Touchstone report “extremely encouraging” results in Trinidad & Tobago

Ishen Patel
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Touchstone report “extremely encouraging” results in Trinidad & Tobago

Touchstone Exploration (LON:TXP) have told shareholders that they have received “extremely encouraging” results from testing of a well in Trinidad & Tobago.

Touchstone Exploration Inc. is a Calgary based company engaged in the business of acquiring interests in petroleum and natural gas rights and the exploration, development, production and sale of petroleum and natural gas.

Shares in Touchstone trade at 22p (+0.53%). 20/1/20 13:00BST.

The firm had been studying the lowermost 162 foot pay interval at the onshore Cascadura-1ST1 well. It has since been shut-in, with pressures too high for current equipment.

The company said that before shut-in, fluid, hydrocarbon emulsion, and gas were recovered at the service after 97 minutes of testing.

Touchstone is the operator of the well with an 80% stake, alongside partner Heritage Petroleum Co Ltd.

The initial test interval was completed on January 17, 2020 to evaluate the lowermost 162 foot pay interval between 6,056 and 6,218 feet.

The well was opened to test on January 18, 2020 on a 4/64″ choke for a period of 97 minutes with load fluid, hydrocarbon emulsion and gas recovered at surface prior to shut-in.

Paul R. Baay, President and Chief Executive Officer, commented:

“This is the best possible outcome for the initial test results from the Cascadura well, as natural gas and liquids have superior economic value under the Trinidad fiscal regime. Based on the information acquired while drilling, the thick sand we encountered in the well appeared to contain oil with some associated gas. It is now evident that it is likely a liquids rich gas structure. Given this is only the lowermost 162 feet of pay in the well, these initial results are extremely encouraging.”

Touchstone build from November loss

The firm in November reported a third consecutive quarterly loss.

For the three months to the end of September, Touchstone Exploration achieved average crude oil production of 1,729 barrels per day, down 2% from 1,758 barrels in the same period a year ago.

On a positive note, nine month average production was up 12% to 1,871 barrels per day but might not be enough to satisfy shareholders within a disastrous financial 2019.

Touchstone Exploration’s net loss for the quarter was CAD1.1 million, ($793,816), swinging from a profit of CAD199,000 a year before, as petroleum sales dipped by 9% to CAD9.0 million from CAD9.9 million.

The update today from Touchstone will please shareholders, and the firm will been keen to build on today’s update following a tough few months.

PM Johnson focuses post-Brexit immigration system on “people not passports”

Ishen Patel
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PM Johnson focuses post-Brexit immigration system on “people not passports”

Boris Johnson has said to the UK people that the post-Brexit immigration system will “put people before passports”.

PM Johnson has had to fight internal party disputes, opposition and the insurgence of far right wingers in coming up with an adequate immigration plan which meets the British people’s needs.

Speaking at the UK-Africa Investment summit, Johnson said the immigration ruling in this country would become “fairer… treating people the same wherever they come from”.

Johnson has pledged to introduce an Australian idea of a points based system to determine who is allowed to enter this country, and this was the focus of his election proposal back in December.

With the state of Brexit negotiations currently, the free movement of EU peoples will still apply meaning that EU nationals do not need a visa to work in the UK.

Speaking in London, the prime minister said post-Brexit the UK’s immigration system would become “more equal”.

“By putting people before passports we will be able to attract the best talent from around the world, wherever they may be,” he said.

PM Johnson also added that the UK will be the investment partners of choice for Africa at the conference which started on Monday morning.

The prime minister has said that he hopes the gathering will “generate new opportunities in Africa for businesses across the UK”.

The PM will say that the UK has “unique expertise and innovation in technology, clean growth, infrastructure and finance” which can feed the continent’s demand for sustainable growth.

The summit being held has gathered world leaders from many countries and has allowed Johnson to voice his ideas on a global platform to engage with countries where relationships have seemingly gone quiet over the last few years.

