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The Worthington comedy continues: Flagship sunk but there’s definitely a Plan D….probably

By Cynical Bear | Saturday 18 March 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.


It’s going to be a sad day when the Worthington (WRN) and Newco saga finally comes to a sorry end as it is comedy gold and Aidan Earley’s latest offering doesn’t disappoint. I thought I’d set out the full “announcement” that came out on Thursday with my commentary.

To set the scene, Aidan had said on his blog on 23 January that “I can confirm that delivery of the certificates in the new listed company, referred to in the Small WRN Shareholders section of this website, remains on track for no later than 16th March 2017.”

I imagine all the long-suffering shareholders opened their broker accounts with anticipation on Thursday morning only to see nothing.

Hmm, OK, but perhaps Aidan had updated his blog instead. Well, yes, but with a mere tease of a statement saying “Standby for news at 4pm”.

I could hardly wait!

Then at 4pm, the following statement came out (in bold below) with my commentary underneath.

“There will be a very short delay in the delivery of Newco certificates to Worthington shareholders. Details surrounding the stock delivery will be published before the end of next week.”

Hahaha – no shit – a short delay!

That must have been the biggest odds-on favourite in Cheltenham week. I wish he had used the word “shortly” instead for old times’ sake, but I’ll take “a short delay”.

I like the slight change in the language too. Before the stock in a new listed company was going to be delivered on 16March, now it is merely going to be the “details around the stock delivery” that will be published before the end of next week. 

Personally, I’m hoping for an elaborate treasure hunt. Perhaps all shareholders will be issued with a book akin to “Masquerade” from the late 1970’s where everyone started hunting up and down the UK for a golden bunny!

“In the meantime I can clarify the following matters. When Newco has completed its initial acquisitions, it will be listed on one of the top 10 largest stock exchanges in the world.” 

Ok, so I guess that means that it will be unlisted to start with although that’s not what Aidan said on 23 January. It also opens up the possibility that if the deals don’t happen then it will never list, a bit like Worthington in fact.

And listed on one of the top 10 stock exchanges. As a betting man, I’m going to go with one of the ones down that Top 10 list and one with more relaxed regulations. I reckon Frankfurt or the Toronto Venture exchange have to be the most likely candidates, both of which make AIM look tough.

“Newco is not incorporated in the United Kingdom, nor are its acquisitions in the United Kingdom.”

Of course not, why would they be, you don’t want to make it too easy for interested shareholders to find out information on these things, do you? 

It did make me think about the acquisitions though. Going back to the glory days of Worthington RNS’s in early 2015 with the infamous £2 billion NAV shout, I reminded myself of the various deals that were being alluded to.

There was the various media interests – well, they were in the UK and have now all gone bust I think, so we can discount those.

The rare earth element business. Hmm, guess that was Nunaminerals, also bust.

The incredible music opportunity – assume this was Electric Jukebox that Yolo Leisure (YOLO) wasted £1.4 million investing in a while back, so probably got away with one there.

Litigation funding sector – the Law Financial case stays with Worthington. I know there was mention of a Chinese deal at some point although never heard of again.

How about the £300 million Scottish property play? Well, that’s in the UK, so that’s ruled out. A real shame, as it sounded fantastic.

The Alabama coal deal with all those reserves seems to have gone the way of Regency Mines (RGM) this week. Assume they got fed up waiting for the Worthington relist. That could have been a corker.

So what are we left with?

There was mention of a gold play somewhere, an oil and gas opportunity in Africa and something to do with shale in the US from memory.

Can’t wait for them all to be done, although they all look a bit cash-hungry rather than being cash-generative, but I’m sure Aidan knows what he’s talking about.

“I am aware of various speculation about the possible identity of Newco, and I can confirm, for the avoidance of doubt, that it is not any of the following:

Regency Mines plc

Flagship Global Corporation

BIA Resources plc”

Andrew Bell has already commented on this site about the comic genius of anyone thinking that somehow Worthington shareholders were going to get shares in Regency Mines plc. I’m not convinced there really was speculation that this was Newco but if Aidan says there was, there must have been I suppose.

Flagship Global Corporation was my pick but obviously I was wrong. My view remains that it was intended to be but when all the parties concerned realised that it was already under investigation by the SEC for matters in the past, they thought better of it.

Obviously I may be wrong and the parties, that may or may not be connected to the Earley family, that invested over $300,000 to take control of that shell may have altogether different plans for it.

My guess is that, right now, someone is using Google Translate over at Germany’s equivalent of Companies House to set up a new shell and desperately trying to come up with a suitably grand name for the future world-beating conglomerate. How about something like: “Global Acquisitions Holdings” or “The Ultimate Conglomerate Inc”?

Please feel free to come up with better guesses in the comments section below.

“I am also aware that there have been suggestions that Worthington shareholders who are being gifted stock in Newco will find themselves, in some way, invited to participate in a fundraising whether by way of warrants or a rights issue etc. This is not the case, Newco will not require funding from Worthington shareholders and, following the completion of its acquisitions, it will have substantial net cash and net assets, as well as being substantially cash generative. “

Well, that’s good news at least, although I couldn’t help but see the similarities between these statements about substantial cash and assets and those from Worthington in January 2015.

I will believe it when I see it.

“Following publication of the stock delivery arrangements this website will no longer be the point of reference for Newco, all relevant information regarding Newco will be provided by Newco's professional advisers and management.”

I think this means:  “When I start the treasure hunt next Friday, I’m out of here and from then on, you’ll have to get your information direct from Newco’s CEO” 

Please, please, please, let it be Doug Ware.

 


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