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Tom Winnifrith Bearcast 3rd February - Deltex dont give me that working capital crap

By Tom Winnifrith

3 February 2016 04:07

More:

I start with today's placing news from Deltex Medical (DEMG). I do not reckon that this will be its last placing and its language stinks at every level. The money will be used for "working capital". Bollocks. It means to "fund our ongoing fucking losses". And there is more. Yes this is a bad language special. And if you are a Guardian reading loser who thinks the NHS is cash starved you will also be offended. I also look at Petro Matad (MATD), Petroceltic (PCI), Rose Petroleum (ROSE) and once again push Wandisco (WAND) for a statement. Is there a "strategic review" yet? How close are you to tits up time?

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Comments

Daniel Victor

3 February 2016, 04:51

You’d expect gyrations at a disco :-]
Nigel Martin

3 February 2016, 09:42

I agree that Deltex will not use the money for ‘working capital’, but I don’t see what they could say that would be less misleading. The hope is that the USA business will grow to be profitable, and Deltex need more money to tide them over until that happens. I agree it is not likely to be the last call for money, the hope for those buying in is that by the time they need more money it will be obvious that the USA business is near enough to being profitable and growing fast. Unfortunately that was also the hope when the company raised money at 11p in May ’14

However, I am pleased by the placing. I thought there was a real chance that the need to repay the Amati loan later this month would sink the company, or at least end up with a far bigger dilution. So I think the shares are worth more now than they were in December, and the share price is back at the December level. I can’t judge whether that makes them a buy. The continuing decline of the NHS business is a big disappointment so I won’t be buying more, but I hold some and won’t be selling.
Steve Brown

4 February 2016, 01:22

Tom,

I took a look at the Petro Matad statement, not quite my field as this is rank exploration stuff, but I noticed that the company seems to have quietly dropped the two core holes (c. 1000m down) from its programme and has deferred the two exploration wells (c. 3000m down) into 2017.

They had done pretty well to get BG to farm-in in 2015, but I am not so sure how keen Shell will be on rank exploration in remote areas with massive infrastructure needed to make anything profitable. Maybe Shell will be on the hook for the exploration wells but they seem to have wriggled off the hook for the core holes.

All the FTG and HRAM acronyms refer to is remote sensing stuff that give you some clue as to the sub-surface architecture to add to whatever you can glean from the seismic but until you have some holes in the ground to calibrate all that stuff against it is very hard to know what is going on. So in my opinion, pretty humble as this is not my end of the business, it is all bad news that Shell have cancelled the core holes and deferred the wells.

All the best

Steve
JAG

8 April 2016, 02:04

DEMG… didn’t directors and friends buy in the placing?.. I heard a rumour about that…. if true the guys are really trying to get the company somewhere