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Nature Group – “Trading Update”, as I warned as the shares soared in November...

By Steve Moore | Wednesday 7 March 2018

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.

I first warned on Nature Group (NGR) as the shares slid to 11p in late 2014 and most recently as they recovered above 4p in November on a Strategic Partner & sale of interest in US announcement. They are now though slumping again on the back of a “Trading Update” announcement…

This includes that Rotterdam maritime operations financial performance “showed particular signs of improvement towards the end of FY2017… and the board is pleased to note that this trend has continued into the first two months of 2018” and that “improvement plans are now being jointly developed” following the sale of the 50% interest in the US subsidiary. However, the latter is with “the termination of existing local banking facilities” and it is added “the group’s Oil & Gas division… continues to experience difficult trading conditions”.

However, also “the board has been actively engaged in a process to dispose of Nature Oil & Gas Holding, its wholly-owned subsidiary, and is now in advanced discussions with a preferred bidder”. It though admits “the potential upside any recovery in drilling activity may bring”, but that maintaining this exposure currently “continues to put pressure on the company's overall cash flow and its limited financial resources”.

As I previously suggested then, it’s cash crunch ahoy – reinforced by that “to allow it to progress discussions relating to the proposed sale, the board has secured a verbal waiver from its lender, DNB… totalling £1 million… until the end of April”, otherwise the “group is likely to face serious liquidity constraints and… additional funding would need to be secured”.

Enough said. Natch, it remains bargepole ahoy!

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