If one of these comes good I might even get into profit overall now which is not bad. I will probably give China a miss going forwards as it's all a bit too risky and the ethics are dodgy so they now fail my quality test.

[exel] 18/12/2014 19:14

Thanks, gw, so quite a lot of 'detail', there, for something that some already feel 'won't happen'. My sense is that it will! Hence I'm holding, and have added today. ex

[via con] 18/12/2014 18:43

Topicel

I think you must have misinterpreted my post by asking me "how long Attwood felt they knew already this was a 'done deal'?"

What I intended to convey was that Attwood intimated that the clarity of strategy etc which has been lacking for a long time, would become more visible for the shareholders in the next few months. Which led me to Speculate that maybe then he/they knew that such a take over was a possibility or simply DC had a change of heart which ultimately led to today´s announcement.

As for the 50% plus holding, we lost our rights and premium listing with the divi bribe, which meant that majority holders were no longer obliged to make a formal offer for the company once they passed certain thresholds of share ownership. Which is why I and many here were worried that Danny and his crew could screw us minority shareholders.

I hope that clears up some of your queries. I appreciate many posters are rather peeved but I´m in the minority it would seem, that at least the price is above that which many of us paid for our shares, many, many moons ago as it could have been far worse, considering the control the BOD and Danny have over the company through their shareholdings and the reduced rights minority shareholders have here.

So it may not be a great offer but it´s not bad, as it could have been a lot worse.

[gwatson56] 18/12/2014 18:16

I too bought a few more circa 9.5p today given the shares are worth at least 10p and its a decent return over the period noted (to expected payment).

I have cut and posted below the sections I found most interesting.



"Each CVR will provide Scheme Shareholders (other than Restricted Overseas Shareholders) with a contingent right to receive 5 pence in either cash (the CVR Cash Amount) (subject to any applicable deductions or withholdings) or, if they so elect, Loan Note(s) (subject to applicable securities laws) (the CVR Consideration), in each case subject to and in accordance with the terms and conditions of the CVR Deed Poll.
The CVR Consideration will be paid or issued (as the case may be) to CVR Holders, subject to the terms of the CVR Deed Poll, if both of the following conditions are satisfied prior to the expiry of the 12 month period following the Effective Date (such period the CVR Term):
(a) the Fortune Oil Group and China Gas Group shall, during the CVR Term, have sold to a CVR Third Party, solely for cash, an aggregate number of the China Gas Holdings Shares exceeding 199,385,362 China Gas Holdings Shares (representing in excess of 35 per cent. of all of the Fortune Oil Group's direct and indirect interests in the China Gas Holdings Shares at the date of this Announcement); and
(b) the volume-weighted average per share price of all China Gas Holdings Shares sold by the Fortune Oil Group and China Gas Group to a CVR Third Party, solely for cash, during the CVR Term shall be in excess of HK$11.



In order to become Effective, the Scheme requires:
(a) the satisfaction (or, where applicable, waiver) of the Conditions (see paragraph 13.2 of this Announcement);

(b) the approval of a majority in number of the Scheme Shareholders present and voting at the Court Meeting either in person or by proxy, representing not less than 75 per cent. in value of the Scheme Shares voted by those Scheme Shareholders. At the Court Meeting, voting will be by poll and not on a show of hands and each Scheme Shareholder present in person or by proxy will be entitled to one vote for each Scheme Share held; and

(c) the approval of the Resolutions relating to the Acquisition (including the Capital Reduction) by not less than 75 per cent. of the votes cast, either in person or by proxy, at the General Meeting (to be held directly after the Court Meeting). "

So all eyes on the CGH share price (11.98 currently) .. Also Beijing Enterprises Holdings
(who has over £1 Billion free cash) interesting times indeed.

[topicel] 18/12/2014 17:06

Via con, may I ask how long Attwood felt they knew already this was a 'done deal'?

