Derek Pain: Lean return on promising Green CO2 merger

No Pain, No Gain

Green CO2 joined the no pain, no gain portfolio more by accident than design. In 2003 I alighted on what I thought was a promising online group called Wyatt. How wrong can you be? It turned out to be one of the high- tech players that did not make it. Unrewarding deals eroded the shares. They slumped to 2p from my 27.5p buying price.

Another example, I'm afraid, of hanging on, hoping for the best. Mind you, it was not all downhill. At one time Wyatt seemed about to clinch an intriguing takeover and its shares appeared set to record a profit for the portfolio. But no. The deal fell through and, despite some vigorous endeavours, the decline gathered pace.

Green CO2 came into the picture through a reverse deal achieved earlier this year. It is probably not the type of business in which I would have elected to invest. But once again, with the price so low, there seemed little point in selling. Under portfolio rules, the cash call that accompanied the takeover had to be ignored.

The old Wyatt, which changed its name to Green CO2, went into the merger with a clutch of online operations, some of which were profitable. Its partner is involved in the fledgling business of providing Home Information Packs and energy certificates. The combined group has yet to issue a trading update.

But it has raised more cash. One of those private placings which I detest has produced £287,000. Still this is one exercise I cannot complain about. After all, at the time of the merger the group attempted to raise approaching £900,000 through a placing and open offer to shareholders.

The placing pulled in the expected £517,000 but the offer produced a mere £44,000 with a miserable 12.6 per cent take up. So the latest cash call at 1.25p, the same price as the offer, merely plugged the money gap created by reluctant shareholders.

Bob Holt, Green's chairman, and clients of two stockbrokers, subscribed to the issue.

Holt runs another portfolio constituent, the rather more successful Mears, which is engaged mainly in social housing and domiciliary care and is seemingly in a strong position to resist recessionary damage. Its profit record is encouraging and another strong performance is expected this year. Interim figures are due later this month.

The only drag could be the small mechanical and electrical division that mostly serves the private housing market. Yet, in its April trading update, Mears referred to the division's niche appeal and seemed confident about its prospects. The social housing and home care operations are sheltered by long-term contracts with a range of local authorities and other public bodies.

Care is a relatively new activity. Holt believes it could develop as impressively as social housing as more and more organisations are forced to outsource their requirements in the battle to shave costs.

Mears has been particularly active on the housing front. It recently clinched a £200m, 10-year deal with Brighton and Hove City Council, which lifted this year's total order intake to approaching £400m. In April the group had already accumulated 92 per cent of this year's forecast revenue.

The shares were among the portfolio's early arrivals. They were picked up at 23p and sold at 71.5p. An extended holiday that would coincide with what appeared to be a dodgy stock market prompted me to crystallise the not-insignificant profit. I returned in March last year at 272p. The price is now around 255p.

Finally Nighthawk Energy, a constituent that seems to attract much of my attention these days. Although I was assured last week that there were no short-term funding requirements, the group has since rolled out yet another cash-raising share placing. It has pulled in £22.4m at 35p a share.

So shareholders suffer more dilution. The group arrived on AIM in March 2007, raising £10m at 25p in the process. It has since indulged in two placings at 20p and another at 46p. Its latest exercise lifts its placing cash to £48m.

The money is needed for exploration and development. Nighthawk remains a promising oil play. But is it fair to dilute existing shareholders so much? Surely, with a £22.4m call a rights issue (or placing and open offer) should have been arranged.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
Sport
David Moyes and Louis van Gaal
football
News
Former Governor of Alaska Sarah Palin, left, with her daughter, Bristol
newsShe's 'proud' of eldest daughter, who 'punched host in the face'
Sport
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
rugby
PROMOTED VIDEO
News
A cabin crew member photographed the devastation after one flight
news
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
Life and Style
food + drink
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
News
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
Voices
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
News
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
Life and Style
fashion
Arts and Entertainment
The John Peel Lecture has previously been given by Pete Townshend of The Who, Billy Bragg and Charlotte Church
musicGodfather of punk will speak on 'free music in a capitalist society'
News
peopleAt least it's for a worthwhile cause
News
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
tech
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee / Experienced Recruitment Consultants

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

    Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Quantitative Risk Manager

    Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

    Day In a Page

    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments