UK 13:40 Sunday, 8 November 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
We now have official conformation that Frontier Resources (FRI) is dumping its oil assets. Great news.
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Comments
wildrides
I am in for the Wildride ………. lets hope its not another Teathers and there is no Drummonds in sight …….. hurrah !
Lord Foffle
You’d better be right Winny…..hard earnt going in here on a punt. Only what I can afford to lose of course.
Last time I invested on your say so was in Ascot Mining and look what happened to that. Mind you – that had the added help of Andrew Bell being involved. Lol
Drunken Sailor
The way this works is something gets reversed in for an overly inflated price compared to NAV. It will no doubt have stacks of potential (hot air and hope) though and no doubt there will be a great management team who will be looking to bring in more such investments so there will be that potential (hot air and hope) in the price paid too. The whole thing will need funding, so a placing will be done at the acquisition price. That placing won’t be able to be done with bucket shops as the shares won’t be trading having suspended to do the reverse, so they will have to find real investors prepared to put in cash at the acquisition price. If they can do that all well and good. As long as the acquisition price is a good enough mark up to what you have paid, you stand a fair chance of selling when the shares unsuspend at a profit. However there may be a number of people who are looking to do that and not that many new buyers for the hot air and hope. The acquisition price will of course give the biggest mark up to whoever owns what is brought in. They may be related parties, they may not. There is a system for dealing with such COIs, it is not perfect but that is the best there is. Thus the bigger the mark up in the acquisition price, which is in effect limited by what they can get the placing done at, the better for you.
I thought it worth explaining the good bit of the shell game – because Tom has a tendency to flip between being a pure capitalist and a guardian reader depending on who is involved.
The down sides. They may not get the reverse done in time and the company may get booted off – GUSC and TEA are recent examples of this. GUSC says it is still going to do the deal and seek readmission to the casino. One has to wonder why it would not be cheaper and better to just IPO directly and ditch all the baggage that comes with the former AIM company. Should this happen to FRI, then those who bought in would be trapped with nowhere to go. Maybe there will be a small return of cash to shareholders (which seems to be the likely outcome at TEA) but it is unlikely to be anywhere near what you paid. The other obvious risk is what if they can’t get the placing done at the acquisition price. The acquisition price would have to be reduced. The owners of the target get a smaller mark up, but may still end up owning the same proportion of the final company. Existing FRI shareholders end up possibly getting no mark up or even a starting paper loss. You will have your shares in the new overvalued company though, which has not been overvalued as much as everyone hoped it would be.
If nobody wants to take the placing shares, bearing in mind it will be hard to bullshit about what the new company is as a full admissions document signed off by a whole range of professionals (crony capitalists) should make the whole thing transparent, then the deal collapses because it is unlikely the new company would have 18 months of cash to continue with normal operations (inc crony capitalist and PLC board fees etc) let alone have any money to put in to turn any of the hot air and hope into any sort of reality.
Anyway that is the risks and rewards of the AIM shell game summed up for you. There are some that work out well there are some that bomb badly. Once it is announced that an RTO is going to be done, the shares suspend so there is nothing more you can do. Of course up until that point you can trade in and out just as you can with any other share. Just remember it is the price the big boys have paid that they will be looking to get a decent return on, not what PIs have paid in the market. If you are going to do this, then get in at less than the big boys and get out again when the big boys would be about 30% ahead. You may be able to rinse and repeat a few times.