Since the summer? If so the share price pattern since would suggest some shrewd trading by some 'in-the-know' perhaps on the way down before repositioning recently?

I sure hope the 5p CVR comes to pass for those less 'aware' of what has been going on here.

Oh, and how long has Dynasty held over 50pc of the company? Surely 30pc and above triggers take over anyway? Different jurisdiction rules? TIA

Topicel

[alanadale] 18/12/2014 17:00

We know in August Fortune acquired some 13m CGH shares at a price of HK14.2 (HK$2.2 or 9% above the current price) bringing the total number of shares in which Fortune has a beneficiary interest to 935m. 184m are owned outright and Fortune has presumably borrowed to purchase the 375m half share of the remainder. Do we have an average price for these latter purchases?

We know from the interim report that the net borrowing position at 30 September 2014 was £36.8m compared with £50.6m at 31 March 2014.

It goes on to state: ‘with a cash balance of £152.1m at 30 September 2014, and the expected positive cash flow generated from operations, the Group envisages no difficulties in meeting both current loan repayment obligations and investment commitments. The net gearing ratio (after deduction of cash) decreased to 10.2% at 30 September 2014 against 14.8% as of 31 March 2014.

This does not signify a financially challenged position let alone large bank borrowings.

I was mistaken in saying the stake in CGH owned outright (184m shares) is greater than the market capitalisation. The MC is £250m v £184m for the CGH shares.

[txi] 18/12/2014 15:51

I think we have been sold out on the cheap but with the Sp down at 6p ish I don't blame the canny Chinese. If I was in their position I might well have done the same as no one rated the stock or it's potential here in the UK (except for us few)

Just bought a load at under 9.5p
Even if we don't get the 5p I'll make +5% in 4 months!!There again I might make over 50% in the next 12 months - It's worth the risk.

[lexus880] 18/12/2014 15:50

aren't they saying we know your shares are worth 15p but we can only pay you 10p

[catscats] 18/12/2014 15:23

I too am a long term holder here and have suffered from repeated declines in the share price. However the cash offer at 10p together with the special div of 2p puts the share back to where it was trading earlier this year which is better than can be said for many other smaller stocks. I expect the 10p cash offer to go through and can't understand why the share is not trading closer to that level since a buyer now at 9.55p will get 10p in 3 months time and a free option for a potential (probable) 5p - seems a steal to me....

[via con] 18/12/2014 15:06

ex

Let´s hope we do indeed "collect the full 15p". You see it was worth continuing to hold afterall

As an aside it would seem that Frank Attwood was right about clarity in a few month´s time - did they know already ? I think they bloody well did.

Although we shouldn´t complain, as at long last we have true clarity, strategy and goals from management in one single announcement. ;o)

[exel] 18/12/2014 14:51

Acting benevolently in one's own self interest is the name of the game, surely? I may make charitable donations at Xmas (as again this year) but I expect none to be coming my way, ever, not being a registered charity. On the other hand, 'Legal Entitlement', facilitated by preceding investment decisions and being a 'shareholding' (ranking 'pari pasu' with others) is quite another matter! I plan to collect the full 15p 'here'. ex

[via con] 18/12/2014 14:44

Afternoon ex,

you have raised a very good point regarding the 5p, as sometimes, especially on this occasion, management´s self interest should benefit us all for once

[exel] 18/12/2014 14:43

Many of those various 500k buys today at <10p (including mine) will have been made on the assumption that 10p is in the bag, and that 5p on top of that has a good chance of following behind. ex

[jacks13] 18/12/2014 14:42

That makes sense exel. They should remain worth a punt at sub 10p as they are likely to rise higher as the picture becomes clearer.

[via con] 18/12/2014 14:39

gwatson, thanks for re-posting that article, although it is worth noting that the article also has forgotten to inculde the debts that FTO has accrued, especially with regards to its gas shares.

