In fact, one small cap fundie did describe it that way. He is one of many running a ruler over
AJ Lucas, whose shares, at $1.80, have slid almost 40 per cent in the past three months.
Everyone knows that the company is mired in debt, but it is also sitting on two potential game-changing assets - its shale gas prospects, Cuadrilla in Europe and Mount Prospect in Texas - that could be worth hundreds of millions. And remember, this is a company with a market capitalisation of $110 million, a far cry from the $460 million or so when the stock traded at $7 in late 2008.
However, one thing holding many fundies back is the fear of "getting slotted", as one put it, with a capital raising, which would probably be in the order of $30 million. To this the ire of AJ Lucas's chief executive, Allan Campbell, is raised. "As usual when it comes to us, the market has it wrong … why would we do an equity raising at current levels if we haven't done one before this?"
Short-term debt, maybe?
Even after the sale of its underground in-seam business for $25.5 million last month, AJ Lucas still has $110 million or so of debt and tax liabilities that need to be paid this year, and $43 million of convertible notes, held by Goldman Sachs, that are redeemable at 90 days notice.
Campbell says the company's balance sheet will be restructured in the next month. AJ Lucas intends to refinance its debt, which means reclassifying it from short to long-term, and to "write back" its Monument Prospect asset that was written down by its $87.5 million cost.
"And voila," he says, "problem solved."
AJ Lucas has thrown about $150 million at the two shale gas assets. The Monument Prospect up for sale could be worth $US100 million and the Cuadrilla project could be worth hundreds of millions.
The catch is that more cash needs to be thrown into these prospects. So, despite what Campbell says, it could be a case of investors holding their nerve and making a killing … or being killed.
More dry weather in Queensland and NSW will help its drilling rigs increase turnover and JP Morgan's $2.17 valuation assumes that it's business as usual for the company.
But the boom scenario for the company is selling its stake in the Monument Prospect and further developing Cuadrilla, where drilling is now under way.
If prospecting is a tricky business, trying to sell an asset is even trickier, says the son of its founder and 9 per cent holder, Andy Lukas. "There's a lot of clever dicks in this business, and we've heard a lot of 'yes, buts', probably more 'buts' actually …"
If investors scent a capital raising is on the cards, the stock should fall further … if not, it's off to the Ivy Room to join Campbell, Lukas and the boys for celebratory drinks.
Matt Birney of Coretrack is hoping that his company's prospects are brighter than his political career.
The mining services company's chairman lasted about 12 months as opposition leader for the Liberal Party in Western Australia, only to see Colin Barnett grab the limelight, a few years later.
The Coretrack chief executive, Nanne van 't Riet, thinks his fortunes will improve with a company that he says is finally making the transition from research and development into the commercial world.
It is less than a month away from securing its first "big contract" in drilling services, he says.
The contract would be for its GT3000 drill rig, which combines the attributes of the big-platform petroleum rigs and reverse circulation mineral rigs. Coretrack has built one of these so far, but intends to roll out six a year to account for the "massive shortage of rigs".
Its other division provides technology that allows oil companies to determine whether a core sample has been broken or snapped. Every time a drill rig puts a hole down to depths that exceed 3500 metres it costs big money, in some cases up to $1 million.
Van 't Riet says that Coretrack is in talks with all the oil majors, having successfully tested the product with Woodside Petroleum.
At 20¢, CoreTrack's market cap is only $30 million, but it is making all the right noises to give its chairman a life beyond politics.
Investors watching the 21 per cent fall in the share price of the accounting and financial planner WHK Group since mid-February will be hoping the new managing director, John Lombard, can do something to arrest it.
At 90¢, WHK's shares look outstanding for value investors, delivering a prospective dividend yield of 8.5 per cent and on a PE of under 10 times.
But is this a "value trap" and are investors set for even more pain?
So much depends not on Lombard - no matter how good the former senior vice-president of SAP is - but on the regulatory reform for financial planners, being conducted by the Assistant Treasurer, Bill Shorten.
A potential reform includes banning commissions on new products from next year. Although this sounds like commonsense, there is fierce lobbying from the financial services industry, and reforms could be watered down. Ironically, this uncertainty is deterring investors.
WHK shareholders should be watching for Shorten's statement on the reforms to financial advice, with draft legislation to follow midyear.
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