I don't see how Kerogen's equity rescue of iGas strengthens your case that Kerogen is playing for a bankruptcy of AJL. This doesn't change Kerogen's math with respect to its AJL investment in the least.
As far as iGas goes, first of all, I don't see an immediate risk of conflict of interest. How many private equity firms hold board seats on firms within the same industry? Lots. Cuadrilla and Igas compete in the same market, but it's a global market. Kerogen serves on the board of many other o&g companies, and I don't believe any conflicts have arisen.
Shareholders of iGas end up with a smaller piece of a more sustainable whole. Being diluted is no fun, but it happens all the time when firms hit the wall. This is the price that the market offered and the board at iGas took it. If it weren't Kerogen doing the buying, it would have been someone else at an even more dilutive price (assuming that the board is upholding its fiduciary duty). The alternative for shareholders to not being diluted would be a likely bankruptcy.
Whine all you want about Kerogen, they are the people stepping up to the plate and betting most aggressively on UK shale at the moment. They've made a big equity bet in AJL and I hope they've got it right.
AJL Price at posting:
25.0¢ Sentiment: Buy Disclosure: Held