The programmes from the Department for International Development, amounting to £370 million, include support for green energy, a £45 million programme helping young people – especially women – access the internet, develop digital skills and find jobs, and a £200 million programme to help build basic trade infrastructure in southern Africa.

International Development Secretary Alok Sharma said: “Africa’s economic potential is huge, with eight of the world’s 15 fastest growing economies and a population set to double to over two billion by 2050.

“We have much to offer African nations – UK aid is tackling climate change and supporting women entrepreneurs, our tech and digital expertise is helping Africa grow new industries and the City of London is channelling billions of private investment into Africa, boosting jobs and growth.”

Intu consider February equity raise to fix balance sheets

Ishen Patel
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Intu consider February equity raise to fix balance sheets

Intu Properties (LON:INTU) have told shareholders on Monday that they are considering an equity raise at the end of February.

Intu have seen a turbulent few months of trading, and the firm said that the discussions over the equity raise will allow to fix its balance sheets.

Reports said that the firm was looking to raise around £1 billion to help it through its testing times, and shareholders are being actively considered within discussions.

Matthew Roberts, Intu Chief Executive, commented:

“We have delivered a robust operational performance for 2019 finishing with a busy Christmas trading period. Total footfall in 2019 was 0.3 per cent ahead of 2018, flat in the UK which significantly outperformed the Springboard footfall monitor for shopping centres.”

“Occupancy was stable at 95 per cent and to date 97 per cent of rent has been collected for the first quarter of 2020 demonstrating the lower risk of our existing customer base.”

“We are making good progress with fixing the balance sheet, our number one priority, and are confident we have the right strategy in place to enable us to prosper as we see continued polarisation between the best destinations and the rest.”

Intu’s income expectations fall

At the start of November, Intu saw their shares crash after expectations for revenue income have fallen for financial 2019.

The retail property giant said that forecasts for 2019 like-for-like net rental income was likely to be down by roughly 9% compared to last year, alerting shareholders.

New rent in the nine months to 30 September 2019 hit £19 million, falling from £32 million during the same period last year.

On a positive note for the property firm, footfall rose 0.9% “significantly outperforming Springboard footfall monitor for shopping centres which was down on average by 2.4 per cent”, the group said.

In their third quarter update, Intu reported that 7 long-term leases amounting to £5m in annual rent, compared with 84 leases equalling £15m in annual rent in the same period a year ago.

NewRiver REIT deal

NewRiver Reit PLC (LON:NRR), a rival of Intu’s reported that they had purchased a Northern Irish retail park from Intu for £40 million.

The park has 231,000 square foot of retail space as well as 1,200 car park spaces and 18 acres of development land.

We are pleased to announce that we have exchanged contracts to acquire Sprucefield Retail Park,” NewRiver Chief Executive Officer Allan Lockhart said.

“This high-quality asset will generate £3.7 million of annualised net property income, which will be highly accretive to underlying funds from operations and significant in improving our dividend cover, which is our key priority.”

“In addition to an attractive long-term income return, the development land offers the opportunity to deliver significant capital growth, leading to a very attractive total return,” Lockhart added.

Intu Chief Executive Officer Matthew Roberts said: “We announced our new strategy at the interim results in July. A key element of this is fixing the balance sheet which includes creating liquidity through disposals. We are pleased to conclude this transaction, which along with the part-disposal of Intu Derby and other sundry asset sales in 2019 brings the year to date disposals total to £268 million.”

Shares in Intu trade at 21p (-6.74%). 20/1/20 12:34BST.

Distil see higher sales from strong festive period trading, as shares climb 10%

Ishen Patel
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1
Distil see higher sales from strong festive period trading, as shares climb 10%

Distil PLC (LON:DIS) have seen their shares in green following an impressive update on Monday.

Shares in Distil trade at 0.77p (+10%). 20/1/20 12:06BST.

The gin and vodka told shareholders that it had seen a good sales performance for the festive period, which was one aspect of the impressive update.

Notably, the firm added that financial 2020 profit will be beating last year’s values and will remain in line with market expectations.

Distil said that revenue for the third quarter, which ended on December 31 increased by 7% year on year which was supported by continued marketing investment.

