Nordic Stocks

Biotie head-fakes traders

2015-04-23T09:54:00.002+02:00

One and a half minutes after updating its tozadenant Phase 3 program design with a positively versed stock exchange release, biopharmaceutical company Biotie Therapies (OMXH: BTH1V) announced it plans to list in the United States and triple its stock count in the process to fund the said development program.

The company will issue convertible notes with a conversion price of 0.15 EUR per share and warrants at a subscription price of EUR 0.17 in a directed issue to U.S. based investors such as Vivo Capital, OrbiMed, Versant Ventures and investment funds managed by the Baupost Group and some existing shareholders. Up to 562 million new shares may result from this. It also plans to conduct an Initial Public Offering in the United States with a maximum number of 530 million new shares from that as well. This might mean the company having more than 1.5 billion shares.

Many traders jumped the gun on the first stock exchange release. Share price of Biotie certainly reflected the need for further financing, and the conversion prices aren’t a whole lot below the current market price, so whether they come out of this unscathed is another matter, but it would certainly be hoof companies to ask for a trading halt rather than to drop one mammoth nugget at a time during market open.

NunaMinerals bankrupt

2015-04-19T23:31:00.000+02:00

NunaMinerals (CPH: NUNA) announced late Sunday evening that it has decided to file for bankruptcy as soon as possible. It has been exactly three months since the loss of the company's equity was reported. Payments are becoming due and the company is insolvent.

The new coalition government of Greenland as both the largest shareholder and the creditor did not feel the proposal a proposal from a newly founded British company Greenland Mining Management Ltd to list NunaMinerals in Frankfurt stock exchange, and to repay all loans to government without asking it to invest more, was viable.

Greenland Mining Management claimed its brokers said there would sufficient demand to see that through. The Board of NunaMirals also said it was attempting to find a solution that would benefit all shareholders. The government will obviously be able to use the prospective exploration portfolio that the company has advanced in whichever way it sees fitting going forward.

SmallCap Danmark indicted for stock market manipulation

2015-04-17T08:55:00.001+02:00

SmallCap Danmark AS said it has received a formal indictment against the company and the then CEO Jens Erik Høst for egregious violations of the Danish Securities Trading Act pertaining to trades in Egetæpper (CPH: EGE) and Rias (CPH RIAS B) between 2009-2011. The trades made by Mr. Høst for the company and transactions between the company and an entity controlled by him are said to not have represented actual demand but were instead used to run up the price to raise the value of their previous holdings to show a better result for the company. The investment company denies stock market manipulation and says its holdings are not affected by the indictment. The charge carries a possible fine.

The Danish State Prosecutor for Serious Economic and International Crime (SØIK) brought charges against the company in 2012. At that time more issues and another stock were on the table. The Danish authority has recently stepped its efforts for violations that took place following the financial crisis. Having been following the said stocks at that time and since, they certainly did enter a whole new plateau with very little volume. Since then the price rise has however also proven justified by the numbers.

AF Gruppen plans to acquire majority of Målselv Maskin & Transport

2015-04-16T17:04:00.002+02:00

Civil engineering and construction company AF Group (OSE: AFG) has signed an LOI to acquire 70% of the shares of Målselv Maskin & Transport AS. The deal is conditional on due diligence and board approval. It values Målselv Maskin at 155 million NOK. The 105 million for the 70% stake would be paid in part in cash and in part in AFG shares.

Målselv Maskin is the largest machine contractor in Troms County with a long list of references particularly in local road infrastructure projects and foundation works. It was founded in 1967 and is based in Rossvoll where the company has a 1000 square metre workshop. It employs about 50 people and has pebble and gravel mines located in Målselv, Bardu and Sørreisa. Its available machinery includes excavators, loaders, dumpers, bulldozers, trucks etc.

Troms region has many large projects in the pipeline and AFG has been eyeing the firm for quite some time. Sales in 2014 were about 225 million NOK. This was up from 120 million in 2013, when the company had EBIT of 17.8 million. Equity at the end of 2013 stood at 141 million with an equity ratio above 80%. The stakes in Holmen Betong AS and Anlegg og Maskin as well as ongoing projects are a part of the deal.

Tasquinimod fails in phase III

2015-04-16T08:28:00.000+02:00

Active Biotech (STO: ACTI) and Ipsen (Euronext: IPN; ADR: IPSEY) are discontinuing the development oral quinolone-3-carboxamide Tasquinimod after the results from pivotal Phase III trial 10TASQ10 which studied about 1200 patients suffering from metastatic castrate-resistant prostate cancer (mCRPC) failed to show enough clinical benefit to justify seeking drug approval considering the known side effects. The results had been highly anticipated, with cautious optimism stemming from a successful 200+ patient phase 2 trial where the drug appeared to significantly slow disease progression in metastatic castrate resistant prostate cancer while the safety profile appeared acceptable.

The phase 3 trial did not show overall survival benefit and only a modest improvement in disease progression. Safety data is preliminary. The oral immunotherapy that binds S100A9 (targeting immunosuppressed tumour microenvironment) has shown some promise in other indications as well but the clinical program has clearly focused on prostate cancer, putting the entire future of the compound in doubt. The entire immuno-oncology field is just in the middle of a deal frenzy. For Active Biotech this is another major blow for a company that seemingly has had so many promising candidates that are yet to bring commercial success. The stock will be in severe pressure today.

Bergen Group sells Hanoytangen, explaining Chang departure

2015-04-13T10:35:00.000+02:00

The snowball effect that started from royally botched Fjord Line cruise ferry project management has now culminated in Bergen Group (OSE: BERGEN) selling its last crown jewel. The company has decided to divest Hanøytangen which is the deepest dry dock in Europe to Semco Maritime. At the same time the adjacent buildings are sold to Hellik Teigen Group. The 40 or so employees continue with the new owners. Bergen Group management recently moved to Hanøytangen and now heads away.

