Westmount Energy Share Discussion Threads

[roderick montrose smythe] 19/12/2008 09:28

RNS Number : 4668K
Westmount Energy Limited
19 December 2008



Westmount Energy Limited

('Westmount' or the 'Company')




Proposed return of capital of approximately £4.5 million to shareholders by way of issue and redemption of redeemable B Shares




19 December 2008




Highlights




Proposed Return of Capital of approximately £4.5 million to Shareholders

Return equivalent to 65 pence per Ordinary Share

Return to be effected by the issue of redeemable B shares

For every Ordinary Share held at 5.00 p.m. on 28 January 2009, Shareholders will receive 1 B share

Shareholders will have their B Shares redeemed for 65 pence each in cash on 6 February 2009

Return is conditional on Shareholders' approval, which will be sought at an EGM on 30 January 2009

A circular detailing these Proposals is today being posted to Shareholders




'The Company intends to return 65 pence per Ordinary Share (approximately £4.5 million in aggregate) to Shareholders. The overall effect of this is to allow the Company to return value to Shareholders. The Board continues to monitor its remaining investments to ensure they continue to be attractive to Shareholders.' commented Mervyn Bradlow, non-executive Chairman of Westmount.







Background to the Proposals

As referred to in the Chairman's Review to Shareholders accompanying the Annual Report and Financial Statements for the year ended 30 June 2008 dated 3 November 2008, it is the Board's intention to realise value from its investments and to return surplus cash to Shareholders. Since the Company was introduced to AIM in 1995 at a price of 15p per share, the Directors have concentrated their efforts in securing capital growth for shareholders. As a consequence the Directors have not been in a position to recommend the payment of dividends.




It has always been the Directors' intention, however, to recommend a return of capital to Shareholders when major assets are realised upon sale for cash.




On 4 November 2008, Westmount announced the unconditional sale of 244,000 shares in Eclipse Energy plc ('Eclipse'), one of its principal investments, at a price of £18.01 per Eclipse share, realizing total gross proceeds of £4,394,440.




Following the disposal of its shareholding in Eclipse and previous disposals, the Company has cash funds available of approximately £5 million with no indebtedness.




The Directors, therefore, are now in a position to recommend the Return of Capital.




Advantages of the Return of Capital

The Board is proposing to effect the Return of Capital to Shareholders by means of an issue of redeemable shares called B Shares. The Board believes that this method provides a number of benefits for Shareholders, including:

all Shareholders are treated equally, pro rata to the size of their existing shareholdings in Westmount;

the relative proportions of equity held by Shareholders will not change as a result of the issue of the B Shares;

the Return of Capital can be implemented in an orderly and timely manner; and

Shareholders will be able to redeem the B Shares without incurring commission or dealing charges.




Summary of the Proposals

The Return of Capital is conditional upon the approval of Shareholders which will be sought at the Extraordinary General Meeting of the Company to be held on 30 January 2009.




The return of approximately £4.5 million will be affected through the issue and subsequent redemption of B Shares. The B Shares will be issued to holders of Ordinary Shares on the basis of one B Share for each Ordinary Share held as at the Return Record Time, which is expected to be at 5.00 p.m. on 30 January 2009.




The issue of the B Shares is conditional on the passing of the special resolutions relating to the Proposals at the EGM.




The B Shares will be issued at a premium and will be credited as fully paid up by capitalising approximately £70,000 of the Company's share premium account and transferring approximately £4,500,000 of the Company's profit and loss account, being an amount equal to the premium at which the B Shares are to be issued, to the Company's share premium account. The exact number of B Shares to be issued will depend on the total number of Ordinary Shares in issue at the Return Record Time. As at 17 December 2008, the latest practicable date prior to the publication of this document, there were 6,980,300 Ordinary Shares in issue.




The Company will redeem all of the B Shares on 6 February 2009 at 65 pence per B share. All B Shares redeemed will be cancelled.




Shareholders are not being given an option of when to have their B Shares redeemed due to the anticipated costs of arranging multiple payments.




The B Shares will not be admitted to trading on AIM. Although transferable, as there will be no formal market for the B Shares, Shareholders' ability to sell the B Shares, prior to redemption on 6 February 2009, is likely to be limited.




Share certificates for B Shares will not be issued and B Shares may not be held in uncertificated form through the CREST system.







Extraordinary General Meeting

The Extraordinary General Meeting of the Company to be held at 11.00 a.m. on 30 January 2009 at Whiteley Chambers, Don Street, St Helier, Jersey JE4 9WG, Channel Islands. Special resolutions will be proposed at the EGM to approve the Proposals.




