You have made a very good observation, particularly in the context of TLGO, the previous set of options exercisable @ $ 0.35 that expired on 30 November 2015, around the time Warwick Grigor was making his messy exit from TLG.
Ever since that episode I have kept track of the Top 20 list of shareholders, which are flagged on this page from time to time when they have been updated on the company's website. The Top 20 list of current listed options exercisable @ $0.45 that expire on 31 December 2018 is published in the Annual Report. The listed options list is not updated on the company's website, in my opinion rightly so as there is not much trading volume in these instruments and they are very tightly held, more of which later.
The listed options arose from a rights issue to all shareholders following the $ 10 million capital raising in June 2016, which saw Smedvig and other European investors join the share register, Kamberg Investments and Pelmer Securities in particular; that capital raising also offered Unlisted options on the same terms as the Listed options. The rights issue was underwritten by Smedvig et al, and is probably why these cornerstone investors received the Unlisted options in proportion to their commitment to the original $ 10 million capital raising. This capital raising was a watershed event for TLG with new institutional cornerstone investors introduced to the share register FROM Northerm Scandinavia validating the quality of TLG's assets in that region.
The original announcement for the TLGOA listed options was for 45,463,769 options, subsequently reduced to 44,920,582 to meet the conditions of the supporting prospectus. The reduction of 543,187 options was for shareholders in certain jurisdictions outside the prospectus such as Germany, where TLG has its pilot plant, and the US. There was a shortfall in the rights issue, no surprise in view of the difficulties TLGO had experienced at the end of 2015, amounting to some 17 million Listed options, which were taken up by the underwriters mentioned above. This is validated by the subsequent Top 20 holders of Listed options in the 2016 Annual Report as at 15 September 2016. These three holders, Smedvig, Kamberg Investments and Pelmer Securities, have NOT reduced their holding of Listed options as evidenced in the TLG 2017 Annual Report as at 13 September 2017. A comparison of the Top 20 list of Listed options between these two dates shows that the percentage has remained fairly constant at well over 75% of outstanding Listed options. One other holder, Keith Liddell, has in fact increased his holding by over 1 million Listed options, no mean feat for a security that is so tightly held and traded in such minimal volumes. The other critical difference between these two dates is that the nominee holders have virtually disappeared from the list in the most recent Annual Report as at 13 September 2017. In fact 4,774,757 Listed options have traded since 14 September 2017 and 8 March 2018, but barely a million in the period to 31 December. I have noted volume spikes in the context of the overall volume coincide with the accumulation events I noted in my reply to Natva on 6 March.
My conclusion is that the cornerstone holders are well in the money on their Listed and Unlisted options, and that their holding is firm. This leads me to suggest that it is very likely that the holders in the Top 20 list of Listed options will exercise in December 2018, especially the three cornerstone investors who will then increase their percentage holding in TLG. This suggestion is supported by the fact that they now have a representative on the TLG Board. I also note that a resolution at the AGM last year to give the Board the flexibility to issue further shares beyond what is permitted under current regulations failed, which suggests that the largest block, namely these cornerstone institutions, did not wish to entertain any further dilution from what is already in the system.
I have calculated that if the Top 5 exercise their holding of Listed options, and their unlisted options, then TLG will receive around $ 30 million in December 2018, providing more than adequate funding to the end of the decade.
As always please do your own research and draw your own conclusions. This commentary is not a recommendation, but a summary of my observations.
For the record I continue to firmly hold TLG and TLGOA
TLG Price at posting:
79.5¢ Sentiment: None Disclosure: Held
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