DSD,
The word from The Australian in the last few days and other credible news sources can be paraphrased and summarised as follows:
1. Rumours have been deliberately spread in the last week by up to three investment banks/financiers that a $750m equity raising has been syndicated and about to be signed. This gas been described as rubbish by the Chairman.
2. Short selling and rumour mongering from vested interests engineering SP drop to force STO to agree to equity raising.
3. Chairman Peter Coates who is conducting the strategic review is an experienced hard head who's prime focus is to crystallise the value of the company. He has no intention of falling for the GFC play book whereby high indebted companies were short sold to within an inch of their life to force a cap raise, whereby investment banks then grabbed shares ultra cheap through discounted equity raising and earned massive transaction fees along the way.
4. Strategic review is believed to be aiming for completion by the end of this month.
5. The cleanest option of the review is for outright sale of 100% of STO.
My summary:
I for one am backing STO to stare down the filthy short selling and unethical rumour mongering. Clear and unambiguous statements at the half yearly conference call were for relentless drive for continual 'cost outs' of the business from top to bottom, reduced and targeted CAPEX . Potential now for selected divestment of non-core assets would be good to streamline the business and strengthen the balance sheet. Apparently the standard US business model and in other countries is for sale and lease back of pipelines as opposed to outright ownership like STO has.
Outright sale option could spark are fire fight of interest from many internationals including private equity IMO. As I have stated previously, according to The Australian newspaper only last week, the sum of the parts valuation of STO is worth approx $10 per share AFTER $9B worth of debt is retired. The current disconnect between STO fair value and SP is due to price of oil fear, sentiment, unethical rumour mongering, short-selling and the like.
STO right now at $4.70 is about the perfect contrarian play. IMHO only.
Cheers
Sarge
STO Price at posting:
$4.67 Sentiment: Buy Disclosure: Held
(20min delay)