By Nigel Somerville, The Deputy Sheriff of AIM | Wednesday 17 June 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.
Deputy Sheriff Towers is in receipt of an astonishing document - a Placing Letter sent out by Cornhill Capital pursuant to the abortive fund-raising announced by New World Oil and Gas (NEW) at the end of April. The placing was, of course, conditional on the passing of resolutions at an EGM, which shareholders blocked. But here is the thing: I see absolutely no reference to that requirement in the Placing Letter- indeed, the acceptance form describes the transaction to buy stock ‘Placed Firm’. Who will be first up to the gallows?
Will it be Cornhill Capital for failing to identify the conditional nature of the placing to the placees?
Will it be the board of New World for failing to make sure that Cornhill knew of this condition?
Or will it be Nomad Beaumont Cornish for signing off on the placing RNS of 29 April, which also failed to mention the conditionality of the placing?
The Nomad is supposed to provide the regulatory oversight. Hmmm…..
As we (cough, splutter) ‘celebrate’ the 20th anniversary of AIM, there could be no better demonstration of all that is wrong with this bent and corrupt market. Surely, surely heads must roll. Surely even the chocolate teapots on AIM (non-) Regulation, the FCA, the UKLA and others must take strong and public action.
Any placee who quite reasonably concluded that they could forward sell the placing (once announced) would inadvertently have found themselves in a naked short (illegal) – and all because the condition that shareholder approval was needed did not appear in the Placing Letter, or in the corresponding RNS. The proposed transaction was to have seen four times the previously existing capital issued.
The LSE suspended the shares after the EGM had blocked the fund-raising, due to a disorderly market: trades were not being settled.
You can read the Placing Letter HERE
More to follow – watch this space
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