Market report: Gulf Keystone Petroleum's rescue exacts toll on investors

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Cash-strapped Kurdistan oil minnow Gulf Keystone Petroleum was today saved from extinction after negotiating a debt restructuring with creditors, but the deal came at a heavy cost to its beleaguered shareholders.

The former AIM darling, which at the start of the decade became a symbol of the opportunity on the junior market to cash in on early-stage oil explorers, is turning $500 million of debt into equity, cutting its debt pile to $100 million.

The heavy dilution will leave existing investors with just 5% of the company, which could rise to 10% if they take part in a $25 million open offer. The news caused the already-battered shares to dive 1.18p, or 25%, to 3.52p.

This values GKP at just £30 million. It was worth over £1 billion four years ago.

The company, under pressure from low oil prices and the Iraqi civil war, warned there would be “zero value” for shareholders if the restructuring plans are rejected.

On the wider market, investors hailed the appointment of Philip Hammond as chancellor, giving the FTSE 100 a 54.31-points leg-up to 11-month highs of 6724.71, with miners and financial stocks leading the rise.

Micro Focus remains on track for a promotion to the blue-chip index as its shares rose 125.64p, or 7.5%, to 1797.64p, giving the software firm a  £4.1 billion price tag.

Today’s leap came as annual profits soared 114% to $195 million, with a chunky dividend as a reward for investors. 

AA reversed 10.5p to 239.7p with a major, but undisclosed, institution selling 80 million shares at 230p each. Goldman Sachs is the sole bookrunner on the shares sale.

Ocado rose 4p to 258.3p as it emerged billionaire hedge fund manager Nick Roditi is being paid to lend 52 million shares, or 8.3% of the groceries delivery firm, possibly to its many short-sellers.

Marwyn Management Partners, the owner of posh wellies maker Le Chameau worn by the Duchess of Cambridge, became the latest to unveil plans to delist from AIM, with business tough at Le Chameau. 

Marwyn claimed no shares were traded on 198 trading days over the past year. It was the case again today, as they were unmoved at 2p.

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July 14, 2016 |
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