The firm did says that they saw a 13% drop in revenue despite maintaining its marketing investment spend.

Don Goulding, Executive Chairman of Distil, said:

“Our key brands performed well in Q3, growing volume and value in a highly competitive and changing market place.”

“We maintained our increased levels of investment in marketing and promotional activity over the Christmas period and enjoyed strong customer support especially in Rum which increased volumes by 16% despite intense competition. This was partially offset by reduced volume in gin caused by changes in retailer listings as previously reported.

“The outlook for the final quarter to 31 March 2020 remains positive with full year profit out-turn expected to be ahead of last year and broadly in line with market expectations”

Distil build from June success

In June, the firm saw its profits rise in a stable update to shareholders.

The Company’s performance was improved by a 48% rise in spending on advertising and promotion to £0.688 million from £0.465 million on-year.

This pushed gross profits up 22% to £1.429 million for the year ended March 31st 2019, with margins following suit, up from 58% to 60% during the year. The revenue spike of 19% to £2.4 million also drove operating profit before tax to increase to £0.160 million from £0.157 million on-year.

“I am pleased to report another strong set of results with growth in revenue, profits and gross margins supported by increased marketing investment in our brands,” said Distil Executive Chairman, Don Goulding.

Rivals – Stock Spirits see impressive trading as well

Stock Spirits (LON:STCK) who also operate in the same field as Distil have seen a productive period of trading.

Stock Spirits said said for the financial year ended September 30 its revenue rose 9.2% to €312.4 million from €282.4 million in a comparative period a year ago.

Another impressive figure which caught shareholder interest was that pretax profit had risen 24% from €282.4 million to €312.4 million.

Stock Spirits said revenue growth reflected its successful growth strategy, with strong performance in Poland and Czech Republic. Also, the company said it delivered its premiumisation target a year ahead of plan.

This was to develop a more premium portfolio and have 30% of revenue coming from premium product.

The company increased its annual dividend by 5.1% which would have put the icing on the cake for shareholders.

The dividend saw a 5.1% rise from €8.51 a year ago to €8.94, which is certainly impressive when you look at the global market state.

Distil will pleased with the results they have updated, and at a point where the British pub market is blooming as seen with companies such as JD Wetherspoon (LON:JDW) there can certainly be a sense of excitement for both shareholders and the firm going forward.

Sosandar report revenue growth but warn shareholders on widened loss

Ishen Patel
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Sosandar report revenue growth but warn shareholders on widened loss

Sosandar PLC (LON:SOS) have updated the market on Monday, giving a pessimistic tone to shareholders.

The firm said that its annual revenue for its financial year, which ends on March 31 is on track to beat market expectations however its loss will be wider.

Sosandar attributed this wider loss to increased customer acquisition costs, which sent shares crashing on Monday.

The firm said generated a quarterly record net revenue of £3.8 million in the three months to December 31, as net revenue exceeded £1.2 million in each month.

Looking at their recent quarter of trading, Sosandar said that revenue was ahead of management expectations and more than double the revenue generated in the same period the year before and exceeding the £2.8 million recorded in the first half of financial 2020.

Notably, the company said growth in its active customer data base which totals at 110,132 which saw a 93% surge from the same period one year ago.

Something for shareholders to also take was that the number of orders rose 140% to 84,304.

Sosandar’s customer database more than doubled since December 31, 2018, to 207,672 and repeat orders in the quarter almost trebled on the same period in 2018 to 51,320.

Ali Hall and Julie Lavington, Joint CEOs, commented:

“We are delighted to be reporting on an exceptional period of growth with sustained momentum across the key trading months to 31 December. It is pleasing that, as expected, following our increased investment in marketing, product and team we are seeing accelerated growth across all our KPIs. It is also testament to the quality of our product range that once we have acquired the customers they are becoming highly engaged with our brand.

“The opportunity we identified appears to be bigger that we first thought, with the success of new product areas helping to drive repeat purchases increasing the potential for future ranges. This has been enhanced by the successful trial in TV advertising which, combined with the already established channels of social, direct mail and PR, expands our ability to attract more new customers than originally anticipated.

