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By Tom Winnifrith, The Sheriff of AIM | Wednesday 11 July 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.
That insolvent Andalas Energy (ADL) is undertaking a placing is no shock. It is insolvent with negative net current assets of at least £400,000 but thanks to some fairly sordid share ramping it has managed to raise a gross £1 million at 0.02p. The ramping of shares in this company with worthless assets is pretty unpleasant but what is laid bare in the news is the sheer greed of City advisers notably brokers Novum – of Jon Belliss and Gavin “I made £750k from Globo - Burnell infamy – and Optiva.
The placing will realise a net £920,000 which means that net current assets are now somewhere just under £500,000. And that means that even before it spends a cent on trying to add value to its worthless portfolio of oil exploration assets, hefty PLC costs means that by Christmas net current assets will once again be negative and so that means that by Bonfire Night the next bailout placing will already be on the runway.
CEO Simon Gorringe talks shite as he says the cash “will be used for working capital and to provide capital to pursue upstream opportunities in Indonesia and the UK identified by the Company’s business development activity.”
Nope Simon. Half the cash will go to clear liabilities. Most of the rest will be used not for working capital but to fund your fucking losses – FFS do you not understand the frigging difference? If there is any money spunked on exploration work that just brings forward the date of the next placing. When Simon says just a blatant untruth it reminds me of wretched Mrs May claiming her cabinet is united behind a good deal on Brexit which was also a statement which was complete bollocks. How do folks make such claims and keep a straight face? Do they think we are stupid?
Useless assets, a discredited management team talking bollocksese via RNS, sordid share ramping and the next rescue placing already on the horizon: what is not to like. Never was the phrase “good money after bad” ever more apt.
Now to the City greed. The 8% cost of raising funds looks to be somewhat on the high side. But that is not the end of it. The statement reveals that “Warrants over 300,000,000 shares with a three year life and an exercise price of 0.02p per share will be issued in connection with the placing.” So the warrants are at a strike price which is the same as the placing price with a three year life, a total one way bet. These warrants are not for those who risked their capital (as they should be) but for the advisers working on the placing who have already coined it in with full fees payable in cash.
This is quote shocking greed and was often the deal structure at the corporate broking department of the late lamented Beaufort Securities the former home of the aforementioned scumbag John Belliss and Gavin Burnell of Globo infamy now at Novum, broker to this placing. It is free cash for Nov um. Wait for a spike on a ramp and the shares will be sold into the market and the warrants exercised.
There is no need for these warrants to be issued. It is just more dilution for shareholders and free money for the coke & hookers account in the City.
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