The perfect storm continued even after Rosenberg divestment, which brought in a lot of cash. The company scrambled to sell Fosen yards, in the end for pennies, just to try to get out of it. Since then Bergen Group touted the long-term prospects of Hanøytangen and made investments into the dry-dock but realising gains such would require further large investments. Decommissioning activity was supposed to be a long-term growth area that could sustain nice yields for investors. The company had said it was looking for a long-term financing solution; most of the 800 million NOK in liabilities is short term. Once Scanmet-option was left unused, the writing was on the wall that the only option was another disposal.

Now what is left? As per stock market regulations, Bergen Group will have to explain this shortly. Balance sheet assets are going to diminish greatly to somewhere in the vicinity of 100 million NOK. The selling price is 245 million NOK and a 145 million NOK impairment will be taken. Total non-current assets as of December 31 2014 were 516 million.

Compared to most recent accounts and just adding the sales price into the short term side, short-term assets will cover all liabilities as listed annual accounts for 2014 by about 120 million NOK, which consequently was about the same as the market value in Friday close. Annual sales of remaining activities of Bergen Group services is somewhere in the vicinity of 400 million NOK. The segment EBITDA most recently has come somewhere below 20 million NOK a year.

That is all well and good and may look like an attractive valuation but it remains to be seen what is shown in Q1 accounts. A net gain from Hanøytangen transaction of some 30 million NOK goes into Q2 accounts based on what was allocated to disposal of net operational assets. Safe Bristolia contract will be finalized, part of it was in Q4 accounts and the remainder is finished within weeks.

The exit from shipbuilding activities has also constantly cost more than the company has been projecting and further potential liabilities have arisen, such as those that were from hull builders for Fosen . Most recent litigation is an 82 million NOK suit from Maritime Construction Services pertaining to a project on Borgland Dolphin in Hanøytangen AS. While services sector has some long-term frame agreement, such as with the Navy, offshore services prospects have dimmed as well. Therefore any entry now is highly speculative.

Now we also know why the biggest shareholder Brian Chang left his post in the Board of Directors last week. It seems he has no particular interest in a mere maritime services company. What Yantai Raffles founder Mr. Chang plans to do with his shares remains to be seen. You wonder if continued listing is worth it. Any change will naturally involve the long-time leader and the other major shareholder Magnus Stangeland.

Brazil prosecutor Gripen deal corruption investigation

2015-04-11T18:41:00.000+02:00

Public Prosecutor's Office has started an investigation into the Brazilian Federal Government deal with Saab (OMX: SAAB B) for 36 Swedish Gripen NG fighter jets. Folha de San Paulo writes that if irregularities are found, prosecution may seek cancellation of the deal. Of particular interest and much debate in Brazil is the difference in the final contract value of 5.4 billion USD signed in October 2014 and the initial offer from Saab of around 4.6 billion USD received in 2009.

Brazilian air force says the discrepancy is due in part because of currency rates, as the quoted rate was translated from SEK at the time, as well as additions such as wide-area display cockpit panel and flight simulators that weren't a part of the original offer. They are ready to provide any evidence needed for the maximum a year-long investigation.

Shell deal for BG has many implications for Norway

2015-04-08T09:57:00.002+02:00

There is still money to be made in oil & gas. Royal Dutch Shell (LSE: RDSA, RDSB Euronext: RDSA, RDSB NYSE: RDS.A, RDS.B) has agreed to bid 47 billion pounds (almost 65 billion Euros) in cash & shares in the combined company (383 pence in cash 0.4454 Shell B Shares) for British multinational oil and gas company BG Group (LSE: BG. OTCQX: BRGYY). The recommended deal represent a hefty premium at current prices for both companies, with yesterday's closes for both implicating a value of 1,350 pence per share in London. BG is up almost 40% to trade around 1250 in early action whereas Shell is down slightly.

Implications on the Norwegian Continental Shelf are also clear. BG Group has licenses in Norway and so does Shell. With the cash & 19% ownership in Shell for BG shareholders, you could say the valuation is attractive for a total increase of 25% in proven oil & gas reserves and 20% increase in production for Shell. Also the largest shareholder in BG Group is Government Pension Fund of Norway through Norges Bank Investment Management with just over 5% holding. The deal is thus another boon for it.

On the other hand consolidation can mean less activity. Annual synergies of 2.5 billion pounds have already been identified. Shell says the deal helps its growth particularly in Liquefied Natural Gas & deep water research with focus on Australia in LNG and Brazil for deep water. Clearly LNG is the major future focus area.

BG Group's Norwegian high-profile CEO Helge Lund, who has previously headed Statoil (OSE: STL) and Aker Kværner, now Aker Solutions (OSE: AKSO) only joined the company half a year ago. His future is now uncertain, with British media speculating he likely has no long-term role in Shell. He said he and his team will remain committed to BG Group during the time it takes to complete the transaction. Finnish former Nokia (OMXH: NOK1V, NYSE:NOK) head Jorma Ollila is Chairman of Shell. He said the result of the deal is a stronger and more competitive company in the volatile oil price world.

As seems to be the norm these days, market was starting to speculate on a bid beforehand, forcing an announcement last night. Advisors for BG Group were Goldman Sachs International and Robey Warshaw LLP while Shell was aided by Bank of America Merrill Lynch.

