On Friday Afren finally gave up the ghost and called in the administrators after it failed to get more funds from the Bond Holders. Although the situation received a handful of vague comments in the weekend press I am astonished that it appears that no investigative journalist has taken up this alleged breach of management responsibility and attempted to expose what might be a huge can of worms. I am aware that some shareholders are attempting to take action and they should be encouraged, as so far I have also not seen activity from the appropriate authorities who should be considering launching a criminal investigation going back some way. So many questions appear to have been raised it is difficult to cover up, such as whether directors ignored a perfectly reasonable bid for the company, the status of companies within and under the Group umbrella and the transfer of assets therein. Time for action?"
Frankly, I this is irresponsible statement to make, hundreds of Nigerians abroad traded in this share too and like everybody else have lost money. By the way it is on record that the people who ran the company aground are not Nigerians.
Why would anyone come with this kind of insensitive statements
I believe this is not a Nigeria bashing forum?
FWIW we have no reason to think Afren directors did not consider the risk associated with falling prices. But, if they did, they obviously thought it was a risk worth taking, as did shareholders who did not sell out months ago.
It is worth remembering that few in the oil industry seemed to predict the oil price falls. For instance Premier Oil were buying back shares just before the price started dropping, as was Genel........ and they would only do that if they had no clue what was around the corner in terms of the oil price and its knock on effects on their share prices.
What I've learnt from this debacle: Never trust any scheme with Nigeria mentioned in it!!
I still think that for a company like Afren to be allowed to take on so much debt without any consideration of risk, is a classic example of panic-lending/banking-crisis behaviour. Companies that have grown quickly during that 10year era of madness should all be vetted intensely before further investment by bond or share holders. I have learnt my lesson painfully! It seems there is no quick route to riches except for the corrupt.
We are all getting rolled over by the debt. I'm a bondholder and there is debt ahead of me. In a bear market where cash is king, companies are valued at a fraction of their true worth. If you are behind in the capital hierarchy you only get the leftovers if there are any. This is the bottom line.
I will be lucky if I don't get wiped out but that's life in the real world. I invested knowing the risks (debt ahead of me) so won't be complaining.
I agree you longer term investors have genuine greviances re past incompetence and corruption but sadly this is the risk we take
But 5 Iron, You knew about the debt when you invested and you knew the risks. Administration is simply the consequence of those risks not playing out to shareholders' advantage and is why focussing solely on the asset value, to the exclusion of all other matters, is a mistake.
The question of what might happen in the future to the assets is largely irrelevant to current shareholders. Just as someone who can not pay their mortgage and has their house reposessed can not complain that someone else buys it from the bank and moves in. The house could be worth a fortune but it does not help the person who took out too much debt to live in it.
So when we see Atrush and Barda Rash is all part of the mega field and actually things were better than they recently thought and pumping 100,000bpd next year not to mention cranking up Nigeria to 100kbpd all run by same management, there is nothing we can do but sit back and accept we were just defenceless pawns in a game of pass the parcel of money from the PI to the sharks. Repeat cycle on next target and nobody does a thing about it.
Afren say actual reserves roughly as before, this is a cash flow glitch from operational delays and poo.
That Bondholders won't cough up more to protect their existing bonds from Administration proves the point I have been spouting for month. Clearly, in the real (ie commercial) world, the actual value of the assets was WAY BELOW the debt. Bonds were worth way less than 100c (and now could be near worthless in Administration) and equity worthless and has been for many months.
This was flagged up at 10p and you were warned by several posters including myself.
We have seen this as standard procedure. .
As shareholders if you were still holding the game is over .
Put it down to experience and move on to trade more carefully.
Tragic. From a little gem to a steaming pile of dung in next to no time. Gives all of us are cautionary reminder not to invest in heavily indebted oilers, miners or other company without transparent earnings.
LTH had probably already written this off after huge drop, then suspension but it still doesn't make it any easier although not having to worry about it any more will.
If a FTSE company like Afren can do this to its shareholders, can every other company do it to us too? This has to be investigated. Isn't there some kind of body watching out for scams like this, if indeed, it was scam? So many things don't add up.
Why were smallish payments not made?
Why was so much spent on Admin?
Why were Kurdistan assets valuable one minute and worthless the next?
Why was a large scale producer who had hedged oil prices not able to stay solvent?
Who is going to benefit from this- they must be the villains?
Who is taking who to court over this?
If they get away with this, it will send a worrying message through the world of finance realising that it can happen to anyone at any time with absolute impunity.
"In a regulatory news release at 10.39 a.m. today -- innocuously title "Corporate Update" -- shareholders of oil company Afren (LSE:AFR) were delivered the final mortal wound in what has been a death by a thousand cuts.
The company announced that ..."
