lots_of_sense
06 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! Now, I have done a very quick and very dirty analysis on their short, so take it with a decent pinch of salt as I’m only using end of day prices and even then I don’t have all of those (so I have interpolated as required) but this is what I have. Current Short 140m shares Overall Shorted value £97m (inc some losses on previous buybacks), avg net price of short 69p Current value of stock £129m, current price 92p, Current Mark to Market Loss -£32m I’m sure the boys in the city have done alot better analysis than this and will do what they do, but needless to say as the price goes up they will be getting margin calls on the MTM and given how shorted this stock is doubt too many people willing to lend out shares IMHO.
lots_of_sense
06 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! Hi Beatley, its from Bloomberg Professional so no link available.
Beatley
06 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! The article looks like a rehash from the one in September, but I can’t find the new one, do you have the link lots_of_sense? With such a large position, ARCM must have been betting on new shares hitting the market at some point, no doubt they’re exerting maximum pressure on the other debt holders to hold out on the same request for new capital. With Zama sold and a good first half next year convent debt will be less than 2xEBITDA at the end of H1, which isn’t a metric of an oil company that needs to raise fresh capital, but will ARCM force the issue anyway?! The company is certainly in much better position than the last time we carried out the refinancing, which will give us a much stronger hand during the negotiations. Not sure about squeezing the shortest out, in my experience the debt holders wield all the power but you never know. Maybe one for IR, but if the maturities are extended, would the interest rates and current restrictions on shareholder returns remain the same? Both would be hugely disappointing, particularly the punitive interest rates.
tes123
05 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! The market has found out who the hidden shorter has been for years .And their debt position. They are exposed to a massive loss here if they have to cover their shorts due to debt being paid faster. There is 1.5 years left for that $380 mn debt to mature. Their threat of not extending maturity beyond the current maturity date of May 2021 would have had some punch if we were very close to that date. Anyways my understanding is that HF can sell the debt before May 2021 if they don’t want to extend the maturity and want their money back , and if pmo doesn’t want to pay them back in full? It’s good that Zama sealed final offers date is tomorrow, 6th December which is (coincidentally?) the opec decision date, which might push more bidders into FOMO mode and getting them to put in their extra best offers for Zama , given that oil price visibility will be there into 2020 due to opec decision. Can the market squeeze this shorter out given that their debt and short position is exposed now , and given that the debt they hold matures after 1.5 years ?
lots_of_sense
05 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! Hi, sounds plausible. Now looking at it, they have debt worth just £290m ($380m out of $2bn) or 19% and currently have a short position against £126m of the stock (~137m shares or 16.85%). Need to think of the impact if debt is paid down quicker than expected and whether that might force a close out of their shorts as PMO would be in better position to refinance and pay off their debt.
tes123
05 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! If you recall there were similar HFs holding out for a deal like that during 2017 refinancing . Some held converts, this one seems outright: And this HFs news seems old: Bloomberg reported this in September; google. co. uk /amp/s/www.bloomberg.com/amp/news/articles/2019-09-18/premier-oil-talks-to-lenders-about-demands-for-capital-increase
Beatley
05 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! Cheers lots_of_sense, not sure what to make of this. Obviously some games are already been played ahead of the refinancing. This is what it sounds like to me (if the article is accurate)…. ARCM want Premier to raise new capital (right issue or placing) so they can get paid out on the debt AND close their short for a profit as the market is flooded with new cheap shares…….sounds like a good deal…for them. Premier are resisting and would prefer to extend the maturities on the debt, which ARCM are opposing so it forces Premier to go down the route of raising cash. I do find all this surprising, especially when shale companies with zero FCF are issuing debt at less than 5%, but then nothing is ever simple with Premier. Any other explanations?