K2A preferred shares listed

2015-04-06T16:39:00.000+02:00

Real estate firm K2A Knaust & Andersson Fastigheter AB (STO: K2A PREF) has started its listed journey on the Nasdaq First North Premier on Thursday April 2nd 2015. With the IPO of preferred shares being oversubcribed, the maximum amount of 700 000 new preferred shares were issues at 250 SEK per share for proceeds of 175 million before issue costs. Post-IPO the company has some 4000 shareholders. In the short half-a-day session, the stock advanced 8.8 % to close at 272 SEK per share.

Shortly before the IPO, Johan Knaust, Olle Knaust and Christer Andersson all held 643200 ordinary class A-shares corresponding to 27,7% of all shares and votes. The remaining shares were held by Claes-Henrik Julander (12,5%) and Ludwig Holmgren (4,4%). Class A shares carry 10 votes each, so the three co-founders maintain firm grib of the company. Minor changes to their holding took place with Olle Knaust and Christer Andersson subscribing to a few thousand preferred shares. In the future it is possible that the company will list ordinary Class B-shares carrying one vote each.

K2A preferred shares are entitled to a yearly 20 SEK preferred dividend paid in quarterly installations. There are some guarantees for this (no profit distribution to other share classes, no issuing of new preferred shares) and an annual interest rate of 12% accruing on the unpaid dividend until the preferred dividend is received, should the company not have distributable cash to meet the preferred dividend in any given year. There are also some additional rights such as the right to subscribe for shares should new shares of any class be issued.

Preferred shares have no right to further profit distribution. If preferred shares are redeemed by the company, it would be done at 130% of the original subscription price (so 325 SEK for this batch). You can thusly argue that this instrument is closer to a corporate bond than to an equity certificate.

K2 has six active project locations and is seeking for more. Just recently subsidiary Svenska Studenthus ("Swedish Studenthouse") was granted permission to begin the construction of three blocks that will hosts 285 student apartments adjacent to Örebro University campus. The production process aims to minimize costs and risk with smallish high-standard houses. Report of Q1 2015 is expected on May 13th 2015. Acting financial advisor & book runner was Carnegie Investment Bank.

Growth ambitions lead to an investment decision, first Volvo factory into USA

2015-03-30T15:42:00.001+02:00

Volvo Car Group announced it is going to build a new manufacturing facility in the United States. The investment is worth some 500 million USD. The location and other details will be announced later. Volvo dealers are satisfied with the announcement. The company aims to sell 100K units per year in USA. The worldwide goal towards 2020 is even loftier, with 800K a year, 200K of which in China. In Europe sales are expected to continue lagging, with perhaps minimal growth taking place.

Volvo recently reported record sales of almost 130 billion SEK and a 2.2 billion SEK net profit for fiscal year 2014. It sold 465 866 cars in 2014, over 80 000 of which were sold in China that has become its main market ahead of the U.S. after a manufacturing site was opened in Chengdu couple years ago. Volvo which has its roots in Sweden used to be owned by Ford Motor Company (NYSE: F). It will now start competing ever-more heavily on Ford's home turf.

Volvo Car Group's parent company is Zhejiang Geely Holding (SEHK: 0175). The subsidiary is Headquartered in Gothenburg, Sweden and production facilities are currently located in Sweden, Belgium, China and Malaysia. For Swedish operations it is good news that the company is doing well. The Chinese owners have taken a hands-off approach in regards to local operations and it has been well received. On the other hand the vision to become a premium brand car maker leaves some worrying on the importance of Swedish operations going forward.

KEVA pension agency CIO calls stock market a bubble in the making

2015-03-30T13:49:00.000+02:00

Chief Investment Officer Ari Huotari at municipalities’ pension insurer KEVA stirred a big debate after telling YLE news that the stock market and other risky assets are creating a bubble and KEVA has reacted by selling some of its holdings. Huotari said he would not be surprised to see up to a 20-30% drop within the next 12-18 months.

Other pension insurers did not seem to agree, feeling that the quick advance is justified in the current low-interest rate environment. Former high-profile politician Raimo Ilaskivi, who is also a Doctor's degree holder in economics, utilized the old adage that this time it is different at his blog published by online newspaper Uusi Suomi.

Ilaskivi mentioned the effectively negative interest rate and European CEntral Bank operations as support for the stock market. He viewed comments from Huotari to constitute investment advice and felt that it is outside the domain of a pension insurer. Ilaskivi hinted that such an advice is potentially a big market mover in Finland and foresees discussion on the responsibilities of large investors in communications toward retail investors that can be swayed by such remarks.

Important news for Saab-Boeing team in T-X program

2015-03-30T11:59:00.000+02:00

Former fierce competitors Boeing (NYSE: BA) and Saab (OMX: SAAB B) have recently started partnering up on a number of projects. The anticipated lucrative USAF trainer bidding process is what pushed them to join forces. Overall the worldwide demand for lowering costs has led the industry to partner more and more on big military projects. Swedish aerospace and defence company is thinking of making big moves in the United States.

In the so called T-X program, the United States Air Force is expected to replace aging two-seat jet trainer T-38 Talon with an initial order of 350 planes that could be worth 90 billion SEK. Lifetime orders from the U.S. could approach 1000 jets and its allies would then be expected to make orders as well. The number of Talons built is 1146. It is unclear when a contract award would happen, but we should have some news by 2016 on when the proposals for the new jet are requested for.

The competitive landscape just had a big shift. Defense News reported that General Dynamics (NYSE: GD) chose to withdraw as prime contractor of the T-100, a re-branding of The Alenia Aermacchi M-346 Master, bid with Italian firm Alenia Aermacchi. Alenia, which is a subsidiary of Finmeccanica (BIT: FNC) had previously considered bidding as a prime contractor but it is considered rather unlikely that notoriously protectionist USA would choose another foreign venture to tackle such a mammoth deal alone, even if Alenia would do the manufacturing on U.S. soil.