Expected timetable of principal events

Last time for receipt of Forms of Proxy for the EGM
11.00 a.m. on 28 January 2009

Voting Record Time for the EGM
5.00 p.m. on 28 January 2009

EGM
11.00 a.m. on 30 January 2009

Return Record Time
5.00 p.m. on 30 January 2009

Issue of B Shares
2 February 2009

Redemption Date
On 6 February 2009

CREST accounts credited and despatch of cheques in respect of B Shares redeemed
On 13 February 2009





All references to time in this document are to UK time unless otherwise stated. The dates and times given in this document are based on the Company's current expectation and may be subject to change. If the dates and times given in this document do change, Shareholders will be notified by an announcement on the Regulatory News Service of the London Stock Exchange.




A circular containing details of this proposed return of capital is being posted to Shareholders today. Capitalised terms in this announcement have the same meaning as those set out in the circular.




Contacts:




Paul R. Anderson,

Westmount Energy Limited Tel: [phone]






Gavin J. Burnell,

Brett L. Miller,

Ruegg & Co. Limited Tel: [phone]




This information is provided by RNS
The company news service from the London Stock Exchange

[cwa1] 19/12/2008 09:23

Return of 65p.....

[whackford] 01/12/2008 16:27

AGM today -- all resolutions past.

Anybody here attend and any indications?

[whackford] 19/11/2008 09:59

Sterling Energy is said "to be in talks". I hope that leads to a settling of the Sterling issue. Then, WTE to do a quick windup by selling the DES and paying out all cash. Then people can buy DES if they want to accept the risk profile.

[deswalker] 18/11/2008 13:27

zingaro,

I'd also prefer SEY and DES shares but I don't think it will happen. Theoretially it seems straight forward but I suspect there'll be many practical issues not least shareholder tax. How would I account for my subsequent sale of DES and SEY for CGT purposes ? What would be my effective buy price of these two shares etc etc ?

I've never heard of an investment company distributing its listed assets in this way and I strongly suspect that we ain't going to see it now.

The best way around this issue would be to distribute the Eclipse cash (thus ensuring WTE shareholders have some funds), then quickly announce the sale of DES and SEY shortly afterwards. Anyone interested in continuing an investment in DES or SEY could then buy in asap.

Des

[zingaro] 18/11/2008 12:58

Hi Des

I would like windup by spring next year, or at least most of the cash being paid out - I'd also like the SEY and Des element as shares and decide on my own timing to sell.

[deswalker] 18/11/2008 11:31

Hope that's us selling 19.5 mill SEY to D O'Brien at 3.5p

[deswalker] 17/11/2008 08:20

I notice from the website that as of 27 Oct we have Amodeo + family of the late DG Williams + Hargreave Hale = 44.87%.

Directors own 5.02% between them.

I'm confident that there will be sufficient pressure/desire for a wind-up by spring 2010.

[topvest] 16/11/2008 13:22

A fair assessment. I agree.

[deswalker] 16/11/2008 13:09

It's clear that a buy at 110p is a punt on the value of DES and SEY but with largely fixed downside at about 75-80p if they both go bust. The payoff is almost like that of an option on a basket comprising DES and SEY. If the basket goes up then one benefits but if they go down then the downside is covered to a degree.

Nonetheless it's difficult to disagree that the offer price is up with current events as it roughly equals the NAV at current DES and SEY prices. However I suspect most here are long term holders who are more concerned with the bid price and/or wind-up level.

So, it's not a buy, it's not a sell but it is definitely a hold for the cash distribution and likely upside from DES and SEY.

They will be under pressure to wind things up fairly quickly IMO. There's the family holding and the Hargreave Hale holding who own over 25% between them and this will force management's hand in a reasonable timeframe. Personally I've been pretty happy with management so far. They sold CDS when it was clearly overvalued, they sold Eclipse at the sort of level I was hoping for via a flotation (so a trade sale is even better), they sold some (but nowhere near enough) DES in the high 70s and SEY in the mid teens. On balance I'm happy with their deal making these last two years.

DES and SEY will go and cash distributed inside 12-18mths IMO and I'm hoping for at least 130p in total and possibly even 150p if SEY sell their US assets or are taken over and DES spikes again as the rig moves south.

[topvest] 16/11/2008 11:55

No it's not. From the results:

"Finally at the time of writing this review the net asset value of our shares (taking into account the proceeds of Eclipse sale) is 110p per share."

Shareholder value here =

110p
- £200-300k of running costs/annum
- Any tax payable (may be nil)
- Costs of liquidation
+ Any value from shell company remaining
- Any cash left in shell company remaining
+/- Any upside in Sterling Energy
+/- Any upside in Desire

110P TO BUY is too expensive, given you will have to wait 6m or more just to get 80-90p back from Eclipse. They haven't worked out how to distribute the cash yet, which is not very impressive...then again it will pay their salaries, so what's the rush!

Still a good company for long-term holders. Just pointing out the price is up with events. With oil prices down to $55/barrel there is downside risk on their two remaining invstments in the short term.

[roderick montrose smythe] 16/11/2008 11:28

Absolute rubbish....suggest that you read the whole FT article. 110p PLUS the upside from extremely low SEY and DES share prices. Not too long to wait now IMHO!