Afren Plc (the 'Company') provides an update on the outcome of the discussions regarding its financial situation.
As announced on 15 July 2015, the recently completed operational review has led the Company to expect materially lower near-term production from its assets as compared to the production level assumed in the restructuring plan announced on 19 June 2015. This change is due to a number of timing and pricing assumptions, as well as to some delays in project implementation during the period when initial funding was being finalised. Whilst the overall capacity of the assets to deliver field life production remains broadly unchanged, the near-term deferral of production revenues has undermined the immediate liquidity position of the business. The Company has subsequently engaged in detailed discussions with all its stakeholders, including lending banks, bondholders and partners, to discuss the impact of the revised assumptions on Afren Plc's near-term cashflow, funding requirements and the resulting amendments in the terms of the restructuring which are required to deliver the revised business plan.
The board believes that all the possible routes have now been explored during the course of this process, which was subject to a strict timetable, driven by Afren Plc's short-term liquidity issues. These discussions have failed to deliver support for a revised refinancing and restructuring proposal that would result in Afren Plc being able to pay its debts as they fall due. As a result, the Board has taken steps to put Afren Plc into administration and appoint Simon Appell, Daniel Imison and Catherine Williamson of AlixPartners as administrators. The relevant documentation will be filed at Court during the course of the day.
The appointment is made with the consent of the Company's secured creditors and is seen by those secured creditors as an important step in preserving value in the Company's subsidiaries. No other company in the Afren Group has appointed administrators today or taken any other step to commence insolvency proceedings. The Group is in discussions with its partners and other key stakeholders with a view to continuing its operating businesses.
I have no stake long or short.
IMHO the company is bankrupt and will be broken up and sold off in a fire sale. I doubt there will be much left for the equity holders.
Any legal action, even if successful will be years away and I doubt there will be any money to pay the claimants.
If anyone can paint a more optimistic view then please step forward, and offer some hope to these beleaguered shareholders
Noone knows how or if this company ever leaves suspension.
What we do know is that howver much they blackmail us, the very worse outcome is transferring ownership of our shares to the bondholders with a Yes vote.
Vote No to giving your assets away to thieves.
Miracles may happen but it is the bondholders who are deciding the size of the eye of the needle that shareholders would be willing to pass through, so if it is too small whose fault is it?
Afren PLC is indeed a special company. Think of cursed luck we have seen of late within Afren PLC as:
· Portfolios turn into dust.
· Oil turns to water.
· Investor updates into misinformation.
· Investor relation into AHBH propaganda (Lord HawHawkins and now Natalie Hari).
· Prospectuses into impairments.
· Announcements into deceptions.
· Cash Income into fees.
· Accumulated cash into thin air.
· Capex into fraudulence.
· Licenses into vacuums.
· Audits into lies.
· Advisors into asset strippers.
· New directors into receivers.
· Old directors into scape goats.
· Stakeholders into bondholders.
· Shareholders into vermin.
· Company insurances into personnel liabilities.
· Due diligence into shorting insider information.
· Accountants into thieves.
· Shares into waste.
· Hope into tears.
· Faith into foolishness.
· Assets into memories.
· Promise into despair.
· Contracts into cons.
· Investments into crime proceeds.
· Pensions into penance.
· Even shared or neighbouring assets prove bountiful to others but worthless to us.
· Supporters into plaintiffs.
· Regulators into mirages.
· Laws into anarchy.
· Markets into brothels.
· Director duties into shareholder contempt.
· Shareholder trust and rights into Director treachery and wrongdoings.
· Executive responsibilities into theft enabling opportunities.
· Bullying into tantrums as North Korean voting ethics emerge.
· Trust into treachery
With such an unlikely confluence of negative events, it really seems only right (and mathematically most probable) that there has to be some good news someday about something.
But still the games continue.
ASOG offered moral support to Alan Linn. Resultantly, when the rest of the board jumped before they were sacked, Alan stayed with their ringing endorsements staying his fate and giving him the opportunity to prove different. And then.
Sadly, it has been eloquently explained on his behalf by his apologists that he is legally working for the creditors now, in priority over shareholders. ASOG anointed him yet the fateful deception of John Bulle at Smithfield repeats itself again. Was it the expensive cup of tea I warned against or finally is it the time for Mr Linn to prove himself the superstar he appears to be using PB vision.
Oh what a tangled web they weave. The deceivers impair, yet the shareholders wont leave.
The company does not need an administrator except to save it from its own self-immolation by the strategy of past and present executives (even those with forked tongues).
Personally, King Luis is the only person I would trust as CEO or in charge of appointing and managing the investigation from here on in Afren.