Therefore Alenia is likely to try to land a new prime contractor/integrator. It sounds as if communication from the U.S. army on the requirement heard by Alenia and General Dynamics in the pre-bidding process required for more modifications. Overall there is now more talk with the industry beforehand on such deals so companies from bids that ed up losing could instead jump ship.

Other competitors are expected to be Talon maker Northrop, now Northrop Grumman (NYSE: NOC), Lockheed Martin (NYSE: LMT) and Korea Aerospace Industries KAI (KRX: 047810) consortium with their KAI T-50 Golden Eagle. Saab-Boeing and Northrop Grumman bids are clean-sheet design from scratch which would enable better adhering to changing requirements. Northrop Grumman was previously planning to submit BAE Systems Hawk.

Saab already has 200 people working on the project mostly with Boeing in St. Louis. As SvD Näringsliv points out, Saab already warned a year ago that costs from the project will be a drag on its results for now. A perceived increase in its chances to get the order therefore had a positive impact on the share price today. Saab and Boeing expect to be able to deliver an adaptable and affordable offer. This would likely mean a smaller plane that could undercut T-50 in costs.

KAI and by presumed extension Lockheed just got good news from South Korea, winning an order of over 7 billion Euros to develop a mid-level fighter for Republic of Korea air force. KAI beat out Korean Air Lines (KRX: 003490), which had European Airbus Military as a technical partner in a last-minute bid. South Korea is also buying PAC-3 missiles from the United States and launch-systems will be upgraded by Raytheon (NYSE: RTN).

Hoist Finance returns

2015-03-30T00:52:00.003+02:00

Poorly performing consumer loans are what Hoist Finance AB (STO:HOFI) acquires and manages from commercial banks and financial institutions. The Swedish financial services firm was de-listed in 2004. Now more than a decade later it has returned to be a listed company as the largest pan-European purchaser of debt originated by financial institutions. Trading in the shares commenced on the Nasdaq OMX Stockholm main list on March 25th 2015.

Hoist Finance has debt purchase and debt collecting activities for non-performing loans in eight European countries. It also has an on-line savings retail deposit operation called HoistSpar which has a total deposit base of some 11 billion SEK from 65 000 active accounts in Sweden. This activity is managed through wholly owned subsidiary Hoist Kredit AB. Some of those proceeds can then finance the loan acquisition side. Hoist Kredit has also issued three series of public notes quoted on Nasdaq OMX Stockholm.

In 2014 gross cash collections were about 2.5 billion SEK while the total carrying value of acquired loans stood at 8.6 billion SEK at the end of the year with 1570 active loan portfolios and about 6.5 million active claims. Total revenue has grown by 140 % in two years from 667 million SEK in 2012 to 1.6 billion plus in 2014 through big recent acquisitions. Margins have also improved with EBIT% rising from below 20% in 2012 to 31.9% in 2014. Earnings per share for last year on the 79,238,014 shares post IPO is about 2.27 SEK.

EBIT margin target is to reach above 40%. Common equity Tier 1 ratio CET1 is now around 10% with stated target to exceed 12%. Medium-term dividend distribution aim is 25-30% while longer term view is to pay about 50% of annual net profit as dividends. Hoist Finance competes with Lindorff, Intrum Justitia, EOS and Portfolio Recovery Associates (now owner of of Aktiv Kapital) as well as a number of smaller local players.

Initial Public Offering was expected to provide proceeds for further growth and raise the company profile. Company was issuing some shares and large shareholders were selling some of their shares in it. Implementation of Basel III regulations is expected to provide growth opportunities as banks reduce their balance sheets. The rationale for banks to sell non-performing loans at a considerable discount is multifaceted. Their capital ratio strengthens immediately, instant cash-in provides liquidity, level of risk is reduced and debt-collection is in general a non-core business.

British hedge fund Toscafund was on both sides of the offering. It bought into Hoist Finance in a 30 million GBP deal that netted it a 10% holding several months ago. Hence at that time Hoist Finance was valued 300 million GBP or 3.84 billion SEK at current exchange rate. With a further 750 million gross or about 675 million net coming in the offering, the market value after the IPO, which at 58 SEK per share was 4.55 billion, was rather close to cash received in the IPO plus earlier valuation. After days of trading and another post-IPO jump, the market value is now closer to 5.3 billion. The IPO range was 50-60 SEK and it was over-subscribed multiple times.

Toscafund had told the company it was intending purchase through different funds at least the same number of shares it was selling, but had made no such guarantee. In addition to Toscafund, other major institutional shareholders post IPO are Carve Capital AB (9%), Lancelot Asset Management AB (5%) and Zenit Asset Management AB (4%) Regarding other shareholders selling shares in the IPO, post-holdings were expected to be as follows; Beagle Investments (7.5%) Deciso AB (7%) and Costas Thoupos (4.2%)

Evolution gaming starts strong

2015-03-28T15:04:00.004+01:00

Live casino systems provider Evolution Gaming Group AB (STO: EVO) started trading on Nasdaq First North Stockholm on March 20th 2015. In one week the stock advanced 6,13% from the start of trading to close at 95.15% and is thusly almost 20% above the IPO price of SEK 80 per share. The 80 SEK per share was also the upper bound of the range in the IPO, continuing a trend of wildly successful Initial Public Offerings in Nordic countries as of late.

At 95.15 per share, the company is valued nearly 3.5 billion SEK as it has 35 970 377 shares. No new cash came toward the company in the IPO, it was the case of founders and management selling shares. Instead Evolution Gaming estimated the IPO will cost a lofty maximum of 4.5 million Euros as commission to managers and other advisors. The clean balance sheet containing very little debt certainly did not require cash-in.

