JKX announces delisting, share buyback at GBP 0.42

JKX Oil & Gas (JKX LN) announced on Nov. 3 that
its directors have initiated the cancellation of the admission of its shares to
the listing on the London Stock Exchange’s main market and the buyback of
free-floated shares at GBP 0.42. The EGM to decide on this is scheduled for
Nov. 23. If the decision is approved, JKX will announce a tender offer to
purchase up to 40 mln of its ordinary shares (23.3% of total) on Dec. 15. The
tender offer will be closed on Jan. 6 and the de-listing will occur on or about
the same day.

The company’s directors believe that the delisting “is
in the best interest of the company and its shareholders.” Namely, the company
has not been able “to utilize its listing to raise finance” for several years,
while it is carrying costs related to the listing of about USD 0.6 mln
annually. Also, the company’s size of free float is below the threshold
required by listing rules (25%). The company is planning no alternative
listing, but “will seek to arrange a matched bargain trading facility” to
provide shareholders with a platform for shares trading after the delisting
from the LSE.

JKX shares were traded between GBP 0.185 and 0.545 in
2021, and traded at about GBP 0.42 over the last three sessions before the
announcement.

Alexander Paraschiy: JKX has
divested all its assets beyond Ukraine and seems to have no ambitious expansion
plans. From this standpoint, its decision to exit the public market might look
logical. Perhaps the next step after the delisting would be liquidation of its
UK office, which generated USD 19 mln aggregate operating losses for the
company in 2018-1H21 (6% of the company’s revenue for the period). We see no
reason for minority shareholders to keep their positions in JKX. Meanwhile, the
price decline following the de-listing announcement creates a potential
arbitrage opportunity.