“Acquisition of customers is nothing without successful retention and that’s why it is so pleasing to see that repeat customers in January, a traditionally difficult trading period, are tracking higher than in the peak Autumn/Winter period helping to continually improve the ever-growing lifetime revenue number.”

Sosandar remain confident

“Given the strong current trading, the Company’s full year revenue is on track to exceed current market expectations and the Company is confident in delivering further growth in future years thanks to the escalated customer acquisition between September and December. The success of the Autumn/Winter period and increase in repeat orders and lifetime revenues of customers means the Company intends to carry on with its increased investment strategy in Q4 to drive current and future growth. Given the upfront cost of acquiring new customers against the benefit over the lifetime of the customer, the Company expects this investment to result in the net loss for the full year being higher than previously anticipated with the increased benefit to be experienced in future years.”

November worries for Sosandar

In November, the firm reported that its interim loss widened as it invested heavily, however the firm did report that revenue grew strongly.

For the six months ended September 30, pretax loss deepened to £2.8 million from £2.0 million the year prior. This was despite revenue jumping 56% to £2.8 million from £1.8 million the year before.

Profit took a blow caused by administrative costs, which surged from £3 million a year ago to £4.3 million as reported on Wednesday.

“The investments that were made in the latter part of the second quarter have resulted in exceptional autumn trading,” Hall and Lavington added. “Post period end, October was particularly notable, as we hit a special milestone – the first month where net revenues exceeded GBP1 million, a performance which November is on course to exceed.”

Competitors in the market see mixed results

N Brown Group plc (LON:BWNG) saw their shares crash over 24% following the issuance of a profit warning last week.

Within the 18 week period, Brown saw total revenue fall by 5% to January 4. Notably, womenswear saw positive growth of 1.1% year on year, as digital revenue also grew 6.7% following growth in its Simply Be brand.

The Simply Be Brand was one of the standout performers for Brown, as revenue climbed 12% from a year ago and online revenue surged 13%.

In this department, both brands such year on year revenue growth of 0.4% and 7.9% respectively, however both brands saw overall revenue declines.

Notably, in the JD Williams brand segment total revenue slumped by 4% and Ambrose Wilson fell further by 9.6%.

Jacamo, one of the menswear brands that the firm holds saw a rise in digital revenue of 3.2%, which pushed overall revenue up by 2.5%.

Boohoo dominate the market

When looking at the womenswear market, the stand out performer across 2019 was Boohoo (LON:BOO).

The firm lifted its annual guidance this week following strong revenue growth.

Also in the update, the firm said that it had appointed former JD Sports (LON:JD) chief financial officer as its new deputy chair.

Across the four month period, which ended on December 31, the firm said that its revenue had jumped 44% to £473.7 million from the £328.2 a year ago.

Boohoo said that it expects revenue growth for its financial year, which ends on February 29 to be between 40% and 42% ahead of their previous guided range of 33% to 38%.

The firm added that t expects adjusted earnings before interest, taxes, depreciation and amortisation margin to be 10% to 10.2%, beating its previous guidance of around 10%.

Certainly, Sosandar will have to review their operations and structure in light of market competitors such as Boohoo smashing 2019, however seniority have remained confident to deliver results across the year. Shares in Sosandar trade at 26p (-6.19%). 20/1/20 11:49BST.