Largest owners before the IPO were British billionaire Richard Livingstone, whose billionaire brother Ian is in the Board of Directors, company founder % CEO Jens von Bahr, Fredrik Österberg and Richard Hadida. After the offering the first 3 maintain slightly over 10% of shares each and Richard Hadida still has slightly over 5% holding. Swedbank Rober Fonder became another large shareholder in the IPO as it committed to acquire about 9.5% of shares. Other high profile investors buying shares were Staffan Persson, Peter Lindell, Erik Selin and Niclas Eriksson, who combined had committed to acquiring about 8% of shares. Further information of the current shareholder structure is promised in April.

The business to business focused group enables real time casino game table dealing to be provided via live streaming video to electronical devices (tablets, smartphones, computers). It aims to be the world leader in the field and currently employs about 1300 people. Some examples from over 70 total customers are Betsson, Poker Stars, Unibet and William Hill.

The company targets faster growth than the industry average in Europe. Global gambling industry market data provider H2 Gambling Capital estimates market to grow by 18% per annum until 2018. Profitability target is to maintain an EBITDA margin above 35%. Dividend policy is to distribute a minimum of 50% of net profit as dividends.

Thus far revenue target has been met with growth from 31 million SEK in 2012 to 49 million in 2014 while Operating Margin has been hovering at or slightly below 35%. With earning per share of 0.35 SEK last year, trailing earnings per share is astronomical. Forward estimates however do seem a lot more reasonable. Morningstar expects Price/prospective earnings to be close to 30 whereas Remium estimates EBIT this year may reach 150 million SEK, which would suggest EV/EBIT of about 23 and sees further upside in the share. Important deals signed in Q4 2014 suggest growth may well pick up this year.

Some of the revenue comes from fixed monthly fees. Variable fees are commissions by operators, with Evolution Gaming typically getting a share of the net profit of the live casino operators' net profit. Both the revenue and cost side debend on which sort of service is to be provided, with Evolution Gaming operating the live casino with their own professional dealers working on two live studios (one in Latvia and one in Malta) and then providing some additional services. Gambling industry is a cyclical consumer industry that carries some regulatory risks.

PA Resources tries to continue going concern, seeks corporate restructuring

2015-03-27T10:55:00.004+01:00

Oil and gas sector companies are really starting to feel the pinch. PA Resources (STO: PAR), which explores, acquires, develops and sells oil and gas from the said resources has been in negotiations with its creditors to restructure debt. Those aren't progressing quickly enough. The company has today filed for corporate restructuring to attempt to shield it from its creditors. Previously the lenders had agreed to defer interest payments until March 31st. PA Resources had been proposing further delay and waiver on covenants.

After deep losses and a massive impairment in 2014, its equity had fallen deep into negative territory. The company thus had to prepare balance sheet for liquidation purposes. That showed a mildly positive equity. Shareholders voted against liquidation in the ensuing extraordinary general meeting. In eight months from the EGM, the situation will be revisited and equity needs to be more than half of the registered share capital. Obviously the company has been attempting some sort of conversion of debt into equity that would mitigate the situation.

Some bondholders however seem to be more willing to take the hit in liquidation rather than make an uncertain bet in sector revival. PA Resources has two big unsecured bond loans. The 900 million NOK bond loan issued in 2011 has part of its principal to be amortized in April 5th 2015 and the loan matures on April 5th 2016. That loan currently has 675 million NOK outstanding (12.25% margin). The 1 billion SEK loan from 2013 has 750 million SEK outstanding (margin 13.5%). Its date of maturity is on March 3 2016.

Global commodity trading company Gunvor is both the largest shareholder and largest creditor of PA Resources. Gunvor has also been in the news since it used to be part-owned by Gennady Timchenko, a citizen of Russia, Finland and Armenia, who was included in the United States sanction list. Timchenko therefore sold his stake in Gunvor to his co-founder, Swedish billionaire Torbjorn Tornqvist, to ensure continued operations.

In current operating environment, PA Resources is cash-flow negative. The firm however maintains that it can significantly reduce operating expenses and has assets in Denmark (central North Sea) and Congo (plus one such field in Tunisia despite other delays and write-downs there) that can be developed further with quite little cost. The business model is to actively develop asset value through exploration, appraisal, planning and development and then divest some assets while take in operational cash flow from producing fields to allow constant continued investments.

In regards to producing fields, PA company President & CEO said in Q4 2014 report, that Block I in Equatorial Guinea and the three small onshore DST fields in Tunisia are cash-flow positive at current oil prices (hovering around 50 USD). The Didon field however is cash-flow negative. That offshore field is 75km offshore Tunisia in in the Gulf of Gabes at water depth of 75 metres. It was already in decline phase but has potential for further discovery. Some 500 boed has been produced from 2 MMboe net producing oil reserves and net contingent resources in Zarat field are over 40 MMboe. Going forward it will be 100% in PA Resource's hands with termination of the farm-out agreement with EnQuest (LSE: ENQ, OMXS: ENQ). The companies entered an agreement in 2013 whereupon EnQuest got a 70% stake. Tunisian authorities slow response provided EnQuest the opportunity to exit the project as the environment changed.

In both 2011 and 2012 PA resources produced an average of about 8000 bpd of oil equivalentss. The number has come down rapidly from there to about on average of 3150 boepd in 2014. The subsidiaries continue to function and the share is still trading in Nasdaq OMX Stockholm, likely providing for some decent trading opportunities as news flow continues.