If as Ynot suggests, directors are upon engagement forced into betrayal upon appointment, then we need to ensure that the brief of the appointed director in charge of uncovering the past 24 months sins, is so rigid and predefined, that it cannot be corrupted by other executives in the interim, as is the excuse given for Alan Linn and his betrayals, SoA and junk mail.
There really should be an EGM ASAP.
We need to know where the money and assets have really been redirected to. The excuses just dont cut it anymore.
Debt, falling crude prices and outrageous executive greed brought down an African powerhouse
THE Gulfstream GIV jet touched down on a hot, bright day in Boca Raton, Florida, sending whirls of vaporised rubber into the air as the wheels met the baking runway.
A convoy of black SUVs pulled on to the tarmac to meet the weary travellers. Mohammed Indimi, a Nigerian oil tycoon, stepped gingerly down the folding stairs. Behind him was a stout, bespectacled executive who stood out among the African travelling party.
Born in Bangladesh but educated in Texas, Shahid Ullah was the head of operations at Afren, the London-listed oil producer that was the key partner of Indimis private oil company Oriental Energy Resources.
It was May 2012. Indimi had flown to Florida to receive an honorary doctorate from Lynn University. He was not being honoured by the obscure university because he had sent six of his children to study there. Rather, the gala was held to recognise Indimis business and philanthropic achievements. Less than a year later he became the lead donor of Lynns newest college, the $14m Mohammed Indimi International Business Center.
Ullahs presence at the weeks events immortalised in a bizarre 49-minute video that includes footage of a group outing to the Miami Seaquarium was hardly surprising. Afren had been Orientals partner for four years in the Ebok reservoir, located 30 miles off Nigerias hydrocarbon-rich coast.
The field, discovered in 1968 by Exxon, had not been developed because the Texas giant deemed it too small. For Afren and Oriental, however, Ebok was their making. By 2012, Afren had rocketed from a London penny stock to an Africa-focused powerhouse worth £2bn thanks to record production, mainly from Ebok.
Oil was then selling for $90 a barrel. Afren and Oriental, chaired by Indimi and staffed by his children, were making money hand over fist. Ullah, Afrens chief executive Osman Shahenshah and Indimi had grown very close. Too close, as it turned out.
Three years on from those halcyon days, Afren stands on the brink of collapse. Creditors led by American bond giant Pimco are this weekend considering whether to throw it a fresh financial lifeline, just three months after handing it $200m in emergency funding.
Last week the company abruptly postponed a shareholder vote on a rescue fundraising. The reason: production from its star asset, Ebok, had unexpectedly plummeted, rendering useless the profit and loss assumptions underpinning the bailout deal. Worse, it has already blown the cash that creditors injected in April.
The sudden fading of Afrens prospects raises uncomfortable questions for Afrens new management and their advisers, turnaround specialist Alvarez & Marsal and Morgan Stanley, sponsor of the aborted rights issue. A creditor said: Were going to have to put a lot more money in to get a lot less money out.
Afren is a penny stock again. Its shares have lost 99% of their value, undone by huge debts, the weak oil price and greed.
The meltdown began on March 26, 2014, when company secretary Elekwachi Ukwu sent a memorandum to the board questioning whether three financing deals that Afren had done with partner companies in Nigeria, together worth $500m, should have been disclosed to the market. The board brought in law firm Willkie Farr & Gallagher to investigate.
What they found shocked them a secret financing arrangement that Ullah and Shahenshah had set up with Oriental that would have paid them and other executives up to $200m over four years. The cash was set to flow into a British Virgin Islands vehicle, called Ntiti, that the duo created in October 2013.
The timing of Ntitis genesis was interesting. Just four months earlier investors had delivered a stinging rebuke. About 80% had voted against the compensation of Shahenshah and Ullah, who were paid £3.4m and £2.6m, respectively, the previous year. Th
Afren's fate in the hands of creditors
26 July 2015
The Sunday Times
BELEAGUERED oil producer Afren has blown virtually all the $200m rescue funding it secured three months ago and could fall into administration unless creditors stump up more cash.
Last week the company, whose shares have lost 99% of their value in a year, abruptly postponed a shareholder vote on a £49m rescue rights issue after it found that output in its most productive oil field would fall far short of expectations.
It is understood that the drop in output is due to the delayed installation of a new platform at its Ebok reservoir off the coast of Nigeria, which accounts for two-thirds of Afren's production.
The bondholder group that led the April refinancing was this weekend considering whether to put in more cash to meet Afren's need for "further significant funding".
Ebok's prospects have been clouded by an increase in water content in the reservoir, which can hurt oil production. Afren declined to comment.
Following discussions with some of our senior lenders and feedback on voting intentions from various brokers, it has become evident that there is no realistic chance of a YES vote being passed.
