LNG recently released its December 2019 Newsletter stating that CEO Greg Vesey had been appointed Executive Chairman on the BOD. What the article didn’t say was that the previous Chairman (Paul Cavicchi) and another member of the BOD had been shown the door following a vote by shareholders to not re-elect them to their positions.
The share holders also voted against CEO Greg Vesey being issued with Incentive (Performance) Share Rights. The three strikes indicate the level of share holders’ dissatisfaction at the CEO’s failure to achieve his performance goals as well as a number of the Company’s market projections failing to materialise over the last few years.
Over the last year alone LNG’s share value has decreased by around 60% and two of the Company’s largest share holders, Valinor and Baupost (including Seth Klarman) have sold down their holdings.
Not mentioned in regard to LNG's re-domiciling effort on this forum is that one of the requirements for joining the NASDAQ is that the share listing price be US $4.00 ($AU $5.80). At the current share price, this would mean that current ASX holders would only get 1 NASDAQ listed share for every 29 ASX listed shares. Add to the equation that US ADR’s have in the past had a value equalling around four times the ASX price (ie 4 ASX shares equals 1 US ADR share) and over the weekend the US ADR’s dropped 7%, therefore a re-domicile share ratio could even be more than 29:1.
There are lower level tiers of the NASDAQ with less stringent requirements that small caps can enter however one of the Corporate Governance requirements to enter these Small Cap Markets is that the company must have independent directors, which clearly Greg Vesey is not!!
The company so far hasn’t clarified the re-domiciling facts or the share exchange ratio so in the absence of this information it might be wise for share holders to consider all ramifications and contact the company for clear clarification.
LNG’s net loss for the last financial year was $33 Million ($11 Million more than the previous year) and there average quarterly cash outflow is around $7 Million. The current cash balance stands around $7 Million and with that being the average project costs per Quarter, it stands to reason that a CR will be required soon. It has been previously said that the company has enough cash to see it through to the second Quarter of 2020 however this does not seem possible and Greg Vesey stated in the last Conference Call that a capital raise will take place before the re-domicile.
The December newsletter also stated that:
* While many
major project launches, and
joint ventures and partnerships were signed and announced by international companies, Magnolia’s announcement of the MOU with DOE was named as the top announcement at the Gastech gathering; in fact the newsletter mentions the MOU five times including this heading:
“Vietnam MOU brings Magnolia LNG one step closer to construction”- The interesting thing about that is Greg Vesey didn’t think it was price sensitive when queried by the ASX
- The newsletter also stated that LNG will be moving their headquarters from Australia to the US, but as far as I was aware, they had done this a long time ago.
https://www.lnglimited.com.au/site/PDF/6368_1/MagnoliaLNGCommunityNewsletter