Sandvik plans to close in Turku

2015-03-26T16:30:00.000+01:00

Swedish engineering group Sandvik (OMX: SAND) continues to move its operations closer to growth markets. About 500 jobs are now threatened in Finland as the entire 470-employee site in Runosmäki, Turku is facing closure. Another 30 jobs are at risk in Tampere unit. Sandvik entered Finland in 1997 when it bought the iconic Tampella Tamrock Oy and later renamed the unit Sandvik Mining and Construction Oy and employs about 1700 people at this time.

Turku factory manufactures underground loaders such as Sandvik Lh514 and underground trucks (dumpers etc). It has been at the forefront in bringing new innovative products to the market with machining, assembly, welding, painting and testing done at the site. Sandvik Mining business unit has provided most challenges to the company in the last couple of years as the sector downturn persists. In total up to 10 Sandvik factories worldwide may be closed.

Dannemora bankrupt

2015-03-18T09:53:00.002+01:00

Mining and exploration company Dannemora Mineral AB (STO: DMAB B, OSE: DMABB) has filed for bankruptcy. The stock is suspended from trading. The company, which was founded in 2005, had been in reorganization proceedings since May 2014 and in special observation since late 2013. In 2014 1.2 Mton of ore was produced and in last month the company said it was EBITDA positive. Continuing operations would however require investments in mass recovery and the transfer of the crusher underground.

In the current extremely low iron ore price environment, no financing could be found and customers were starting to prepare for finding new suppliers. On Monday the company announced ceasing of all production until liquidity situation could be resolved. This precipitated a gradual 50% slide in Swedish exchange to 0.33 SEK per upon Tuesday close. In 2012 the stock traded near 60 SEK. Dannemora had been supplying ThyssenKrupp Steel Europe AG, Salzgitter AG, and Stemcor UK Ltd.

The historic Dannemora Mine was reopened in the Summer of 2012. It had last been closed in 1992 by SSAB after the mine had been running for over 500 years. The last mineral resource update showed probable resources of just under 35 Mton remaining with measured resources below 20 Mton. With those estimates, the mine was supposed to have under 10 years remaining in operation as is. Its magnetite iron ore could be crushed and processed into high purity with low levels of phosphorus and vanadium. Recent recovery rate was around 40% with target above 50%.

Anttila to be sold nearly for free

2015-03-16T08:27:00.002+01:00

Kesko Oyj (OMXH: KESBV) announced has decided to sell its Anttila department stores for one million Euros to German-led investment company 4K Invest International Ltd. The company is taking a 150 million charge on Q1 2015 for the deal. In 2014 Anttila had sales of 324 million Euros and posted a 64 million loss before exctraordinary items.

Tte Finnish retailing conglomerate also updates its outlook on the account of the deal. Profit without extraordinary items is now expected to improve on 2014, implying Kesko expected Anttila's losses to continue this year. Sales are now naturally projected to be down from last year. Some 1500 employees and 23 Anttila plus 9 Kodin1 stores continue operations as usual for now. Last year Kesko announced closures of several Anttila's.

4K invest acquires medium to large companies performing poorly and attempts to create value through restructuring or carve-out. It has a track record of deals in retail. There has been some overlap with the brands. Some Kodin1 and Anttila shops work in the same cities and eat into each other's sales. There is also a separate online store for both, netanttila.com and kodin1.com are a part of the deal. Kesko's K-Citymarket stores also have competing products on offering.

2015-03-10T12:56:00.000+01:00

Business information services provider Suomen Asiakastieto Oy is contemplating stock market listing in Nasdaq OMX Helsinki main list. If the market value estimates north of 100 million Euros hold water, the Finnish credit information market dominator's IPO is likely to be the largest for Helsinki stock exchange since NASDAQ's acquisition of OMX in February 2008

In pure margins, the company is among the most profitable in Finland. Since only some key numbers and ratios have been made available and IPO details are scarce, the value proposition is to be determined. Supposedly listing has been planned for at least a year. Credit rating business doesn't mind recessions and with the misfortunes of people and businesses seemingly constantly in the rise in Finland, Asiakastieto continues to benefit from its near monopoly position. CEO Juha Ruuska told newspaper Talouselämä that a positive credit registry should be allowed in Finland as well and foresees that as one potential future growth area.

Finnish banks Nordea Bank (32.3%), Sampo Bank (16.1%), OP Bank Group Central Cooperative (16.1%) and payments provider Luottokunta (16.1%), and minority shareholders sold Asiakastieto to private equity firm GMT Communications Partners in 2006 citing focus on core business. Financial details were not made public, but the company was valued way south of 50 million. GMT cashed out less than two years after that with an IRR of about 70% on their investments. The buyer then was the current majority owner AKT Holdings S.à r.l, a Luxemburg-registered holding company which is owned by Bahraini alternative investment provider Investcorp International (BSE: INVCORP). Now Investcorp appears to be gradually making its exit at still a hefty profit. According to its own Q4 2014 report, . It already made a partial exit in Q4 2014, but more details are not available. It is just known that the IPO would consists of the sale of shares from AKT, Investcorp clients and some members of Asiakastieto's Board of Directors and management.

Presentations at 10th North Atlantic Seafood Conference

2015-03-05T23:05:00.000+01:00

10th North Atlantic Seafood Conference takes place in Bergen from 3-5th of March. The event is the largest seafood conference in the world. Several listed companies typically release their presentations held in the finance and investor seminar portion. Direct pdf links for the presentations are listed below as they become available:

Marine Harvest (OSE: MHG) here and here
Bakkafrost (OSE: BAKKA) here
Norway Royal Salmon (OSE: NRS) here

Salmar (OSE: SALM) here
EWOS Group AS, here and here

Bavarian Nordic lands a deal from partner after positive early results

2015-03-05T19:29:00.001+01:00

Danish biotechnology firm Bavarian Nordic (OMX: BAVA, OTC: BVNRY) has gotten a big piece of the ongoing biotech deal frenzy. Bristol-Myers Squibb (NYSE: BMY) has signed an exclusive deal for Prostvac worth up to 975 million USD. An upfront fee of 60 million USD is already coming their way. The cancer immunotherapy and infectious disease vaccine maker already has one approved drug and several others in early clinical development. Its stock market price is up by 50% following the news.

