By Tom Winnifrith, The Sheriff of AIM | Friday 17 July 2015
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.
New World Oil & Gas (NEW) shares were suspended at 0.24p because of the inability of shareholders to get trades settled. Following a £3.5 million fund raise at 0.09p that seems to have been settled and the shares have restarted trading today, duly crashing to 0.08p -0.1p. Questions, questions.
1. How much cash does New World have? Assume it had sweet FA prior to the placing but that it raised £3.5 million gross. How much did Nomad Beaumont Cornish, broker Cornhill and other advisers suck out? I called a chap called Nick Bealer at Cornhill who refused to say what commission his firm charged and indeed what the net proceeds were citing “client confidentiality”.
Nick you are being an arse. The client is New World and New World is owned not by its board but by its shareholders and they have every right to know what the net proceeds were and what net cash is. As if Cornhill had not suffered enough reputational damage you get an A1 tool like Bealer showing that he views investors with contempt. Tosser.
I am told that the fees were stiff and that net cash today is very much closer to £3 million than to £3.5 million. Net off trade payables and let’s call it £3 million.
2. So are the shares cheap? At 0.09p the market cap is c£4.2 million. Cash we are calling £3 million plus the worthless assets in Denmark and bongo bongo land. An AIM Casino shell is worth c£500,000. So you are paying a small premium here for management. What?
The management here are a bunch of shysters. They merit a discount not a premium because they will just piss the cash away.
New is not the most expensive stock on AIM but unless there is a quick and cheap management change to a team that is more credible (Mickey Mouse & Donald Duck, the cast of TOWIE both qualify as more credible than the incumbents) the shares are not cheap either.
3. Now to appease flip flop Turney who wants public executions for this farce. I regard the prime culprit as Roland “fatty” Crnish who signed off on two RNS’s ( the first placing and the Chris Oil stake) that were just wrong. To protect the integrity of the Nomad system he must be made to pay. I sense that Cornhill made some material errors too. The word on the street is that Cornhill has spent a fortune in recent months on compliance consultants to change its systems and has hired new compliance officers to make sure that this never happens again. Okay it is a bit too after the event on New but better late than never.
It is the right thing to do. Compliance consultants charge the earth and I am sure that the financial cost will be hurting Cornhill already. And having compliance consultants force you to change culture must be like living in a beehive but it is the right thing to do. Unlike Fatty who blundered on from the New fiasco straight into Gate Ventures, Cornhill does seem to have learned its lesson which is good.
That probably will not save it from a bottom spanking from the FCA but at least it is doing all the right things which the FCA will applaud and so do I. The important thing here is to ensure that this sort of balls-up never happens again. That means that the FCA should be publically criticising those who erred. And if any of the errant folks have not taken steps to ensure this does not happen again – without FCA prompting – they should be closed down. Yes Fatty I am talking about you.
A lot of folks have lost money thanks to this farce which could have been avoided had my suggestion of a suspension on day 1 and unwinding of trades been implemented. I know I was abused for that but I was right.
Now we move on and await the FCA pronouncements. I am not holding my breath.
Never miss a story.
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