Post by JimmyRobby85 on Jul 24, 2014 13:25:44 GMT
“New” Range Resources gave away 1.14% of company in fees
I’ve waited a few days before reporting on Range Resources’ (RRL) announcement on Friday. I wanted to see if a holdings RNS was released. So far it hasn’t been, but more on this another day. In the meantime it is worth focussing on the various share payments that Range made at the end of last week. I’ve received a lot of comments from Range’s shareholders about “New Range”. This might be true. Perhaps Rory Scott Russell is a genuine breath of fresh air. The current 2.1p share price at least suggests he might be. The problem with this line of argument is that Friday’s RNS was very much “Old Range”, as shareholders lost 1.14% of their company in share payments made to settle fees on old debts and, what appears to be, a new mystery consulting agreement.
Once a company reaches nearly 5,000,0000,000 shares, it is common for its shareholders to experience something which can only be described as share issue fatigue. They see another RNS with a swathe of more shares due to hit the market and the details just melt into the mix of all the other RNSs, which have signalled perpetual dilution.
Many of Range’s long suffering shareholders certainly seem to suffer from this condition. Each RNS from the company, which announces new share issues, is greeted with a collective shrug of the shoulders and comments such as “Range issues more shares, so what?”
I suppose how much this matters depends a lot on your attitude towards the stock. If you simply treat Range as a share to trade, it doesn’t matter at all. What do you care about how the company is run?
However, if you have bought this stock for more fundamental reasons and view it as a long term hold then it matters a great deal.
If you look back over Range’s history of disastrous corporate deal making you will quickly see the fortune this company has spent in transaction related fees, including both cash and share payments. When you consider how this company struggled financially and constantly needed to tap the market for new funds, it all looks pretty outrageous. But I’m talking about “Old Range” and apparently this has no bearing on the future.
Well, up to a point.
For all the talk of “New Range” the company still has to contend with legacy arrangements made during Peter Landau’s reign. The latest announcement revealed two share payments, one of 39,298,700 shares and the other of 10,000,000 shares, “issued in respect of fees due to lenders upon final settlement of debt agreements (previous RNS dated 3 June 2014)”. Using Thursday’s close of 2.45p, the value of these two tranches of shares was £1.2million and they accounted for 0.99% of the company’s issued share capital.
If the language in the RNS was accurate, then these share payments were only made to settle fees. We already knew that Range’s debt was extremely expensive, but these sums do look a tad extortionate. Referring back to June 4th’s RNS Range paid;
• $6.7million cash to Platinum Partners, Yorkville and a syndicate of Australian investors.
• A further $700,000 to the syndicate of Australian investors before June 30th.
• AS$250,000 to Hudson Bay through a conversion into shares
• £210,000 to a US based institutional investor also through a conversion into shares
Which of the organisations above received the latest share payments for “final settlement” of fees is unclear and we aren’t likely to find out. After all, “New Range” seems to have many of the same old problems relating to transparency in its financial wheeling and dealing, which “Old Range” used to have.
Being charitable I can concede the point that the new management team at Range has little choice but to suck it up and try and keep everyone focussed on the company’s future. Ok, fair enough, but what about the 7,500,000 shares “issued for consulting fees as per agreement”?
Again using Thursday’s close of 2.45p, these shares were worth £183,750 and accounted for 0.15% of the company’s issued share capital. Whomever Range paid this amount to, I hope it got value for money.
I’ve had a good look through Range’s RNS history and cannot see a direct reference to this consulting agreement. This is not to say the company hasn’t mentioned it somewhere, but as we all learned with the Platinum Partners loan scandal, even “New Range’s” reporting can be a little opaque. It could be that these consulting fees relate to the deal with LandOcean or they might relate to something entirely different.
I’ve asked the company for official confirmation of to whom these “consulting fees” were paid, which I hope to receive soon.
“New Range Resources”— we shall see...
I’ve waited a few days before reporting on Range Resources’ (RRL) announcement on Friday. I wanted to see if a holdings RNS was released. So far it hasn’t been, but more on this another day. In the meantime it is worth focussing on the various share payments that Range made at the end of last week. I’ve received a lot of comments from Range’s shareholders about “New Range”. This might be true. Perhaps Rory Scott Russell is a genuine breath of fresh air. The current 2.1p share price at least suggests he might be. The problem with this line of argument is that Friday’s RNS was very much “Old Range”, as shareholders lost 1.14% of their company in share payments made to settle fees on old debts and, what appears to be, a new mystery consulting agreement.
Once a company reaches nearly 5,000,0000,000 shares, it is common for its shareholders to experience something which can only be described as share issue fatigue. They see another RNS with a swathe of more shares due to hit the market and the details just melt into the mix of all the other RNSs, which have signalled perpetual dilution.
Many of Range’s long suffering shareholders certainly seem to suffer from this condition. Each RNS from the company, which announces new share issues, is greeted with a collective shrug of the shoulders and comments such as “Range issues more shares, so what?”
I suppose how much this matters depends a lot on your attitude towards the stock. If you simply treat Range as a share to trade, it doesn’t matter at all. What do you care about how the company is run?
However, if you have bought this stock for more fundamental reasons and view it as a long term hold then it matters a great deal.
If you look back over Range’s history of disastrous corporate deal making you will quickly see the fortune this company has spent in transaction related fees, including both cash and share payments. When you consider how this company struggled financially and constantly needed to tap the market for new funds, it all looks pretty outrageous. But I’m talking about “Old Range” and apparently this has no bearing on the future.
Well, up to a point.
For all the talk of “New Range” the company still has to contend with legacy arrangements made during Peter Landau’s reign. The latest announcement revealed two share payments, one of 39,298,700 shares and the other of 10,000,000 shares, “issued in respect of fees due to lenders upon final settlement of debt agreements (previous RNS dated 3 June 2014)”. Using Thursday’s close of 2.45p, the value of these two tranches of shares was £1.2million and they accounted for 0.99% of the company’s issued share capital.
If the language in the RNS was accurate, then these share payments were only made to settle fees. We already knew that Range’s debt was extremely expensive, but these sums do look a tad extortionate. Referring back to June 4th’s RNS Range paid;
• $6.7million cash to Platinum Partners, Yorkville and a syndicate of Australian investors.
• A further $700,000 to the syndicate of Australian investors before June 30th.
• AS$250,000 to Hudson Bay through a conversion into shares
• £210,000 to a US based institutional investor also through a conversion into shares
Which of the organisations above received the latest share payments for “final settlement” of fees is unclear and we aren’t likely to find out. After all, “New Range” seems to have many of the same old problems relating to transparency in its financial wheeling and dealing, which “Old Range” used to have.
Being charitable I can concede the point that the new management team at Range has little choice but to suck it up and try and keep everyone focussed on the company’s future. Ok, fair enough, but what about the 7,500,000 shares “issued for consulting fees as per agreement”?
Again using Thursday’s close of 2.45p, these shares were worth £183,750 and accounted for 0.15% of the company’s issued share capital. Whomever Range paid this amount to, I hope it got value for money.
I’ve had a good look through Range’s RNS history and cannot see a direct reference to this consulting agreement. This is not to say the company hasn’t mentioned it somewhere, but as we all learned with the Platinum Partners loan scandal, even “New Range’s” reporting can be a little opaque. It could be that these consulting fees relate to the deal with LandOcean or they might relate to something entirely different.
I’ve asked the company for official confirmation of to whom these “consulting fees” were paid, which I hope to receive soon.
“New Range Resources”— we shall see...
