By HotStockRockets | Tuesday 12 September 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.
Columbus (CERP) has renegotiated the terms of its $8.9 million Convertible Security Funding Agreement with Lind Partners, LLC , announced by the old regime on 7 December 2016. This is big news and it is good news. The terms are as follows:
On 9 December 2016, $1.825 million was drawn down by the Company (the "First Tranche"), repayable in cash over 24 months from the Company's free cashflow. Repayments are up to date and as of 31 August 2017 the balance of the First Tranche is approximately $1.344 million, with all repayments having been made in cash to date. Under the Funding Agreement, Lind currently has the right to convert some or all of the outstanding balance to equity at a conversion price of 3p per share.
On 10 September 2017, the Company executed the following value accretive amendments to the Funding Agreement: Lind has agreed to increase the conversion price by 50% for the First Tranche to 4.5p per share from 3p per share upon completion of the deal. The Company has granted Lind 17,992,308 shares, to be escrowed by Lind for at least six months from the date of issue (expected to be 23 September 2017). Lind has agreed with the Company that it shall receive the repayment of its next First Tranche monthly instalment in September 2017 in shares, totalling 2,307,692 shares at a conversion price of 3p per share.
Lind has also informed the Company that it intends on exercising its exclusive right to increase the Funding Agreement by$750,000 (the "Second Tranche"), with the funds to be provided to Columbus in Q4 2017. The Second Tranche is to be repaid by the Company at a monthly rate of $38,719 in cash or shares, with the Company exclusively determining the method of repayment on a monthly basis. Upon providing the Second Tranche, Lind will also be entitled to 7,692,308 share options, exercisable at a price 50% greater per share than the average share price for the 20 days prior to the date of award for a period of up to 40 months.
Complex? It is a bit but the bottom line is that with minimal conversions and flips now possible at 3p the sort of eiling on the shares goes from 3p to 4.5p That is big news!!!
Andrew Monk at house broker VSA notes:
I am going to mention the Columbus RNS which on its own is fairly just technical. I mean important technical as it will have potentially a 50% uplift in share price as the renegotiation will effectively lift what was becoming a ceiling of 3p to one of 4.5p. But I think this week we will see a lot of news from Columbus as interims on wed and AGM and presentation on Thursday.
The more I look at this company the more it stands out from every other company I look at. It has quality management , it has production and cash flow which is rising rapidly as they sort things out. It has potential massive and I mean massive exploration but the cost of that exploration will be de minimus as so easy as it's shallow on shore - why would anyone own another oil stock ? The only thing people don't like about Columbus is it is too small for them. But it should probably be 10 times that if you look at fundamentals - so why not buy now even if small but then enjoy the run- this is genuinely a proper company that should have institutional support !!!
We are not sure that at 2.7p-2.9p this is a ten bagger but our 3.5p target to sell looks very do-able now. We note what Columbus boss Leo Koot said today:
"The financial and corporate initiatives we have implemented to date across the Company to reduce our cost base and increase production through existing cash resources means that Columbus is still on track to being cash flow positive in Q4 2017.
The amendments set out below will enable us to deliver further share value growth and to accelerate our work programme in Trinidad. We believe the amendment to the conversion price clearly highlights Lind's confidence in the business and suggests the previous price of 3p should be our share price's floor. With the additional funds from Lind, we are implementing a number of operational opportunities to increase further production and revenues from existing fields, including field optimisation, well stimulation and the water-injection pilot for which the application has been submitted. The preparations for the water injection pilot programme B are in progress and we have already commenced water injection to establish interference between some wells associated with that application."
That is what we call upbeat and sends all the right signals. Leo will have more news on Wednesday (interims) and Thursday (AGM).
HOLD VERY TIGHT.
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