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NWOGaction; why I am voting against New World’s placement

By Ben Turney | Saturday 2 May 2015


Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


As co-founder of NWOGaction (www.nwogaction.co.uk) I intend to vote against New World Oil & Gas’ (NEW) placement at the forthcoming EGM on May 19th. After an extremely intense 72 hours, I have given this a great deal of thought and explain below my rationale.

My first reason to vote against the placement is I am certain that by rejecting it, shareholders will be able to remove the current board of directors. Regular readers will know my views on this group and their track record. I believe they do not deserve to be directors of a publicly listed company and am staggered they have survived as long as they have, in the positions they are in.

My second reason concerns the proposed issue of warrants. I am disgusted at the award of essentially in the money warrants with minimal vesting conditions to the directors and to the company's advisors. By rejecting Resolution 2 shareholders will defeat this outrageous proposal.

My third reason concerns the price of the placement. It is appalling; a 45% discount to the previous night’s close. New World’s shareholders do not deserve to be treated so despicably.

My fourth reason for voting against the proposal is because I am certain this is a unique opportunity to take the fight back to the people who have been the scourge of AIM placements for far too many years. Forward selling has been an endemic problem on AIM, which the authorities have singularly failed to deal with. 

It is perhaps a little ironic that the current apparent forward selling of New World’s placement is not illegal. The share price did not drop in the lead up to Wednesday’s announcement, but what has happened since the announcement looks like the height of unimaginable stupidity by the forward sellers.

New World has 702million shares in issue. Since Wednesday over 3billion shares have changed hands, over FOUR TIMES the number of shares in issue. This looks to me like a huge NAKED SHORT position has built up unless those who took part in the placing actually get the stock. If shareholders reject the placement there will in effect be a vast naked short and those with that short will be desperate for whatever stock they can get their hands on. I dread to think what they will be forced to pay to close their positions.

Where so-called regulatory oversight has failed the likes of you and me for far too long, shareholders in New World have been gifted an opportunity to incinerate those people who have had a wanton disregard for shareholder rights and been behind so much of the value destruction we’ve witnessed in AIM’s resource market.

I expect there is going to be one hell of a fight this weekend, as those behind the placement panic once they realise what they have done. In the simplest terms they have handed a loaded gun to aggressive shareholders, determined to right at least some of the many wrongs that have been inflicted on us.

To be clear, I am not telling anyone how they should act, but it is my firm intention to vote against the placement and the issue of warrants on May 19th.


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Comments

4 comments

  1. Sat on almost 2% of the company all bought at 0.067… I am loving the sound of this : )


  2. drunken sailor

    Ben,

    Are they ordinary resolutions (over 50% needed to pass) or Specials (Over 75% to pass). Normally disapplication of pre-emption rights is a special. The RNS does not say. The resolution looks to be outrageous as they are asking for authority to raise £6m ie do loads more placings with pre-emption rights disapplied. The discount on this one is bad enough but what will be the price of future placings!

    I note Metal Tiger took a 6% (soon to be diluted back to just over 3% if the placing goes through) stake in NEW earlier in the week. What do you make of that?

    Anyway best of luck, it would be good to see the board get a bloody nose on this one and if it is a special resolution then you stand a reasonable chance if you can motivate enough people to actually vote their shares against. Sadly most PI shareholders are either too apathetic or do not know how to vote their shares or their nominee account provider does not let them.

  3. The placement has already been done, the vote on the 19th is for a further £6m. The shares sold, this week, will hit the market

  4. Yuff – Despite wording on the RNS as if this has already been done they need the resolutions to be passed.

    I agree with TW and Ben that this could work out in favor of the little man, win win situation.. hopefully no suspenders in the mean time.


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