[topvest] 16/11/2008 10:30

Given NAV = 110P and that is how much these cost to buy, that is expensive in my book. They only have two investments with upside potential, offset by c£200k of running costs + costs associated with returning funds. Can see the price reducing.

[roderick montrose smythe] 15/11/2008 23:05

K G-J = FT

www.ft.com

Kevin Goldstein-Jackson: Watching the directors

By Kevin Goldstein-Jackson

Published: November 14 2008 16:26 | Last updated: November 14 2008 16:26

When looking for companies in which to invest, I prefer those where the directors have a stake – after all, why should I risk my money if the directors are reluctant to invest theirs?

Among many other qualities, such as solid assets and no or low debt, in these difficult times I am also interested in the potential of companies to hand out cash to investors.

[topvest] 09/11/2008 13:49

Agreed - expenses are way too high, given there is nothing to do! Looked at buying a few a week or two back, but spread too big. Only limited upside and so I will leave for now.

[bisiboy] 08/11/2008 17:39

before they can distribute sterling shares as well
at such a low market cap ewxpenses are now high with eclipse out the way
a big cut in directors salaries are in order.

[whackford] 08/11/2008 08:52

Des - I would like to see WTE get rid of SEY within a timescale of 3 months, hopefully via a takeover or if not via a sale in the market. Otherwise SEY might go under esp if they cannot sell USA.

Once SEY disposed of WTE should immediately set about winding up and distributing the DES shares if that is practicable. Different shareholders will want to do diferent thing with DES - some hold until a drilling conclusion, others want to sell in run-up to drilling etc., according to risk profile. Therefore, distribute the shares and let the individual decide. I will be contacting WTE to say as much if it looks certain SEY will be disposed of.

I have been a WTE holder since around 1996. I knew D Williams and can remember telling him that I did not think much of the windfarm investment. The windfarm has not been a spectacular success but a reasonable investment in the present climate.

[deswalker] 08/11/2008 08:30

whackford - I doubt very much SEY will get back over 11p for a couple of years at least if ever. Personally I think WTE should be starting to lighten up (sell 10mill say) around this level with the majority held for the US sale and/or takeover, but they should certainly be out inside 12 mths IMO.

I'm no expert but the problem with distributing DES shares may well be one of tax implications for us shareholders. How would we know precisely what our CGT liability would be ? The good thing about DES (over SEY) is that there is a very clear event that will see the share price quite a bit higher. When the rig sets sail for the Falklands then there will be great interest and the share price will spike. It is vital that we are drip feeding into that spike perhaps keeping a few (but not too many) for the result.

I've held here for two years. The main rationale for investing (Eclipse undervalued in the books) has worked like a dream but ironically the share price isn't any higher due to the poor perfomance of SEY. Still the path forward is pretty clear and we should make a reasonable profit from here on an 18mth view. Fingers crossed.

[whackford] 08/11/2008 08:13

Interesting to see in the ARA that the board believes SEY will eventually reach 11.25p again. It is now being talked about as a takeover, so hopefully that will materialise.

If we are left with just DES by the year end they might as well pay these out as shares, the remainder in cash, and that will be the end of it.

All in all, not a bad little investment.

[cwa1] 04/11/2008 13:52

Aye if Celtic win tomorrow nite :>)

There's always one that takes it TOO far.....

[mickinvest] 04/11/2008 13:47

Aye if Celtic win tomorrow nite :>)

Throw in Des getting a rig as well then.

Mick

[cwa1] 04/11/2008 13:46

Christmas???

Sterling Energy plc

Response to Share Price Movement

In response to the movement today in its share price, Sterling Energy plc ("Sterling") confirms that it has received approaches regarding possible offers for Sterling from third parties. Discussions are at a very early stage and there can be no certainty that these could lead to an offer for Sterling.

[deswalker] 04/11/2008 13:21

I've redone the numbers for all the changes up to today (except for management charges since June).

On a fully diluted basis ...

NCA = 6.181 mill
5.2 mill DES at 38p = 1.976 mill
31.5 mill SEY at 2.8p = 0.882 mill

Total = 9.039 mill

Shares in issue plus outstanding options = 7.8303 mill

Fully Diluted NAV per share = 115.44p

I see no reason why they can't/won't release at least 60p per share leaving us with an share price of 30p and a remaining NAV of 55.44p. Hopefully this will grow with DES and SEY and we can look forward to everything drawing to an end in the next 12-18 months IMO.

Des

[mickinvest] 04/11/2008 12:25

Tell me about it C, had that slipped we were looking at an almighty drop, hopefully they'll raise the bid a bit and try and flush out some sellers and buy a few more shares back.(I've got this far so I'll wait a bit longer and getting the hang of the LTBH strategy!)

The company seems to have run its course as the amount of money they have doesn't go far enough for whats required these days although whats the script with tax on the sale or can they get round staggering it over the tax year?

Mick