by Travis Johnson, Stock Gumshoe | December 2, 2011 10:37 pm
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Thanks Travis for going back to Lonrho. I continue to look for investments that are inexpensive for long term value. I also want to thank you for being way ahead of the rest of pack with Sandstorm Gold and Sandstorm Metals and Energy. They are both my largest holdings and the sisters are doing well . SG is going to be a big winner over the next few years and beyond and SME is such a buy right now I just can’t believe it. As always good work and Thanks for your help trying to navigate through a difficult market. When your looking down the road a little, you don’t get to stressed out over the daily volatility. Thanks. Jennifer
Interesting development on the Lonrho airline front today — Lonrho is invested in Rubicon, a small cash shell, and Rubicon is working with the founder of Easyjet to prospectively build an African budget airline under the fastjet name. Easyjet’s founder is already in partnership with Lonrho for the franchising of 50 easyhotel hotels that Lonrho will build across Africa, there may be some potential for leveraging Lonrho’s position, permits, or experience with Fly540 into something bigger.
Here’s the FT article on the deal, which is likely to be mired in the fight with easyjet over whether the founder has the right to start a new airline: http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=newssearch&cd=1&ved=0CC8QqQIwAA&url=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F81eb8ccc-1f28-11e1-ab49-00144feabdc0.html&ctbm=nws&ei=0wPdTvLRPMjb0QG97cT8DQ&usg=AFQjCNFL8kQo7-b6adpLp2naCiKeNzj0KQ&sig2=ZCfBpRgdByvkYFKnU3dIPA
Travis any thoughts about the Lonrho warrants I just received notice about from my broker–pros and cons?
The share offering? From what I remember it’s at a premium to the current market price — I think they offered it at 10p, maybe? It’s below that now, so no particular reason to buy in that I’m aware of.
I’m not aware of any warrants on offer, I received notice of the fundraising they’re doing in part through existing shareholders. From what I can tell they’re simply offering shares at 10p both to existing shareholders and to other investors. That’s good for them, relatively speaking, since it was the fair price at the time and they didn’t have to discount it to get some interest, but obviously it would have been better to raise the funds (which they probably need for the airline as much as anything else, a worrisome potential sinkhole if it doesn’t get up to speed pretty quickly) earlier in the year when their shares were much stronger.
As far as what to do, I personally have no interest in the follow-on offer from Lonrho — if I want to buy shares I can do so today for 9.5p since they’ve fallen further, no reason I can see to overpay for the direct offer, they don’t appear to be offering anything special (like warrants, or discounts for existing shareholders) to sweeten the deal. I’ve read only the basic sheet on the offering, there may be a longer prospectus with some hidden benefit but I’m unaware of it if so.
I received notice from Fidelity stating that i had to act on mine before Dec 27th. I was offered 116 for the 2000 shares that i own. When i called to inquire about this i was told i did not qualify because i was a US citizen?