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There suddenly seems to be a lot of excitement all over twitter and the bulletin boards about a tiny AIM shell called Infinity Energy SA (INFT) – but of course that wouldn’t have anything at all to do with the recent placing and placees looking to offload for a quick profit!
The interest has been enough though to get me to take a look at the company, and I have to say that I certainly wouldn’t be rushing to buy at the current share price of around 0.16p, and a market cap of nearly £2.7 million.
The company became an investing company back in February 2012, but currently the only investment on its books is £150,000 in a loss-making consultancy services company called UK Methane Ltd, where one of the directors is also Infinity CEO Gerwyn Williams, more of which later.
The company has recently raised a total of £1.1 million via two placings - £500,000 at 0.09p followed by a further £600,000 at 0.13p less than a month later. An update this week on the strategy going forwards revealed that it has total cash of £1 million plus the investment in UK Methane.
The same update also mentioned that the company had decided to cease its investment activities – originally that was to invest in the oil and gas services sector – and is now a cash shell under AIM Rule 15, meaning that it must complete a reverse takeover by October 12 2017 or the shares will be de-listed.
Alongside the recent fundraising, we have also seen Gerwyn Williams convert his outstanding £480,000 loan into shares at 0.13p, and he now holds 36.52% of the shares in issue.
Where it gets interesting is if we were to start speculating on where such a reverse takeover may come from, but South Western Energy Ltd is amongst the names that spring to mind, where Gerwyn Williams just happens to be a director. He claims that his various companies – he is a director of 17 different ones – have plenty of experience of hydrocarbon exploration in the UK via 20 years of operations in Wales, although there is now a moratorium in place on fracking there.
South Western holds all the exploration licences in Somerset, and Gerwyn is predicting that it will be drilling at the end of 2018 – given that the licences expire in December 2020 and all work must be completed by then, it will be interesting to see whether this first drill prediction remains on track.
There is also the small matter of funding as it is predicted to cost at least £400,000 and South Western certainly don’t have that sort of money – the last listed accounts up to the end of 2014 show assets of just £521, with £1 in actual cash - barring maybe some sort of tie up with a listed AIM company, perchance?
It turns out that South Western Energy is actually 100% owned by UK Onshore Gas Ltd, which also owns a string of other subsidiaries of which Gerwyn is a director, including UK Methane where Infinity Energy has its investment.
The financial position of UK Onshore doesn’t look much better if its last set of filed accounts are anything to go by, given that they showed cash of £1,315 and net liabilities of £1,834 – so it was hardly in a position to fund its subsidiary for any drilling campaign either.
Now obviously there is a fair bit of speculation involved here and it may be that Infinity choose a completely different sector for a reverse takeover (assuming of course that there is one), and whatever company that involves has absolutely no ties with Gerwyn Williams. But from what I have seen a lot of investors in Infinity seem to be expecting that it will be related to some sort of UK onshore oil or gas project.
Taking all of that into consideration it is hard to see any sort of value in Infinity anywhere even close to the current share price – on the basis of its assets, closer to 0.07p would seem like fair value. That is aside from the fact that the cash that it does have could well end up being used to fund one of Gerwyn Williams’ private companies, via a reverse takeover, but even then it wouldn’t be enough for much of a drilling campaign anyway. Of course, if that is indeed the area of business the company moves into!
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