Prostvac cancer immunotherapy candidate is currently in pivotal phase 3 trials under an SPA protocol from the FDA for asymptomatic or minimally symptomatic metastatic castration-resistant prostate cancer (mCRPC). Target enrolment was reached last December and a total of 1298 patients are on the trial. The three arm-study has a stand-alone, combination treatment arm with adjuvant dose of GM-CSF (Granulocyte-Macrophage Colony Stimulating Factor, used as an immunostimulator) and Placebo control group.

Bristol-Myers Squibb has an option to exercise the deal once phase 3 results are available. Upside fof 50 million to 230 million plus on top of the 80 million exercise milestone hinges on median OS data exceeding results from phase 2 study [in combination phase 2 study with GM-CSF the overall survival for the treatment arm was 8.5 months longer than the in the control group (25.1 vs 16.6 months]. Regulatory milestone are a maximum of 110 million and sales milestones of a maximum of 495 million plus double-digit royalties could come on top of all that. Here is the summarized agreement:

60 million upfront
80 million after phase 3 fs BMS exercises option
230 million max based on phase 3 data
110 million max in regulatory milestones
495 million max plus royalties from sales
-----------
For a maximum total of 975 million plus royalties

BRISTOL-MYERS SQUIBB is going to further research combination with its monoclonal antibody Yervoy (Ipilimumab), that is already on the market in melanoma and is in phase 3 for mCRPC. About a week ago Bavarian reported promising Phase 1 trial results for Prostvac- Ipilimumab combination. An investigator sponsored trial combining the drugs has already been in the works. Bavarian's US subsidiary is called BN ImmunoTherapeutics

On Nordic countries in renewable energy attractiveness index and companies involved

2015-03-04T14:41:00.000+01:00

Ernst & Young Global Limited has released its annual Renewable Energy Country Attractiveness Index (RECAI) where top 40 countries for investing in renewable energy sources are listed. The methodology takes into account market stability measures, energy policy and market demand and technological issues. Despite some environmental and market-size challenges, Nordic countries have amassed high-level expertize in renewable energy segment. Four Nordic countries once again make it into the top 40.

Denmark as the traditional heart of offshore wind investments as well as manufacturing and research led by Vestas Wind Systems (OMX: VWS) is still near the top in attractiveness in investing in power generation in that field, lifting the country to 17th place in overall rankings. Sweden's small climb is explained by the continued political drive to move away from nuclear power and switch those to renewable energy sources. Swedish stock-market listed wind farm developer Eolus Vind (STO: EOLU B) won a big project from Norway within the last year. Finland also makes the top ten as a target in onshore and offshore wind and biomass investments.

Norway's large hydropower capacity is a big player in Nord pool electricity market. Investments to that sector continue to have potential. Stock-market listed Hafslund (OSA:HNA) owns several hydroelectric power plants. The country also has solar power expertize as evidenced by being the home of Renewable Energy Corporation (OSE: REC) but investments in the generation side there seem to bear little fruit.

Some companies listed in the Nordic exchanges providing products and services directly into renewable energy generation include power and automation technology provider ABB (SIX: ABBN, NYSE: ABB, OMX: ABB) and presumably soon delisting Vacon (OMXH: VAC1V). Other firms such as Wärtsilä (OMXH: WRT1V) and Metso (OMXH: MEO1V) provide solutions for intermittent energy needs to supplement the industry as well as serving those industries. Many other engineering firms subcontract into the industry

New entrants from the field, such as solar thermal (heat) generation firm Savo-Solar, are expected to come to stock market in the near future. Nordic consulting firms such as ÅF AB (OMXS: AF B), Tieto (OMXH: TIE1V, OMXS: TIEN), Pöyry (OMXH: POY1V) and Rejlers AB (OMXS: REJL B) have reaped the auxiliary rewards of public sector support to renewable energy developments.

Pulp & paper companies have dabbled into biomass generation and petrol and environmental services companies from the region have been investing in similar ventures with varying levels of success. Wind farms in particular are important for steel companies. Some construction companies such as MT Højgaard (owned by listed Højgaard Holding (CPH: HOEJ B) and Monberg & Thorsen (CPH: MT B) which is market leader in offshore wind turbine foundations are involved in building the structures.

Nordic billionaires 2015

2015-03-03T14:15:00.000+01:00

Forbes list of billionaires 2015 has been released. There are 44 Nordic people listed. These include 23 Swedes, 10 Norwegians, 5 Danish, 5 Finnish and one Icelandic person. Although still by far the richest person in Sweden and in the Nordic countries, Stefan Persson’s wealth has come down somewhat as his three children all join the list.

Lego's Kjeld Kirk Kristiansen is firmly entreched as the richest man in Denmark. The title of Norway’s richest person changes hands for the second year running as Olav Thon trusted most of his wealth in 2013 to his charitable foundation exiting the list a year ago and this year Odd Reitan overtaking Stein Erik Hagen.

