Xcite Energy announces a placing via their seda agreement today and it comes with director participation which sends a clear message to shareholders. Xcite has been the horror story of 2011 if you look at the sp’s progress from 395p highs to lows of 104p. Quite astonishing really when you take into account that the company is sitting on 115mmstb ‘minimum’ which is independently valued at circa $1.35bln.
As many will know by now – ‘valuation’ is a funny old game in the stock market. Share prices often become detached from the companies assets and relate more to the ‘trading activity’ that is occurring at that time.
The recent draw down was down at 118p which looks like a ‘mates rates’ placing in the grande scheme of things. It’s not clear at this time whether further equity draw downs will be required to meet the FSP costs and investors will be keen to understand whether the remainder of estimated funding will be sorted via bank loan facility.
The Directors have been under fire due to the sp’s collapse which has been largely attributed to their mis-management of the RR release which require a ‘revised’ version to be issued a week after the first one – as the original was incoherent with a written style that might baffle most North sea oil specialists – never mind the standard pi.
Late in 2010, the directors sold 1mln+ stock at 380p range. Today, they have bought 1mln+ in stock at 118p. That clearly doesn’t wash too well with investors but the directors positions are damned if they do and damned if they don’t. It’s a tricky one to evaluate the merit on. It’s good to see them take the placing as it shows commitment – if they hadn’t participated, then it would have raised more questions than answers.
There is still some way to go before the DECC is given but most sources believe this will be before the end of August. It could come as soon as July – but most would expect an August confirmation.
It’s conceivable that XEL’s sp could be back to where it started ‘pre RR’ announcement circa 290p once the DECC approval arrives. That would represent a full 186p drop to 104p and a 186p rise to 290p in the space of just 3 months.
When investors had eyes on XEL being a multibagger this year, I don’t think they pictured it quite like this.
29 June 2011, Xcite Energy Limited (announced after close on TSX canadian exchange)
Drawdown on Equity Line and Directors’ Share Purchases
Xcite Energy announces that it has drawn down on its Standby Equity Distribution Agreement (“SEDA”) with YA Global Master SPV Ltd (“Yorkville”) in the amount of £12.5 million (CAD$19.5 million). This draw down has been undertaken at a price of £1.18 (CAD$1.84) per share and will result in the issue of 10,593,220 ordinary shares of no par value in the capital of the Company (the “SEDA Ordinary Shares”) to Yorkville. This funding will be used as future working capital for the Company and to progress towards the first stage production of the Bentley field.
Subject to the terms of the SEDA and except in accordance with Canadian securities laws and with prior written approval of the TSX Venture Exchange, the SEDA Ordinary Shares may not be sold or otherwise traded on or through the facilities of the TSX Venture Exchange or otherwise in Canada or to or for the benefit of a Canadian resident until the date that is four months and one day from the date of issue.
Application will be made for the admission to AIM (“Admission”) of the SEDA Ordinary Shares upon approval of the share issue by the TSX Venture Exchange. The SEDA Ordinary Shares will rank pari passu with the Company’s existing issued ordinary shares (each, an “Ordinary Share”).
The Company has engaged Arbuthnot Securities Limited (“Arbuthnot”) to assist in the placing of the stock acquired by Yorkville pursuant to the SEDA, for which it will be paid a fee of £82,800 (CAD$129,000). Arbuthnot, as agent for the purchasers, has agreed to acquire 5,508,475 shares acquired by Yorkville pursuant to the SEDA, including stock to be acquired by directors of the Company.
The Company has received communication that two of its directors, Rupert E. Cole and Stephen A. Kew intend to purchase, using entities controlled directly by them, through Arbuthnot, respectively, 1,000,000 and 1,000,000 Ordinary Shares of the Company at a purchase price of £1.18 (CAD$1.84) per share from Yorkville on the date of closing of the issuance of the SEDA Ordinary Shares to Yorkville.
Following the purchase of the 1,000,000 Ordinary Shares, Mr. Cole will hold an aggregate of 6,198,334 Ordinary Shares. Following the purchase of the 1,000,000 Ordinary Shares, Mr. Kew will hold an aggregate of 6,212,619 Ordinary Shares.
Subject to approval by the TSX Venture Exchange, following the issue of the 10,593,220 Ordinary Shares the total Ordinary Shares in the Company in issue will be 175,591,947