Election result provides stability to UK housing market

Dina Caruso
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Election result provides stability to UK housing market
New data revealed on Monday that UK house prices have grown at a record rate following last month’s general election. Rightmove’s House Price Index revealed that the price of property coming to market increased by 2.3%, making it the “largest monthly rise” ever seen at this time of the year. Between 8 December and 11 January, almost 65,000 properties were marketed. Meanwhile, buyers are also feeling the optimism as demand has jumped since the election. Immediately after the election from 13 December to 15 January, enquiries to estate agents were up by 15% compared to the same period a year prior. Last year was a rather turbulent one for UK politics, with political and economic uncertainty hitting many sectors. It seems that the outcome of December’s general election has provided optimism to the housing market. “These statistics seem to indicate that many buyers and sellers feel that the election result gives a window of stability,” Miles Shipside, Rightmove director and housing market analyst, provided a comment. “The housing market dislikes uncertainty, and the unsettled political outlook over the last three and a half years since the EU referendum caused some potential home-movers to hesitate,” Miles Shipside continued. “There now seems to be a release of this pent-up demand, which suggests we are in store for an active spring market. The early birds are on it, with over 1.3 million buyer enquiries to agents since the election, up 15% on the same period a year ago. Some buyers are even further ahead and have snapped up a property already, with the number of sales agreed up by 7.4% on this time last year.” Marc von Grundherr, Director of Benham and Reeves, said: “The coal that fills the furnace of the UK property market is very much market sentiment and it doesn’t matter what your stance is on Boris or the election result, even the slightest inkling of returning market stability has been enough to reignite the fires both where buyer and seller activity are concerned.” “There was an instant uplift in buyer commitment following the result and those acting fast enough were able to secure some very favourable deals. However, as is always the case, a tsunami of buyer demand soon spurred an increase in asking prices and savvy sellers were quick to ride the turning tide to ensure they secured the best price for their property,” Marc von Grundherr said. Marc von Grundherr added: “This rather emphatic return to form was always on the cards given the resilience of the market and we shouldn’t be surprised if this is only the start of a very positive new decade for the UK property sector.” Meanwhile the Founder and CEO of GetAgent.co.uk, Colby Short, also provided a comment: “The property market has sat in a state of hibernation while political uncertainty has remained prevalent, but all the while, both buyer and seller sentiment has been building like a coiled spring.” “The election has proven to be the release point for this built-up tension, with the market exploding back to life almost instantly and both buyers and sellers jumping back in at the deep end where enquiries and asking price increases are concerned,” Colby Short said. Colby Short added: “This has helped to bump start a market that has been stuttering over the last three and a half years and while we shouldn’t try and run before we can walk, it does show promise for the year ahead.”

Forum Energy invest into Anglo African causing shares to spike over 14%

Ishen Patel
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0
Forum Energy invest into Anglo African causing shares to spike over 14%

Anglo African Oil & Gas (LON:AAOG) have told shareholders that they have added a new investor to their portfolio on Monday.

Anglo African said that Forum Energy Services Ltd (NYSE:FET) had taken a stake in the company, as shares jumped.

Riverfort Global Opportunities PCC (LON:RGO) and YA II PN Ltd will be selling 84.0 million shares to Forum Energy at 0.5 pence each, for a total of £420,205. AAOG will get £361,376 off this.

Anglo have said that they intend to use the proceeds to pay off debt, and also look at the deal with Zenith Energy which hit news headlines earlier this month.

The update also said that Forum will have the right to appoint three directors to AAOG board, and the current Non-Executive Director Phil Beck will leave once the first Forum Energy nomination joins.

Sarah Cope, chair of AAOG, said, “The Board has considered several offers to purchase the ISA Shares and has, in consenting to the purchase by Forum, given consideration to the long-term interests of the Company rather than purely immediate financial gain. The Board is confident that, of all the potential partners considered, Forum has the clearest vision and best contacts that will enable it to deliver value for shareholders in the long term.”

Paul Forrest, Chief Executive of Forum, commented, “Forum is pleased to have taken a strategic stake in the Company and we are looking forward to working with the Board to create shareholder value. Forum has, through its investors and network, access to sources of funding as well as exciting and viable projects in the natural resources sector that could be suitable as acquisition targets for AAOG.”

Zenith Energy deal

As mentioned, Anglo African saw their shares crash when a deal with Zenith Energy (LON:ZEN) hit market headlines.

Zenith are set to purchase an 70% stake in Anglo African Oil & Gas’s Congo subsidiary for £1 million under a sale and purchase agreement.

