Open letter to Beaumont Cornish, New World Oil and Gas’s Nomad.

I tried speaking to you yesterday, but unfortunately I was told that you could not speak to me, due to internal, self imposed rules.

I wanted to raise with you a number of concerns and potential breaches of governance that I feel might exist with a client of yours “New World Oil and Gas” (NEW).

In a recent RNS concerning the open offer, which you approved they issued the following statement.

 “The current cash position of the Company (as at opening of business on 8 June 2015), excluding any funds owed to the Company pursuant to the Al Maraam SPA, stands at approximately £290,000. Based upon the current rate of spending and in the absence of raising any funds pursuant to the Placing and Open Offer, the Directors expect this balance to last for no more than three months…..

….If the Company and Cornhill Capital are unable to identify or agree on such steps, the Board may be faced with no alternative but to commence winding-up of the Company.”

It clearly says that the company has a very unhealthy financial position that will cause it to go bankrupt within a matter of weeks (maximum 12-14 weeks).

It is clear that this has been known to the company for quite a while and that the funds sought from April’s placing were needed to prevent bankruptcy. At no point until after the shares were suspended was this made public to the shareholders.

The below is taken from the London Stock Exchanges own rules for companies, which I am sure you are aware of.

“General disclosure of price sensitive information

11. An AIM company must issue notification without delay of any new developments which are not public knowledge which, if made public, would be likely to lead to a significant movement in the price of its AIM securities. By way of example, this may include matters concerning a change in:

 its financial condition; “

 

So it’s very clear that investors were mislead when buying prior to suspension by incomplete but known information on the company’s financial condition. Investors were also mislead when asked to vote in the placement as this didn’t have this information. NEW and yourself also failed to inform investors of a material change in its financial condition.

 

The following also taken from the stock exchanges clearly details where responsibility of this lies.

 

“ensure that each of its directors accepts full responsibility, collectively and individually, for its compliance with these rules; “

 

The directors must accept responsibility for this.

 

http://www.londonstockexchange.com/companies-and-advisors/aim/advisers/rules/regulation.htm

 

The below is taken from the nomads responsibilities, which is linked above.

 

“MONITOR TRADING

OR3 – The nominated adviser should monitor (or have in place procedures with third parties for monitoring) the trading activity in securities of an AIM company for which it acts, especially when there is unpublished price sensitive information in relation to the AIM company

In meeting this, the nominated adviser should usually:

 use suitable alerts or other triggers to alert the nominated adviser to substantial price or trading movements. This can be satisfied via the broker

 contact an AIM company where appropriate if there is a substantial movement to ascertain whether an announcement or other action is required, liaising with the Exchange where appropriate

 consider the necessity for arranging relevant press monitoring, particularly when there is material unpublished price sensitive information in existence “

 

As soon as the exceptionally large volumes started as a Nomad you should have noticed and requested suspension of the share price.

Did this monitoring happen?

Did a request go to the LSE?

When did these things happen?.

 

Finally we come to the open offer itself. There is considerable confusion between brokers as to who qualifies for the open offer. Many brokers are offering the open offer to unsettled holders, however the offer document and the RNS that was released, clearly talk about only settled shares taking part in the open offer. I am sure that you can appreciate that its impossible for me as an investor to accurately judge whether to take the financial risk of subscribing without having full information about who can actually subscribe. Any clarity you can provide here would be appreciated.

I am sure you are also aware that the correct documentation is also not going to the potential subscribers.

 

I am sending you this email in the hope, but not the expectation that you will respond. However I am also sending a copy of this letter to the London Stock Exchange to investigate as a matter of urgency the issues raised.