A late entry for worst UK flotation of the year… Madagascar Oil.
Just three weeks after its shares started trading on the junior Aim market at 95p, the exploration company has dropped this bombshell:
Following a meeting between the Ministry of Mines and Hydrocarbons (the “Ministry”) and Madagascar Oil in Antananarivo late on Thursday 16 December 2010, the Ministry has indicated that it is interested in acquiring from the Company all of its licences excluding Bemolanga, being blocks 3104, 3105, 3106 and 3107. There can be no guarantee that any price agreed for such an acquisition will be representative of the fair value of such assets. However, the Company has obtained legal advice that all of its licences are valid and that the obligations on both parties are legally binding. Madagascar Oil intends to robustly defend its position.
Pending the resolution of such discussions, the Company has requested that trading in its ordinary shares on AIM be suspended with immediate effect. A further announcement will be made in due course.
Ouch!
So trading in its shares has been suspended as the company tries to hang on to its licenses, detailed below:
Now, Madagascar Oil did flag that risk of something like this happening was flagged up in its admission document.
Although its all pretty generic…
The Group’s assets are located in Madagascar and there are a number of risks which the Group is unable to control. There is a risk that the Group’s activities will be adversely affected by economic and political factors such as the imposition of additional taxes and charges, cancellation or suspension of permits, expropriation, war, terrorism, insurrection and changes to the laws and regulations governing petroleum exploration and development, including labour standards and occupational health, site safety, toxic substances and other matters. In addition, there may exist uncertainties surrounding lack of judicial 44 independence, inconsistencies among laws, decrees and regulations issued by the Government of Madagascar and its ministries, inconsistencies among regional and local laws and regulations and limited judicial guidance on interpreting legislation.
So who brought this Christmas turkey to market?
Step forward; Strand Hanson Limited, Mirabaud Securities LLP and GMP Securities Europe.
Update: 10:28am (GMT).
A list of the biggest shareholders in Madagascar Oil from the admission document.
