Lamprell shares crash more than 80% as group fails to agree new financing and prospect of bargain basement takeover bid looms
- Lamprell warned that it was at risk of not meeting $75m in funding obligations
- Major shareholder Blofeld Investment has also made a takeover bid for Lamprell
- A year ago, Lamprell shares were worth around 65p each, compared to 4p today
Struggling oil and gas services firm Lamprell has seen its shares collapse by around 80 per cent after warning it was facing an ‘urgent and severe liquidity constraints’.
The Dubai-based business, which provides equipment like jackup rigs and wind turbine foundations for the energy industry, said it had not agreed any new financing since the start of the financial year.
It cautioned that it was at risk of not meeting $75million in funding obligations due this month and the next, should a short-term funding solution not be found.
Energy: Lamprell provides equipment like jackup rigs and wind turbine foundations
Bosses revealed discussions were taking place with its two largest investors, Lamprell Holdings Limited and Blofeld Investment Management, regarding an equity raise of up to $150million or ‘some form’ of interim financing.
In addition, they said talks were taking place with lenders over securing non-equity forms of funding, including a $45million credit facility, having gained a similar size loan with two banks in October last year.
However, the company has so far been unsuccessful in both endeavours, while separate talks over the possible sale of a majority stake in its oil & gas division to a consortium had failed.
Lamprell shares had plunged 81.7 per cent to 4p during the late afternoon on Friday. Twelve months ago, they were worth 65p each.
The coronavirus pandemic contributed to major financial difficulty for the group as travel restrictions led to a downturn in oil and gas prices, and slashed demand for firms involved in the energy service industry.
Yet even as energy prices have rebounded, the London-listed group’s problems have continued to mount, with supply chain problems and worker shortages leading to costs increasing, and it has struggled to gain much-needed financing.
Lamprell also revealed that it had received a takeover offer at a ‘very significant discount to the prevailing share price’ from Blofeld, which owns a 25 per cent stake in the company.
Due to Lamprell’s current fiscal situation, bosses said Blofeld’s current proposal could not be accepted unless it included some interim funding or bridge financing.
Blofeld now has until 5pm on 22 July to make a concrete offer or walk away, though the City’s Takeover Panel could decide to extend the deadline.
AJ Bell investment director Russ Mould said companies making a takeover bid would generally offer a 20 to 30 per cent premium to the market price, but the exact opposite has been the case for Lamprell.
Given the desperation the firm is facing, Mould believes the approach from Blofeld ‘is more of a rescue package than a recognition of the company’s future potential.
‘Lamprell says the proposal is at a very significant discount to last night’s market price, and it desperately needs financial help in the interim.
It could be one of those situations where something is better than nothing for shareholders, given the clock is ticking on the company’s survival.’