By Tom Winnifrith, The Sheriff of AIM | Friday 22 July 2016
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.
UK Oil & Gas (UKOG) has today announced that it has bought another 6% of Horse Hill Developments, 3.9% of the Horse Hill Field for £1 million. The deal makes no sense at all and stinks at every level. Here is why.
The vendor is Flowermay Ltd and it will get £150,000 in cash and £850,000 in shares which it can flog as soon as it wants. So who is Flowermay Ltd and what did it pay and when? I5t is not a British company. The British Flowermay was dissolved in 2004.
My source close to the HH consortium says that it is overseas registered so we will never discover who owns it and what it paid. But we do know when it acquired its shareholding and from whom. The annual returns for Horse Hill Developments for 2014 and 2015 are live and make it clear that the 60 shares were bought from Angus Energy during 2015.
I asked Jonathan Tidswell of Angus how much he sold those shares for and who is behind Flowermay but he declined to answer. I asked David Lenigas who owns Flowermay and he declined to answer. Hmmm I wonder who made a turn on this trade? Perhaps the same parties who made a turn on Danadav?
So that stinks in a big way.
Next up is the price paid. UK Oil & Gas has paid £1 million for 3.9% of HH. But a 35% stake in HH owned by Magellan is currently up for sale.Magellan is debt free and its entire market cap is $6.8 million - £5 million. The word on the street is that Magellan would accept as littlre as $6 million ( £4.6 million) for its 35% stake which mkakes the amount UK Oil & Gas is paying for the Flowermay stake look really daft.
And that again begs the question - who is the lucky owner of Flowermay?
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