[exel] 18/12/2014 14:34

The 10p is pretty much a done deal, whether we like it or not. The 'carry' is very much of 'the issue' now. There are material staff shareholders who will be 'more than interested' in that 5p p.s. carry. the loyal and industrious Li Ching (for one) has 20m ords - so the carry is worth a cool £1m to her. I just can't see 'this' being fluffed over. It is also worth some £35k to Frank Attwood, too, not an immaterial sum. I am guessing that Frank will have a view as to the likelihood of this getting paid - 'more likely than not' would be my guess, and 'yes' it is worth a very considerable sum to me, so I will be focusing on 'this' rather than anything else. ex

[via con] 18/12/2014 14:26

Alan, far be it for me to defend the board´s prognosis, but as an investment vehicle, the NAVs rarely reflect true value.

Also Fortune has debts, and in respect to the China Gas shares, FTO took on even more debt, so I submit to you that those figures you quote are not a true reflection of the balance sheet´s net worth.

I also have a confession to make in that if the shares had reached 10p or so (without this potential TO), I would have sold my shares anyway, as this share has broken all my investment criteria, from clarity, to future strategy and then if that wasn´t enough, to cap it all, it became a bloody investment holding company.

So I´m glad to be pushed out at 10p, regardless of the potential of another 5p. For me in the end, the jam tomorrow scenarios of having a piece of the China growth story became mere hopes rather than goals.

So I say - good riddance to bad rubbish of self interested management

[gwatson56] 18/12/2014 14:24

Simon Thompson - IC...... taken from II

The full IC article.

I am not the only one who has seen the obvious value in Fortune Oil (FTO: 9.4p), a supplier of crude oil, transportation fuels and natural gas. A consortium owning almost 57 per cent of the issued share capital do too and have launched a cash bid this morning valuing each Fortune share at 10p, valuing the equity at £259m. Shareholders are also being given a contingent value right worth 5p a share, or £129m, and one which means they will benefit from a material share in any value realised from Fortune’s valuable 11.3 per cent shareholding in Hong Kong-listed China Gas Holdings (HK:384), an energy giant with a market value of £5bn. Shares in Fortune rose 50 per cent to 9.4p on the news and are now slightly above the recommended buy-in price in my 2014 Bargain shares portfolio.

It seems a fair assumption to make that Fortune Oil's shareholders will get the other 5p a share as the stake in China Gas Holdings is currently worth £565m, or 21.8p per Fortune share, so is way above the level of the 15p a share offer. The 15p a share offer represents a small premium to Fortune Oil’s last reported net asset value of 13.8p, but this only valued the China Gas stake at £400m in the accounts, or 6.3p per Fortune Oil share less than the current market value.

I feel that this is probably the best way to extract value for Fortune shareholders and with 57 per cent support the offer is likely to succeed. For now though I would await documents for the full details of the takeover bid.

[jacks13] 18/12/2014 14:07

Next time I hear the expression 'it's a steal', I shall be reminded of this little episode.
Alan as you say the implication in their statement ("The Independent Fortune Oil Directors believe there would be a challenging investment environment ahead...etc)is that their venture into CGH has somehow been a mistake instead of the roaring success that it has in fact been. The opportunity to grab the spoils all for themselves has been too great to resist.

[alanadale] 18/12/2014 13:51

"The Independent Fortune Oil Directors believe there would be a challenging investment environment ahead for Fortune Oil Shareholders, should the Scheme not become Effective and Fortune Oil remain listed. "

Is the inference from this is the board would cease paying dividends to punish us?

Anyone would think from this Fortune was a business on the ropes. By the board’s own admission it is generating earnings of 3p a share… this translates into a tidy little dividend stream which would sustain a share price of at least 12p a share. I come back to the CGH holding Fortune owns outright which is worth 11p a share.

The new Fortune may not have been the trailblazer we had all hoped for but it was still a nice little earner.

I don’t think Ian Taylor’s reputation is going to be enhanced by this…