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LGO Energy and Commerzbank TR-1s – surely shome mishtake?

By Nigel Somerville, the Deputy Sheriff of AIM | Sunday 15 May 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.

I’m a bit confused: how can you sell down your holding and at the same time increase your % interest all at the same time? Well, I guess that’s pretty complicated stuff and best left to the professionals.

AIM-listed LGO Energy (LGO), a company which does not (any longer) feature David Lenigas on its board of directors, has been releasing a raft of TR-1 notifications in recent days. This may or may not have something to do with the £3.25 million fundraising announced on 4 May 2016, the shares from which were admitted to trading on 11 May.

Amongst the TR-1s released were four involving Commerzbank AG, the first of which disclosed the crossing of the 5, 6 and 7% thresholds following a transaction on 6 May 2016. The pre-transaction holding is market N/A which one might take to mean zero, and the resulting holding of 447,500,000 shares represented 7.85% of LGO. One might note that the additional information tells us that this was an amended TR-1 (dated 12 May) as the original, dated 9 May, had failed to take into account the increased in capital of LGO (the 4 May placing, one assumes).

Then on 12 May, LGO released a second Commerzbank TR-1 disclosing the crossing of the 6% threshold on 10 May, as reported to the company on 11 May, to take Commerzbank to 6.36%. So it was buying, right?

Bearing in mind the previous holding of 447,500,000 shares represented 7.85% of the company that might seem a tad surprising: the new 6.36% holding was 362,500,500 shares! So was the 6% figure supposed to have read 7%? Or was the number of share held following the transaction wrong? Either way it appears that Commerzbank was a seller, not a buyer.

Later that same day came a another TR-1 from Commerzbank, this time relating a transaction on 11 May as reported to the company on 12 May which saw the crossing of the 5% threshold to take it to 5.92%. But the holding of 362,500,000 (er…wasn’t that 362,500,500?) had been reduced to 337,500,000 shares. So should the 5% figure have read 6%, and what was the previous holding?

Finally we had one yesterday which noted a transaction on 12 May and reported to the company on 13 May which crossed the 4% threshold to take it to 4.43%, bringing the previous holding of 337,500,000 shares…er… down to 252,500,000 shares. Should that 4% figure have read 5%?

Of course this is no hanging offence but each of the last three TR-1s seem to imply that the holding has INCREASED through the disclosed threshold when in fact it seems that Commerzbank AG could not exit its position fast enough. It seems a trifle careless but no more than that.

The real question I have is to wonder what on earth Commerzbank was doing picking up all these shares in the first place. One might consider that it had taken a big line of the 4 May placing, although those shares were not admitted to trading until 11 May they did exist as of the 4th. 

If it was all done as part of the 3.25 million placing, with the first sale done on a T+ basis, it does look as though from 10 May onwards Commerzbank has been dumping its holding as fast as it can. It might seem a bit of a surprise to see the likes of the mighty Commerzbank appearing to act as some kind of super-sized bucket shop. But if it had taken a slice of the £3.25 million placing surely it would have got its original TR-1 correct and not forgotten about the placing shares when calculating its % of voting rights?

So did Commerzbank acquire its holding other than from the placing? I’ve no idea – I suspect not: LGO did tell us that the placing was a wholly institutional fundraise.

If it was the placing it won’t have done too well, as the issue price was 0.2p and the price from 10 May onwards initially hovered at 0.2p before dropping to 0.1925p at the close on Friday, and it still has over half of the holding to get rid of.

One might wonder why Commerzbank was happy enough to pony up at 0.2p but within days has been dumping at below that price: 12 May saw the shares spend the whole session below 0.2p and yet that last TR-1 tells us that Commerzbank offloaded 85 million shares that day.

What might Commerzbank know now that it did not know on 6 May?

And, of course, one wonders whether this might have any effect as/when LGO needs to pass the hat around once again which it will surely have to do as Tom pointed out HERE after reviewing its last RNS.

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