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SDX Energy – tut tut: tardy director dealings RNS after-hours and a read-across from the demise of Circle Oil to Igas

By Nigel Somerville | Tuesday 14 February 2017

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.

Dual-listed on AIM and in Toronto via the TSX Venture exchange slipped out a no-one-is-watching o’clock RNS last night detailing some dealings by one of its directors. I had thought that director dealings had to be reported without delay, so it comes as a bit of a surprise that dealings dating back to 4 February – all the more so given that 4 February was a Saturday. Then there is the read-across from the acquisition by SDX of the assets of the corpse that was AIM-listed Circle Oil (COP) for shareholders in fellow AIM-listed Igas (IGAS) which has a few debt problems of its own.

We are told that:

David Richards, a Director of the Company…. on 4 February he purchased 10,000 common shares at C$0.66, on 9 February, he sold 50,000 SDX common shares at C$0.70 and on 10 February he purchased 20,000 common shares C$0.70.  Mr Richards has advised the Company that these transactions are part of a process to consolidate his holdings into a single investment vehicle.  Mr Richards is now beneficially interested in 947,531 SDX common shares. 

Right, so he bought 10,000 shares on Saturday 4 February, sold 50,000 on Thursday of last week, and bought 20,000 the next day. And it took until yesterday, Monday, for the company to inform the market – after-hours, natch.

As for consolidating holdings into a single investment vehicle, I make that a net disposal of 20,000 shares, which just happens to be in the wake of a major transaction and share issue by the company.

No doubt all will come out in the wash and a few more transactions are lined up to return the holding to its former size, now in a single investment vehicle, but the tardy announcement and odd timing of an acquisition of shares on a day the markets are closed raises my eyebrows even if nobody else’s, even if it might at worst only amount to a parking ticket.

I’m sure all is well with the company, and its shares have moved satisfyingly northwards since it joined the Casino last year, raising enough cash to alleviate a previous determination by the directors that the company was in serious financial difficulty, as well as completing a US$40 million fundraising to fund a $30 million acquisition – production and exploration assets in Egypt and Morocco formerly of Circle Oil, with the $30 million price representing about 39 cents in the dollar of Circle’s total group debt as at 30 June 2016.

This, of course, was the result of Circle’s overindebtedness and the result for its shareholders was delisting and a zero return. Circle's loss would appear to have been SDX's gain, whose shares are up to 44.24p following the 30p per share fundraising in January.

Shareholders in Igas, whose unsecured bonds (which rank ahead of the equity) currently trade at just 23.5c in the $ might want to take note.

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