Market Report: RusPetro pays the price for bond flop
Wednesday 06 February 2013
Investors in RusPetro must have felt like they had been sent to Siberia when the oil explorer's shares crashed to their lowest-ever level. Siberian-focused RusPetro, which listed in London last January when it raised $250m (£160m), has not been able to raise finance via a proposed $350m bond issue and has now postponed the sale.
The shares plunged by as much as 50 per cent during trading and finished the day down more than 15 per cent – an 8p fall to 43p.
Investors were still shuddering after news last month that production growth had been slower than anticipated. RusPetro chose to push out this key piece of information after the market had closed back on 4 January.
Its $350m bond issue was supposed to pay back a loan from Sberbank, and an outstanding loan from shareholder Limolines Transport was going to be converted into new shares.
The small-cap explorer, which counts Vladimir Putin's ex-deputy chief of staff Kirill Androsov and the chairman of Oleg Deripaska's EuroSibEnergo, Andrey Likhachev, as backers who own just under 30 per cent, said it will "consider recommencing the offering at a later date".
The Sberbank loan facility will mature in April 2015. RusPetro also said it will postpone its extraordinary general meeting to approve its fundraising that had been planned for 18 February.
Raising money is tough out there, particularly for small oil explorers, but one outfit which did manage to get some funding away was AIM-listed Victoria Oil and Gas. It placed shares priced at 1.6p to raise £23.4m for its Logbaba gas and condensate project in Cameroon.
Victoria now thinks it is fully funded to meet its "long-term corporate objectives, to monetise the Logbaba gas discovery and to meet its production target for 2013". It also stressed it did not plan to raise further equity.
The shares are now at an all-time low, and lost 0.42p to 1.64p. But traders thought that the group had turned a corner. Macquarie Capital resigned, leaving Fox Davies Capital as sole broker.
After a dip during afternoon trade, the benchmark index recovered some poise and added 12.58 points to 6,295.34. Punters were still willing to overlook bad eurozone news and the outlook was broadly upbeat.
The Kazakh miner Enrc, which reported that fourth-quarter iron ore and ferrochrome output was up, added 31.4p to 375.6p, taking it toward the top of the leaderboard. It was also the subject of re-heated bid rumours.
Traders also spread rumours of corporate activity at the mid-cap interdealer broker Tullett Prebon and the shares added 20.9p to 272.5p.
But it was Flybe's shares that really took off as it agreed a deal with Ryanair's Michael O'Leary to help him in his third takeover attempt of the Irish airline Aer Lingus. Flybe soared 9.25p to 54p on news of the plans to create Flybe Ireland with Ryanair. If Ryanair's bid goes ahead, Flybe will pay Ryanair £865,000 for 43 European routes and around nine planes as well as flight crew and staff, while Ryanair will put up €100m (£86m) for the venture.
The arrangement is part of Mr O'Leary's endeavour to gain European Commission approval for his £600m Aer Lingus takeover bid. A smooth landing for the bid is far from assured. The European Commission will make a decision on competition issues on 6 March.
Investec's experts think that the deal "is in keeping with Flybe's long-standing strategy of expanding in a low-risk way to create a European network. If this goes ahead, we'd expect a material increase in the share price". Investec gave Flybe a hold rating and a 68p share price target.
But Flybe's chairman and chief executive, Jim French, played down the chances, and said: "Before Flybe Ireland can come into being, there are many hurdles to overcome, not least the European Commission accepting the remedies offered by Ryanair… and then the shareholders of Aer Lingus accepting an offer from Ryanair."
The gaming software maker Playtech got a boost from analysts at Deutsche Bank ahead of its fourth-quarter results today. Deutsche rates the stock a buy and raised its share-price target from 470p to 550p. The shares fluttered up 0.9p to 481.5p.
The small-cap oil services specialist Lamprell has won a new Singapore contract and its shares jetted up by 8.75p to 143.75p.
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