The days on the stock market of the current Deoleo are numbered. The shares of the oil company will stop trading next Monday, May 25 and will remain suspended from trading until, a month later, their new titles debut. This break has the objective of facilitate financial and capital restructuring that this Thursday has received the approval of the supervisor.
The restructuring plan has been definitively endorsed by the National Securities Market Commission (CNMV) after long months of delays and other shocks at the company. Finally, Deoleo will proceed to an ‘accordion operation’ whereby your current shares will lose all value to be redeemed to zero euros and new shares for 50 million euros will be issued, of which 40 million are insured by the British fund CVC Partners, its majority investor.
Although the roadmap to find the financial consolidation of a company that has been dragging negative balances for ten years was approved by a general shareholders’ meeting held in February, the plan has not been implemented until now. Strategy goes through issue of 500 million new shares – and four more – at a subscription price of 0.10 euros each one together with the conversion of debts into securities for up to 49% of the share capital of the new Deoleo.
Equation and rounds
Although the current shares will lose all their value, the expansion plan foresees that the possession of 59 of these titles that will stop trading on May 25 to access rights to subscribe for 21 new shares, which is scheduled to be released on June 25. By then, the restructuring will be complete at all ends, the company estimates.
With its shares suspended from trading, the initial award period for new will start on May 26 for current shareholders. And it will last until June 9. Later, and until the 16th of the same month, Deoleo will proceed to the additional allocation round for those investors who wish to access a greater participation in the new company than their old shares would allow.
In this round, and in this order, other investors who have exercised their rights and requested additional shares may also receive additional titles, as well as the holders of the preferred shares of the company and other institutional investors, according to the prospectus of the operation.
With forecast that the capital increase may be incomplete In the event that the commitment of the CVC fund was insufficient to cover all the actions not requested by the market, it is expected that on June 22 the ‘accordion operation’ will be brought up to public deed. In this way, on June 24 it would be already registered in the Mercantile Registry and the shares, admitted to trading on the Spanish stock exchanges.
Debts and warrants
From Deoleo it has been underlined that the closing of this operation “implies that the group’s net financial debt is reduced by up to a maximum amount of 375 million euros, if the capital increase is fully subscribed ”. In addition, it would mean a reduction of more than 50% of the current syndicated loan, which would go from 575 to 242 million euros.
The last point of this operation that has aroused much suspicion among the investment community, as evidenced by the fact that its shares are worth just 0.038 euros, is the issuance of some warrants for non-professional investors they may be rewarded for their participation in it if any corporate operation occurs in the future.
In this sense, these derivatives grant the right to distribute up to 10% of the amount of a hypothetical acquisition of the oil company as long as this operation does not exceed 575 million euros. All this in a ten year term, twice what was initially established, because after a decade they would expire without effect.