The deal has been put on hold however as Anglo African Oil & Gas shareholders have yet to approve the deal.

Following the lack of funds and a recent share subscription, Anglo African entered negotiations with Riverfort for a convertible note loan.

However, a deal has not be struck. Riverfort have agreed terms where Anglo will receive an initial tranche of £250,000, if shareholders approve the Zenith deal, and a further £50,000 every month until negotiations over the convertible notes concludes, which leaves shareholders will power.

Zenith has also agreed to advance a £250,000 loan to AAOG to help with its cashflow position. This loan, whilst subject to shareholder approval, is not contingent on the sale of AAOG Congo. The loan is for an initial six month period but may be extended for an additional three months.

“When the board entered into the sale and purchase agreement on December 24, the reality facing the company and its shareholders was that AAOG had very limited cash resources, a large debt owing from Societe Nationale des Petroles du Congo with no certainty as to when the debt would be repaid, a significant creditor position both at the plc level and at AAOG Congo, a work programme at Tilapia that was not fully funded and the likelihood of a significant signature bonus attaching to reattribution of the Tilapia Licence which expires in July 2020,” AAOG said.

Shares in Anglo trade at 0.4p jumping 14.14%. 20/1/20 11:27BST.

Rockfire Resources’ impressive few weeks

Ishen Patel
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Rockfire Resources’ impressive few weeks

Rockfire Resources (LON:ROCK) have said that it has started drilling to expand gold mineralization at its BPL025 hole in Australia.

Shares have surged this morning by 37.88% to 1p. 20/1/20 11:10BST.

The firm said that reverse circulation drilling is now being undertaken and will be completed within a 15 day period.

Geophysical anomaly will be tested by drilling two holes of 50 meters and 150 meters respectively, east of hole BPL025, with gold analyses to follow the completion of drilling.

The drilling program will aim to extend the near-surface gold resources at Plateau in north Queensland, the company noted.

David Price, Chief Executive Officer of Rockfire, commented:

“This current drill program is a very exciting one, as we are testing at depth to the east of hole BPL025, which was a very successful hole. Success with this follow-up drilling will demonstrate significant extension of this deep gold mineralisation in an east-west orientation.”

“A second aim of the current program is to expand and build greater confidence in the gold mineralisation at our near-surface JORC resource, in an effort to define an open cut resource, 80m from surface.”

“We are fortunate to get underway with drilling at this time of the year, as the usual wet season in northern Australia has not yet arrived and we intend to make the most of this window of good weather. Geological mapping, rock sampling and XRF analysis of drill samples from October 2019 drilling is in progress and the Company expects results from this analysis within the next few weeks. We will keep the market informed of our progress.”

November – where Rockfire picked up

In November, the firm reported that it had seen consistent gold assays from an operation in Australia.

The firm updated shareholders that it had returned broad consistent gold assays from a geophysical target on its Plateau gold project.

Of particular note was gold mineralisation occurring almost continuously throughout a 215 metre deep hole, including 177 metres at 0.5 grams per tonne gold.

Rockfire believes that this hole has intersected the upper levels of a large mineralised system.

“Hole BPL025 was designed to drill down a sub-vertical pipe structure into the centre of a geophysical chargeable anomaly,” David Price, chief executive of Rockfire in a statement.

“This is the first indication that Plateau has grade continuity extending at depth and supports our belief that this deposit is much larger than previously demonstrated. With consistent gold, silver and zinc being encountered close to surface, we always believed that a large mineralised system was somewhere deeper down. This hole has demonstrated that mineralisation can be followed over long intervals,” he added.

Lighting strikes twice within two weeks

At the start of December, Rockfire said that the drilling of a new Breccia zone at the Plateau Gold deposit in Queensland, Australia has discovered high-grade, near-surface gold.

The company said the central Breccia was identified from mapping and sampling by Rockfire geologists. The company believes this new mineralised zone forms part of the near-surface expression of the large gold system encountered by the BPL025 drill hole.

The newly identified zone includes an intercept of 1 meter at 21.7 grams per tonne gold, which is the highest gold grade encountered in drilling at plateau, the company said.

