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Obtala fact Check - Evil Banksta is just wrong

By Tom Winnifrith | Monday 17 April 2017

Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. 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 am meant to be away from my keyboard as I tackle the big D but find myself dragged back by an Evil Banksta to eal with Obtala (OBT) which has been unfairly slighted on this website. I write as a ( small) shareholder in this company following the Dragon's Den Pitch at UK Investor earlier this month. The evil one published a piece which was, I fear, just factually flawed.

There are some folks who claim that companies take a stand at UK Investor to get good coverage here. Well it sure did not work for Obtala. Not only was our coverage bearish but it was frankly libellous. It is a sign of what a good company Obtala is that it does not threaten for it knows that the facts will do the talking. Miles Pelham, its boss and a thoroughly decent chap who has invested vast amounts of his own cash in the company, simply points out a string of factual errors.

The truth is that whoever is editing ShareProphets be it me or - as of this moment young Steve Moore - cannot control what our writers opine. That is the deal we have with them and thus they are at liberty to attack firms who book stands at UK Investor and the companies at the show know that. But writers should get their facts right. The Banksta did not.

The crux of the Banksta bear case is that the funds raised via preference share issues are in fact quasi debt. It is not. It is perpetual equity with preferred dividends not coupons. It doesn't have any debt like features and its terms only contain equity like clauses. If the crux of the case is based on that massive actal error the rest collapses.
But the factual errors do not end there. The Evil one mentions that there's a BVI company which is wrong, Montara Cont is Seychelles and Argento is Mauritius.

The ownership structure is not hidden but is on the website here . Note that Obtala stills owns 6000 prefs so it's current ownership of Argento is 78%. So the Banksta is correct about the 58%.

The Banksta's points about valuation are also drawn from the pst fact era. Please see this RNS. It states that Obtala expects to have received in $22.95 million for its sale of 24% of Argento via the preference shares. That provides a firm and undeniable market value on Argento of $95.6 million. It has placed all of that $22.95 million bar $2 million which will be done soon, giving Obtala an even larger cash pile.

The $95.6 million value is different to the balance sheet of the Forestry assets as those are valued independently under strict guidelines. Obtala may have sold the 24% at a lower price but it needed the money to get the asset into full production which all shareholders will reap the benefit from. The company didn't have enough cash at that point and so had to find a clearing level where investors would commit funds.

Banksta seems to be stating that Obtala assets are worth just the agricultural assets and insinuating an Enron type scandal, which is ridiculous. If you go around calling everyone an Enron ( which had no cash as it turned out and no tangible assets) then such abuse loses any impact. I have termed just one UK Company Enronesque and that was Quindell (QPP) and that claim was proven to be valid. One should compare firms to Enron very rarely.

At 18.5p Obtala is valued at £47.8 million ($60 million). The valuation of 58% of forestry as per the investment level - hard cash put up by folks who have done thorough due diligence on the ground - is $56 million. In addition the PLC has just raised $5 million at 20p in straight equity from a serious investor who also did months of on the ground DD.

So that values both the agricultural assets which are now generating cash and any uplift in forestry which will come as the cash raised for forestry is invested - at less than zero.

And that is why I am very happy to hold my shares in this very well run company. They are ridiculously cheap.

I hope that puts the record straight. Now back to the Greek Hovel and the snakes for som manual labour.

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