Current press speculation, and the increasing interest of the FSA, along with comments from the Nigerian Government, have made it very difficult for the company to carry out its threatened actions listed under Plan B.
Consequently, Afren Plc ('Afren' or the 'Company') announces its decision to adjourn, until further notice, the General Meeting scheduled for 24 July 2015, as well as the Scheme Meeting, currently scheduled for 29 July 2015.
It is still the company's foremost intention to complete a wholesale transfer of Afren's assets from the shareholders to a group of merchant bankers, hedge funds and other wide boys, but we regret these plans must, for now, be put on hold. Further, it has also been realised that if Bond Holders, and High Yield Noteholders do not fully subscribe to the Open Offer, then Afren would raise far short of the $75m cash stated in the restructuring proposal published on 13 March 2015. This would leave the company still needing to raise funds.
As a result, the company has decided to allocate another $18m or so to their financial advisors to come up with an alternative solution (Plan C), that is marginally less repugnant to the existing shareholders. It is hoped that this additional expenditure will not tip Afren into insolvency.
Given the material uncertainty of the results of the above-mentioned review and the need for additional funding, Afren is unable to assess accurately its financial position and inform the market accordingly. Therefore Afren's shares remain suspended.
We keep asking you to play nicely children but the games just continue. You offered us scraps, we said No. Mr Linn it is not credible to now pretend that you were offering too good an offer and that is why you have again ran away from the results of yet another vote you arranged. You are now abusing the voting process (why not add that to the list, as you and your friends have ignored every other Director responsibility and duty). Be assured, when we call our EGM, we will not be cancelling it. When you have taken so much away from so many people, you will find that further threats and games will only further embolden those who refuse to cower. We cannot stop you from killing us all. But you really ought to watch Reservoir Dogs before you make your next move. Also please can you tell your latest wave of Brokeback Mountain friends to leave the BBs because they are baiting people who have already lost so much, our patience is become vengeful and that is not the kind of shareholder relationship you were promising. Afren is a mainly PI shareholding company. This will not end nicely if you continue to try to pick off the most vulnerable investors for the benefit of a corrupt brown envelope. All stakeholders are going to be partners under the ground in some form or another. Digging oil or nursing losses. Shareholders have already cried out their tears. Executives, Bondholders and Collaborators tears have not yet started and the bullies cannot even comprehend what will follow if this gamesmanship does not stop NOW. Time is passing but the only two constant things you can be assured of is: 1 SH will not be bullied further 2 Every trick you try and fail to win on behalf of your ad hoc friends will be simply added to the trail of evidence which is now beyond any reasonable doubt. So we can all move on and get on with our summer, why dont we now just cut to the chase. Either sell off or rearrange assets and subsidiaries so existing shareholders have something to approve and believe in with their shareholdings. Otherwise, phone your ad hoc friends and tell them they have lost everything and post the licenses back to Lagos. Understand that unless there is any dramatic change in offer, attitude or outcome which is less abusive to your shareholders, then we will be continually coming for you regardless of how this plays out further and a class action lawsuit once commenced can only realistically end in the courts (thats how our lawyers are paid and we will not carry on paying for your lawyers much longer you can be assured). We have years to get justice. You have days to put this right. PS Check those insurances a little further
"Even if the restructuring is forced through, you just couldn't rely on this bumbling management team to make the company a success..."
Precisely my view Symore, which is why I jumped ship after the 15th March restructuring announcement. Although I might question how much of this was down to incompetence, and how much was due to premeditation.
What is clear is that the BOD have not been working in the interests of the company's owners ( the shareholders) for a long while. IMO, this has been a deliberate and well executed plan to steal Afren from the shareholders and give it to their mates on the Ad-Hoc committee. It has been disguised by dodgy director paybacks, sackings, the dramatic fall in oil prices to look like the perfect storm, that the poor BOD could do little to stop. But if this is accidental, then this is incompetence on a nuclear scale.
I do hope that the regulators take a serious look at what has happened here, if not the stock market will become a very dangerous place to invest in.
Good luck to those still holding, and anyone stuck with these shares, who cannot exit even if they want to.
Just when you think the management's incompetence couldn't get any worse, they achieve a new low. So, despite paying external consultants tens of millions of dollars to help with the restructuring plan (which in itself was a disaster), they are now telling us that their assumptions were way off the mark. These so-called financial consultants have conned the bond holders by presenting a business plan and projections which were wrong......I assume the bond holders agreed to lend them another $300m based on their restructuring plan? If the management team and these so-called consultants cant even get the basics right (which every other oil and gas company seem to have managed including on AIM), they should all resign. This is just more dirty tricks to put pressure on shareholders to accept this deal. Where are the Regulators and SFO?
Even if the restructuring is forced through, you just couldn't rely on this bumbling management team to make the company a success...
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