David Price, chief executive officer, said: “We are starting to get a better understanding of the geology of this zone and the more we learn from each drill hole, the higher our drilling success rate becomes.”

“These holes are interpreted to represent the near-surface expression of the large gold system encountered at depth in hole BPL025. Importantly, these holes extend the mineralised target zone by another 120m towards the east. It is our expectation that the geophysics recently completed at Plateau may highlight potential for a “sweet spot” with higher average grades at depth,” Price said.

Rockfire hit gold for a third time

Just one week later, the firm said that induced polarisation geophysical survey has identified multiple anomalies at the miner’s 100%-owned Plateau gold deposit in Queensland, Australia.

Rockfire said large geophysical anomaly has been detected around and beneath BPL025 target, which intersected 177 metres at 0.5 grams per ton of gold.

The anomaly is a reported 350m wide and over 200m long, has proven to host gold mineralization near surface and provides multiple strong targets for gold exploration at depth, Rockfire explained.

Rockfire said it continues to await results from the remaining 11 drill holes from October Plateau drilling campaign and intends to extend the geophysical survey towards the east to track the gold anomaly further.

Shareholders of Rockfire will be thoroughly impressed with the update and generally the last few weeks of trading.

If the fine form continues, the shareholders can be excited for Rockfire to see what 2020 brings.

BAE Systems announce two American acquisitions

Ishen Patel
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2
BAE Systems announce two American acquisitions

BAE Systems PLC (LON:BA) have announced to shareholders that they have acquired two American businesses on Monday.

The firm said that they have purchased the military global positioning system from United Technologies Corp (NYSE:UTX) unit and Raytheon Co’s (NYSE:RTN) Airborne Tactical Radios business.

BAE also announced that they would be buying US based Raytheon’s Airborne Tactical Radios business for $275 million in a cash only deal.

The deals are still subject to clearance, however BAE shareholders have seen their shares in green.

Charles Woodburn, Chief Executive of BAE Systems said:

“These proposed acquisitions present a unique opportunity to add high quality, technology focused businesses to our Electronics Systems sector. It’s rare that two businesses of this quality, with such strong growth prospects and close fit to our portfolio, become available. The strategic and financial rationale is strong and these proposed acquisitions, which are focused on areas of highest priority defence spending, will further enhance the Group’s opportunity for continued growth in Electronic Systems. We look forward to welcoming the employees of the two businesses to the Company, as we work together to help drive our business forward successfully.”

BAE move following other merger deals in the industry

In November, the UK Government gave the green light for the planned purchase of Cobham (LON:COB) by US private equity group Advent.

The deal is set to cost Advent $5 billion, and the deal won clearance after the group offered a number of commitments to address national security concerns.

The deal was put on hold after British business minister Andrea Leadsom spoke to government departments about the risk of the deal.

“We have worked closely with the Ministry of Defence to construct undertakings that would adequately mitigate against any potential national security risks,” Shonnel Malani, partner at Advent, said.

Advent will also have to give prior notice to the Ministry of Defense, if arrangements are made to sell Cobham’s business are made whilst government contracts are still to be fulfilled.

“No decision will be taken on whether to accept the undertakings until the consultation has closed and the representations have been carefully considered,” Leadsom said in a statement.

Following the movements in the market, BAE have made an impressive start to 2020. With these two acquisitions, this is a great opportunity to develop and expand operations whilst using US knowledge and expertise.

Shares in BAE Systems trade at 641p (+2.66%). 20/1/20 11:00BST.

Update: Anglo American Sirius Minerals deal gets the green light

Ishen Patel
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1
Update: Anglo American Sirius Minerals deal gets the green light

Anglo American PLC (LON:AAL) have announced that the proposed merger deal with Sirius Minerals (LON:SXX) has been completed.

Anglo said that they will offer 5.5p per shares for Sirius, which shows a 34% rise to the closing price of Sirius on Friday which was 4.1p.

