ORC.B - Orca Exploration Group

[Mitch07]

Yes I suspect the estate may tender some shares. They did last time. They tendered 1.7M class B shares which something like 40% were bought back.

[manuelbean]

Yes I suspect the estate may tender some shares. They did last time. They tendered 1.7M class B shares which something like 40% were bought back.

 

Isn't that a? (I'm lacking the word in English) I mean, Lyons both thinks that the stock is cheap for the company and expensive for himself. Couldn't this be seen as self-dealing?

[writser]

Yes I suspect the estate may tender some shares. They did last time. They tendered 1.7M class B shares which something like 40% were bought back.

 

Isn't that a? (I'm lacking the word in English) I mean, Lyons both thinks that the stock is cheap for the company and expensive for himself. Couldn't this be seen as self-dealing?

 

I think you should just see it as a return of capital. The estate wants to cash out. If you think the company is paying too much for those shares, well, you should tender. If not, don't. All shareholders have the same pro-rata opportunity. I don't really see a problem.

[writser]

Final results of the tender offer: https://money.tmx.com/en/quote/ORC.B/news/5188190858766760/Orca_Energy_Group_Inc_Announces_Final_Results_of_Substantial_Issuer_Bid .

 

Very interesting to see that proration was actually worse than last year.

 

Mar 2020: Company bought back ~23% of shares outstanding, S/O went from ~32m to ~25m. 18.7m shares were tendered, 7.7m shares accepted, proration ~41%

Jan 2021: Company bought back ~25% of shares outstanding, S/O went from ~24m to ~18m. 19m shares were tendered, 6.2m shares accepted, proration ~32%

 

Given that the tender price was the same, how accretive I thought the previous buyback was and and given where commodity prices are now versus last year I was really expecting the opposite. In fact, this year more shares were tendered despite the fact that the share count decreased by 25%.

 

Shows again that I understand absolutely nothing ..

[writser]

Looks like Swala is getting out: http://www.swalaoilandgas.com/documents/Process-to-sell-25,000,000-Class-1-Senior-Notes-listed-on-the-CSX.pdf .

 

Dr. David Mestres Ridge (Swala CEO) said: “The current holders of the Notes have been very constructive investors and

the Company wants to take the opportunity to thank them for their support. On conclusion of a successful bidding round

the Notes could be held by other financial investors or by Orca. In the latter case Orca could seek, subject to the approval

of the Tanzanian Fair Competition Commission, to re-acquire the 7.93% of PAEC held by Swala (PAEM) Limited."

[lathinker]

Dividend increase from 0.08 CAD to 0.10 CAD.

 

https://orcaenergygroup.com/2021/02/24/orca-announces-increased-quarterly-dividend/

 

Yield around 7% p.a. at current prices

[writser]

Q1 results out. ~20m shares outstanding for a market cap of ~$92m USD. $68m cash, $27m in Tanesco receivables fully written down despite getting back $20m last year. Swala bought 8% of PAEM at an implied valuation of ~$250m (including the debt on the balance sheet) in 2018. Since then the company has spending quite some capex to be able to increase production and has been returning a lot of capital to shareholders.

I know, banana republic, their license expires in 2026, taxes, etc., etc.. Quite a bit of hair. Still, this field is very lucrative and you aren't paying a lot for it. I've been buying a bit more recently. I'd say there is a decent chance they'll launch another tender within a year.

Edited May 19, 2021 by writser

[writser]

On 2/3/2021 at 2:19 PM, writser said:

Looks like Swala is getting out: http://www.swalaoilandgas.com/documents/Process-to-sell-25,000,000-Class-1-Senior-Notes-listed-on-the-CSX.pdf .

 

 

 

The senior notes (with the ~8% stake in PAEC as collateral) have been sold to an EM private equity group ( http://www.swalaoilandgas.com/documents/Sale-of-25,000,000-Class-1-Senior-Notes-listed-on-the-CSX.pdf ) .

 

Quote

Dr. David Mestres Ridge (Swala CEO) said: “The acquisition of the Senior Notes by a financial institution should ensure that Swala’s ownership of PAEC is maintained. The Company looks forward to engaging constructively with the new holders to restructure the Notes in a manner than reflects the remaining potential of the PAEC investment.”

 

 

I'm not quite sure how to interpret this. These notes were issues in 2018 to finance the PAEC acquisition. Now the original buyer resold them to a PE shop but even though the notes have the stake in PAEC as collateral this transaction ensures Swala's ownership of PAEC? What is the plan here? And can one figure out at what price these notes were sold? Did Orca try to buy these notes, as suggested in the initial press release? Interesting puzzle ..

 

Edited June 7, 2021 by writser