In Finland the Herlin family is the richest in country history, with good fortunes for Kone and Cargotec bringing in more members to the list. Antti Herlin is still the richest in the nation. Thor Bjorgolfsson of Iceland rejoins the list as the lone representative of his country after a tumultuous period of restoring his finances following the crisis of 2008 and onwards. Below is the complete listing of Nordic billionaires in 2015:

28. Stefan Persson (24,5 billion $, H&M, SWE)

92. Hans Rausing (12,5 B, Tetra Laval, SWE)

129. Kjeld Kirk Kristiansen (9,7 B, Lego, DEN)

220. Melker Schörling (6,4 B, Melker Schörling AB, SWE)

271. Jorn Rausing (5.5 billion, Tetra Laval, SWE)

271. Anders Holch Povlsen (5.5 B, Bestseller, DEN)

283. Antonia Ax:son Johnson (5,3 B, Axel Johnson Group, SWE)

291. Odd Reitan (5.2 B, Reitan Group, NOR)

301. Dan Olsson (5.1 B, Stene Sphere, SWE)

301. Finn Rausing (5.1 billion, Tetra Laval, SWE)

301. Kirsten Rausing (5.1 billion, Tetra Laval, SWE)

309. Bertil Hult (5 B, EF Education SWE)

318. Frederik Paulsen (4.9 B, Ferring Pharmaceuticals, SWE)

341. Stein Erik Hagen & family ($4.7 B , RIMI, NOR)

381. Liselott Tham (4.3 B, H&M, SWE)

393. Gustaf Douglas (4.2 B, Investment AB Latour SWE)

435. Lars Larsen (3.9 B, JYSK, DEN)

435. Niels Peter Louis-Hansen (3,9 B, Coloplast, DEN)

462. Fredrik Lundberg (3.7 B, L E Lundbergforetagen AB SWE)

481. Antti Herlin (3.6 B, Kone, FIN)

497. Ingvar Kamprad & family ($3.5 B, Ikea, SWE)

577. Johan Johannson (3.1B, NorgesGruppen,NOR)

603. Karl-Johan Persson (3.0 B, H&M, SWE)

603. Tom Persson (3.0 B, H&M, SWE)

603. Charlotte Söderström (3.0 B, H&M, SWE)

663. Andreas Halvorsen (2.8 B, Viking Global Investors ,NOR)

690. Hanni Toosbuy Kasprzak (2,7 B, ECCO, DEN)

714. Carl Bennet (2.6 B, Carl Bennet AB, SWE)

737. Stefan Olsson (2.5 B, Stene Sphere, SWE)

782. Arne Wilhelmsen & family (2.4 B, Royal Caribbean, NOR)

949. Torbjorn Tornqvist ($2 B, Gunvor Group, SWE)

1006. Kjell Inge Rokke (1.9 B, Aker, NOR)

1006. Madeleine Olsson Ericksson (1.9 B, Stene Sphere, SWE)

1226. Petter Stordalen (1.6 B, Nordic Choice Hotels, NOR)

1415 Markus Persson (1.3 B, Mojang, SWE)

1415 Björgólfur Thor Bjorgolfsson(1.3 B , Novator, ICE)

1415. Gjert Wilhelmsen & family ($1.3 B, Royal Caribbean NOR)

1533. Ilkka Herlin (1.2 B, Kone, FIN)

1415. Thomas Sandell (1.3 B, Sandell Asset Management, SWE)

1605. Niklas Herlin (1.2 B, Kone, FIN)

1638. Ilona Herlin (1.1 B, Kone, FIN)

1712. Alexander Vik (1.1 B, Xcelera etc, NOR)

1741. Antti Aarnio-Wihuri ($1 B, Wihuri, FIN)

1741. Trond Mohn (1 B, Frank Mohn AS,NOR)

Band of people with intellectual disability selected into Eurovision Song contest

2015-02-28T22:19:00.002+01:00

Finnish entrant into the 60th Eurovision song contest to be held in Vienna, Austria towards the end of May is Pertti Kurikan Nimipäivät (Pertti Kurikka's Name Day). The punk music playing band consist in its entirity of people with Down syndrome. Their song Aina Mun Pitää ("I always have to...") won by getting 36,2% of the popular vote in the televoting, besting its closest rival Satic Circus by over 10%.

Eurovision song contest has come to known in a forum to raise social issues and other controversial subjects. Just last year the winner was an openly gay drag artist Conchita Wurst. Members of Pertti Kurikan Nimipäivät met at a workshop for the mentally disabled. Their aim is to raise awareness for people with Down's Syndrome

Tallink's ship order from Turku yard confirmed

2015-02-28T00:02:00.000+01:00

A binding contract for the construction of a new cruise ferry has now been signed between Tallink Silja Oy, a Finnish subsidiary of Estonian AS Tallink Grupp (TAL: TAL1T) and Meyer Turku Oy, the recently acquired Finnish arm of Meyer Werft GmbH. Teollisuussijoitus (Industry Investment, Finnish government-owned investment firm) has 30% minority stake in Meyer Turku. The parties had signed a Letter Of Intent in December. Tallink is ordering a 230-million 212-metre long LNG-powered fast ferry designed to carry 2800 passengers.

The deal is important for the large subcontractor network in the area. Many small to medium sized engineering firms deliver much of their revenues from the sector and maintain critical competences, one of the reasons why maintaining Turku’s shipyard as well as Rauma’s, Pori’s and Helsinki’s is seen so vital for the entire Finnish maritime cluster. Local steel firms such as SSAB [OMXS, OMXH: (SSAB A, SSAB B)] and Outokumpu (OMXH: OUT1V) could vie for some materials deliveries.

Things are looking up in Turku for the moment, with much of the current layoffs presumably ending and new temp recruits coming with 30% more work next year. In total building the ship requires an estimated 2000 man hours of work. Over 80% of the total value of labour and components is expected to be created locally. Delivery is expected in early 2017 and Tallink has an option for a sister ship. The ferry is expected to serve Tallinn-Helsinki route.