lots_of_sense
05 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! Ok, found the story behind it. I’m surprised it has only been made public yesterday by FCA Premier Oil’s Key Lender Takes 17% Short Position on Shares ARCM has $380 million of company’s $2.5 billion loans due 2021 Oil explorer is resisting creditors’ demands to raise capitalBy Luca Casiraghi and Antonio Vanuzzo (Bloomberg) – Asia Research & Capital Management, the largest lender to Premier Oil Plc, is hedging its exposure to the company with a 16.8% short on the company’s shares. ARCM’s position on the London-listed exploration firm dates from July and was made public on Wednesday in data published by U.K. financial watchdog the FCA. The hedge fund started by Perry Capital’s former Asia head Alp Ercil, started shorting the company in 2017, and it’s been steadily increasing the position since September 2018. ARCM also has $380 million of exposure to the company’s $2.5 billion in loans that are due to mature in May 2021, according to people familiar with the matter. Premier Oil has been talking to creditors including ARCM, Citigroup Inc., Deutsche Bank AG, Fortress Investment Group and Varde Investment Partners over ways to reduce debts amid volatile oil prices. The company is resisting lenders’ requests to raise about $500 million of new capital, while ARCM opposes any potential extension of the debt beyond 2021, the people said. Officials at Premier Oil and ARCM declined to comment on the disclosure and on the negotiations.
Beatley
05 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! Very odd, have mailed IR to see if they have anymore info. Its a huge position, so surely wouldn’t have gone unnoticed for so long?!
lots_of_sense
05 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! Who are Asia Research & Capital Management Ltd as they have a short position of 16.85% in Premier ! Short tracker just updated today to show their massive short interest which they have held for some time and so it shows a total short interest as 20.58% whilst yesterday it was 3.8%. I’m guessing they must hold a substantial amount of Premier debt so its a hedge against it, anyone got any better info ?
Beatley
04 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! Oil prices aside, next year does look promising… Zama sale Debt reduced to an acceptable level Alaska drill Sea-Lion sanction? Refinance the debt and get rid of the restrictions on shareholder returns Tolmount online in Q4 Maybe the buy and hold brigade will finally have something to cheer about.
lots_of_sense
04 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! Yes, performed ok recently, nice not to have bad news like some others, the steady as she goes and paying down debt is good after the last few years although still some way to go. Let’s hope that Zama goes for a decent price and then we shall see how those short interests react…the short tracker already showing declines to ~3.8% and AHL down to under 1%. It was over 5% not too long ago. Equally the higher oil price doesn’t hurt either.
Beatley
04 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! Plenty of games being played that’s for sure, although good to see some share price strength over the last couple of months, especially when compared against the likes of Tullow and Enquest. Deadline for Zama bids on Friday, maybe someone will add an extra few quid and go for our stake in the entire block?!
lots_of_sense
04 Dec 2019
Highest short interest in FTSE 250 according to Sunday Times! The Sunday Times’ Sam Chambers asked why so many investors were betting against exploration and production company Premier Oil? In his Inside the City column over at the Times, Chambers pointed out that more than a fifth of the FTSE 250-listed firm’s 831 million shares were out on loan, according to IHS Markit, making it the most “shorted†stock in the index. However, he said things might not be quite as bad as they seem to be. “Almost three-quarters of those positions are banks borrowing stock to hedge their exposure to Premier Oil,†said Chambers. Chambers did warn that Premier needed to protect itself after having sold investors contracts for difference, financial instruments that allow speculators to bet on the direction of a company’s share price without actually owning any stock. He said it appeared that Premier Oil had become somewhat of a “quasi-casino†as its shares were highly correlated with the price of oil, often moving more dramatically than the commodity price itself.
Beatley
23 Nov 2019
Unable to sell Zama Premier noted that analyst expectations are between $300m-$400m, the higher number would be great but there’s still the capital gains tax of 30% to consider. Personally, I’m keeping my expectations at $300m net to Premier. Thanks for referencing Geo’s post, I would have missed it otherwise. Good to read about the considerable interest, which somewhat blows away the title of the thread that we’re posting on. Based on what we’ve already discussed in other thread, I would have been disappointed if the debt reduction target wasn’t $1.5bln for year-end 2020, but it is good to hear it coming from the company. Given the cash finance costs are still elevated next year and with capex rising to $400m, next years FCF will likely be down on this year, but should do give us $200m+, which with $300m from Zama gives us the $1.5bln. The key is the refinancing, from memory I think we have around $400m of senior notes that carry a coupon of around 8%, which is huge in the current interest rate environment. I’ve recently noted some shale companies refinancing debt at around 4-5% so would be disappointed if we’re not in and around that number. If the company can get the cash finance costs closer to $100m, that frees up a lot of cash to be able to support the share price if it’s needed. The Alaska drill is an interesting one, if successful it might have come at the right time should the application for the export financing for Sea-Lion fails. ATB.
