Small Talk: Untangling the web at Cadogan

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The Independent Online

What a task Ian Baron has on his hands. Since being appointed in March as chief executive of Cadogan Petroleum, the Alternative Investment Market-listed oil and gas exploration group with operations in Ukraine, Mr Baron has had to deal with a sea of troubles: he has stopped spending money on operations while conducting a review of the company's activities, has launched legal proceedings against his predecessor over allegations of "improper payments" made to the group by suppliers, and to cap it all, Mr Baron was beaten up by as-yet-unknown assailants in Kiev.

As a public company, Cadogan has been nothing short of a disaster. As well as getting embroiled in what amounts to bribery, the company's entire board has changed and the share price has collapsed from 300p at the time of listing last June, to a touch over 14p today.

The claims of bribery cover the period between 2006 and earlier this year, including the period that Mr Baron – until March 2008 – was a non-executive director. There is no suggestion that Mr Baron was aware of any irregular payments, and the auditors signed off the accounts. He has also moved quickly to investigate the allegations of wrongdoing since becoming chief executive, but the fact that some of the alleged bribes were paid during Mr Baron's tenure as a director can hardly inspire much confidence among investors.

Mr Baron has worked hard to get he group on the straight and narrow since his appointment. In some ways he is in the fortunate position of the group having £50m of cash and some decent assets in Ukraine. Cadogan also looks set to overturn a legal challenge to two of its licences.

While it is thought that the group would prefer to stick it out, Gainsfort Research said last week that it expects the group to be split up or sold off when the results of Mr Baron's review is completed in October.

GW Pharma shares up due to controversial drug

Altogether better news from GW Pharmaceuticals, one of AIM's few biotech groups that has had a good time of it in the last 12 months or so (for the avoidance doubt, the shares are up a very impressive 110 per cent in the last year). The company, which controversially develops its products, including Sativex, which is used to relieve the pain associated with multiple sclerosis and cancer, from the cannabis plant.

Unlike most AIM listed pharma groups that have struggled to generate revenues, GW is already in a strong position from Sativex sales, leading the stock proving popular to investors.

The appetite for shares was evident again at the end of last week when Great Point Partners, the US specialty healthcare investors, snapped up 7.6 million new shares at 78p, giving the private equity group a 5.8 per cent stake in the group. Not to be outdone, M&G Investment Management subscribed to another 917,000 shares to maintain its 10.8 per cent holding.

"Ongoing progress of Sativex and additional pipeline compounds should serve to support share price over the next six to 12 months. Our target represents approximately 32 per cent potential upside to the current share price," say analysts at Singer Capital, who reckon the stock will reach the heady heights of 107p.

GW cannot escape the controversy of its use of cannabis – the group has Government permission to grow the plant at a top secret location in the south of England – even if it only uses a tiny part of the plant for molecules.

So while there cannot be many perks for investors in terms of freebies, shareholders will no doubt be getting high on the share price.

Housing 21 sees Claimar buy bringing value-boosting synergies

It is always good to hear of firsts on AIM. Before too long, Housing 21, Britain's second biggest provider of social housing for elderly people (the group began life 40 years ago as part of the British Legion) is likely to become the first not-for-profit organisation to buy a publicly listed company, care services group Claimar Care.

Claimar's share price rocketed by more than 150 per cent on Friday, taking the stock from a previous year high of 17p to more than 30p, after Housing 21 offered 39p a share. Mark Hales, Claimar's chief executive, said: "Housing 21 represents the right fit for our business, offering an excellent choice of care and support for older people." Housing 21's deputy chief executive and commercial director, Pushpa Raguvaran, argues that Claimar's current share price does not reflect the true value of the company and that it will complement Housing 21's existing operations. Housing 21 is likely to formalise the offer by the end of the week, and expects the deal to be completed by October.

* One thing that is almost as certain as death and taxes is that it will get remarkably cold in Russia in the coming winter.

The AIM-listed company Zirax, which describes itself as offering "de-icing solutions" is expected to announce this morning that it has won the contract to keep Moscow's roads serviceable this winter. The group will provide 20,000 tonnes of calcium chloride, which the group markets as IceMelt, to the city this winter for $4m (£2.4m).

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