Sirius Minerals itself said its directors consider the acquisition to be “fair and reasonable”, and have recommended that shareholders vote in approval of the offer.

The offer is conditional on whether 75% of Sirius shareholders decide to vote in favor for the merger deal, which will be done at an upcoming court meeting.

Anglo American have remained confident about the acquisition and have said that they expect this to be formally completed by the end of March.

The share price offer values Sirius at £404.9 million, and is a deal which Anglo American will be thoroughly excited with.

Commenting on the Acquisition, Mark Cutifani, Chief Executive of Anglo American, said:

“Anglo American’s recommended offer provides greater certainty for Sirius’ Shareholders, employees and wider stakeholders, while bringing the prospects for the development of this potential Tier 1 Project closer to reality. We intend to bring Anglo American’s financial, technical and product marketing resources and capabilities to the development of the Project, which of course would be expected to unlock a significant and sustained associated employment and economic stimulus for the local area.

“The addition of the Project supports our ongoing transition towards supplying those essential metals and minerals that will meet the world’s evolving needs – in terms of the undoubted need for cleaner energy and transport, and providing infrastructure and food for the world’s fast-growing and urbanising population. Our development of the Project in the years ahead reinforces the quality of our portfolio and our long-term growth profile, further enhancing our ability to deliver leading returns on a sustainable basis and enduring value for all stakeholders.”

Sirius find need to merge with Anglo American

Commenting on the Acquisition, Russell Scrimshaw, Chairman of Sirius, said:

“Four months ago, following the setbacks in the bond market, we took the difficult decision to slow the pace of development of our project and initiate a strategic review to reassess how best to unlock the long term value for our Shareholders, the community, the UK, and our customers all around the world.

“The scope of the strategic review was to consider and incorporate optimisations to the Project development plan and to explore alternative funding solutions, including looking for a strategic partner to acquire a minority interest in the Project to provide those funds and support the senior debt financing required to complete the Project.

“We were successful in reducing the initial funding needs of our Project to map out a way to develop the Project in a way that better aligned risk to capital providers but, despite an extensive global search for a strategic investor, we have to date not received a firm proposal for a partial Project stake. The only viable proposal was received from Anglo American in early January, who were only interested in pursuing a 100% control transaction.

“Alternative financing solutions have also been pursued in parallel to the strategic partner process, which resulted initially in a non-binding proposal being received in December 2019 and subsequently a revised proposal being received on 9 January 2020. However, in the opinion of the Sirius Board and its advisers, the terms of the proposal received and the conditions attached are not acceptable in their current form. It is highly unlikely that acceptable revisions to this financing proposal can be delivered and implemented by the end of March 2020.

“We acknowledge that to many Shareholders our decision as a board to recommend this offer will have come as a shock. Your board deeply regrets that we could not deliver the complete stage two financing in 2019 despite a very broad and thorough process. Going into the strategic review the Sirius Board’s strong preference was a solution that allowed current Shareholders to participate as fully as possible in the future development of the Project. Following the strategic review process it is clear that no such options are currently available to us and in that context Anglo American’s offer is the only feasible option.

“We also recognise the returns that this offer would represent are not what either our shareholders or the Sirius Board had previously hoped for. We regret that we are not able to deliver on our long-term goal of Sirius being able to deliver the Project into production, although we assure all stakeholders that the team has worked tirelessly and diligently over the last nine years to try and achieve that. However, given the current cash constraints of Sirius, and lack of realistic and deliverable alternative financing and development options, we believe this to be a fair approach from Anglo American, a company committed to approaching the Project in the right way, and with the resources to complete the job.

“We now face a stark choice. If the Acquisition is not approved by Shareholders and does not complete there is a high probability that the business could be placed into administration or liquidation within weeks thereafter. This outcome would most likely result in Shareholders losing all of their investment, as well as put the future of the entire Project, and its associated benefits for the local area and the UK, at risk.

“This is the context in which your board must assess the offer for your company and, having given due consideration, your board believes the Acquisition to be in the best interests of Sirius and all of its stakeholders, providing Shareholders with some financial return.”

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