UK 18:01 Saturday, 7 November 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.
One of the things which investors should ask themselves is: who gains? And with reference to Afren (AFR) this is a pertinent question. It surely is clear as day that it is the bondholders who have been calling the shots (or shorts!) since the company essentially ran out of cash. At any moment, the bondholders could have called in their cash and Afren would have been toast. That they didn’t suggests that the current proposals on the table offer the bondholders a better deal. It surely is better for shareholders too – the alternative being a certain wipe-out, as opposed to a gamble on recovery – but should shareholders put more of their cash into Afren via the Open Offer? I have grave reservations.
Already a member? Sign in
• All premium articles
• Tom Winnifrith’s Bearcast
• Access to all the entire nearly 13 year archive
• ShareProphets Daily Newsletter
Cancel any time
This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.
Comments
JustCurious
Excellent analysis
J P Spagetti
I agree – excellent article. Not that I’m particularly qualified to judge but experience has told me that warnings from the horse’s mouth, so to speak, should be considered understatements on the Roger Moore scale, and the more mealy-mouthed they seem the more likely there is to be treachery afoot!
DUCK AND DIVE
This kind of analysis is worth every penny of my annual sub.
But I don’t understand why the SP is still hovering around 2p when everyone should be bailing out. Who could be hoovering up shares at this price and why?
nigel somerville
Thank you for your kind comments.
Duck – Waseem Shakoor was pointing to the spreadbet companies upping margin requirements on Afren shorts, thus causing some forced buying. I suspect there may also have been some relief buying by people who think the company has now been saved from extinction – maybe seeing (mistakenly, I would suggest) an opportunity to average down. Rather , they can average down but perhaps just end up losing even more.
drunken sailor
All those red flags have been put in to deceive shareholders into thinking that the company is worth a lot less than it really is so that shareholders will vote yes and hand most of it over to the evil bondholders. The Shareholder part of the OO will be oversubscribed and scaled back, which is why it is worth averaging down at 2p so that you are guaranteed your 4 for 9 at 1p to average down further. There is also the strong possibility (given how valuable Afren really is) that some white knight will see through those red flags for the deception that they are and put in a realistic offer for the company that pays off the evil bondholders and allows the company to thrive for shareholders.
Well that is what some BBMs believe and it is much more comforting to believe that than to believe what the company is saying and have to accept that they have been complete idiots holding for this long when there was more than enough evidence and analysis out there to tell them what was going to happen.
The fact that the Bonds are still only trading at 45c is a pretty clear indication that this is not a windfall deal for the bondholders, just a damage limitation exercise – far better to flog off the assets in an orderly manner than see what you get from a fire sale following default.
nigel somerville
Drunken – you had me there, until I got to para 2!
JSB
I still think there’s a good reason for buying to take up the open offer. Hedge the stock via cfd and pre sell the entitlement.
Even if the deal collapses you will be net short and quids in.
The danger is some nutter comes in and offers to buy the company at over 1p a share, but does anyone see that happening?