Wednesday, 4 December 2013

#MXP Max Petroleum holdings

Three holdings RNS' in the space of three days and it looks like UBS have been buying again. This time they have been swapping debt for equity to the tune of 113m shares. That takes the overall number of shares in MXP held by ii's to around 85% assuming all are updated on time (unlikely) and it also includes some holdings which I assume are on behalf of private investors eg Halifax and TD Direct.

Meanwhile the share price still languishes at below 4p, not far off the lows when the very future of MXP was in question. Since then debt has been rearranged, the drill bits are turning, production is well up and should exit 2013 higher still. Although of course debt repayments start next year and due to low levels of communication around this we aren't sure how the finances are looking. The drilling campaign on the shallows is mid flow, and we eagerly await the results of an updated CPR to include recent well data up to the end of September, expected sometime in the new year.

I asked the question why ii's were still buying MXP in such volume here and a helpful investor tweeted me suggesting that maybe the whole company will be taken private at some point - PI's lose out of course - the deeps are then sorted and drilled, and then the company eventually successfully returns to the market making millions for whoever took it private. Oh joy. There's something to look forward to. I have no idea whether this is likely, I suppose it could be possible, and would be a good result for the ii's, but a disaster for all long term MXP investors.

I am waiting for the CPR and potential news on the deeps in 2014 before reassessing my position in MXP. For now I hold, but am not adding.

Updated ii holdings as of 4th December 2013: (click on image to expand)

Definition of a debt for equity swap courtesy of investopedia
"A debt/equity swap is a refinancing deal in which a debt holder gets an equity position in exchange for cancellation of the debt. The swap is generally done to help a company continue to operate (after all, an insolvent company can't pay its debts or improve its equity standing). However, sometimes a company may simply wish to take advantage of favorable market conditions."

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