Icebergshares - New open offer

**Nothing that I write here constitutes advice for anybody, this is purely my own personal opinion on the current situation**

Well we’ve just had the RNS that we all knew was coming from New World Oil and Gas. It was all about the number of shares issued, rather than the issue price really.
The issue price only determines how many shares are taken up by Private Investors in the open offer and indicates a floor price for the company.

The number of shares indicates how many of the shares are going to be used to cover the short fall, obviously the lower the better. NEW could have issued anywhere between 1bn and 7bn shares. The final amount of 3.8 billion is not good, but is far from a disaster.
A few points.

Yes the company needs funds to survive, it is disingenuous of the BOD to blame the EGM NO vote on the survival of the company. The NO vote was due to the price the shares were being issued at. Everyone knew that some kind of share issue/fund raising was needed. The question is what is best for the company. Was an issue of 3bn shares at .05 good for company?, given the resulting actions today by the BOD the answer is an obvious NO, this means everybody who voted NO has actually put the company in a much better position.

Does the company need to raise £3.5m to survive? Blatantly not, given that they were happy to raise £1.5m just 2 months ago!.

Cornhill could have just paid £1.5m @ .009 for 1.5bn shares. From this it’s obvious that there is the need for the extra 2.3bn shares.


The company acknowledges that £3.5m will be raised, however only £2.8m net of associated costs etc related to this debacle. So the company has spent/will spend £.7m on this mess. Quite an achievement for a company with such small reserves!.


Next Steps


Investors need to make a few decisions.


Do they:
1) Invest in the Open Offer, use this opportunity to average down. For example if you brought 100k at .5p and your shares are settled then you can buy 500k at .09p giving you an average of around .016p. Given the base price of .09, cash in hand, assets etc a price of .12 maybe .13 as a minimum to sell is still possible. This would reduce your loss potentially from £4k down to £1k or £2k.


2) Sit tight. If the majority of the placing shares are brought by private investors in the open offer then Cornhill, it’s clients, the Market Makers and other short interested groups will still not have the shares they need and will need to purchase them on the open market. Its possible for a short squeeze to still occur.


3) Complain to your broker. If you brought shares that have not settled, you were given no warning by the broker when you brought that the shares would not settle and maybe even received indicated via a website that the shares had settled then you might well want to demand your money back. You probably brought under the assumption that you were buying shares and that the shares would settle in accordance to the brokers own statements. That you could average down in any open offer and maintain your position. Some shares have been settled, some have not. So your broker could have and should have fought on your behalf for what was yours…
You have been materially disadvantaged by your broker being unable or unwilling to settle the shares at the prices paid, this is despite a contract with them saying this. Keep it simply but demand your money back and threaten ombudsman if this doesn’t work.




What investors choose to do is up to them. Personally I think NEW will still be a reasonable company, particularly if the BOD get ditched. Money in the bank, new exciting Middle East projects about to be started. If we look at what the pile of shit SER did and how it was valued. I get the feeling that even with the open offer the price will be over .3 in the not too distant future…