QPP issued an RNS (http://is.gd/H630rW) earlier , clarifying the nature of the share purchase. Some interesting points are noted below.
It is described as a “sale and repurchase agreement”, in which they “transferred legal and beneficial interest in a number of shares”. In return, the directors received 67% of the value of the shares, less an arrangement fee. “As the legal and beneficial holder of the transferred shares, EFH may take any action it deems appropriate in relation to the transferred shares and is under no obligation to hold or retain the transferred shares though it has undertaken not to vote them.”
Neither directors nor EFH may not short the shares.
So far, this is consist with the view that EFH is dumping shares on the market. However, the RNS states: “Directors relied upon assurances from EFH that … the shares transferred would not be disposed of outright, other than in a default event”
On maturity, the directors are contractually obliged to purchase the transferred shares at the price they sold them. “The Agreements would not have been entered into if the board did not remain confident of meeting full year market expectations and of the Company’s longer term prospects.”
Shares are at 96p, down nearly 19%, in early trading.
To date, Rob Terry has transferred 8.9m shares under the agreement, but purchased 1m shares. This is what seems to have the Market spooked, as it is interpreting it as a cashing out. If the shares keep dropping at this rate, then a default situation will occur.
The recent announcement by Cenkos is inconsistent with this RNS. Given the misrepresentation of facts, it will be interesting to see their response. If they do not resign as advisors to QPP, then that could undermine the Market’s perception of their professional integrity.