CURRENT ACCOUNT: Aminex shareholders can be forgiven for being a bit flummoxed after last week's "bid" - if that is what it can be called - from Ofex minnow Apple Oil and Gas.
Think about it. Apple is offering Aminex shareholders 2.36p sterling (3.87 cents) for each share - less than a 10th of the price in the market - with a promise of jam tomorrow in the shape of a cash distribution when Aminex's assets are sold off.
To describe Apple's tilt at Aminex as cheeky is an understatement; Aminex shareholders mightn't have had much to cheer them in recent years but the jam tomorrow offer from Apple is one they should forget about.
There are too many ifs, buts and maybes for any shareholder with an ounce of sense to give any consideration to the Apple offer, and they should wait at least until they have some sort of offer document from Apple before they think about doing anything. That offer document will need to fill in many of the gaps in last week's bid announcement.
First let's examine the share swap offer. Apple is offering four of its Ofex-listed shares for every 11 Aminex shares, and that produces the ridiculous 2.36p valuation. Whatever about the value of its shares, Aminex shareholders should be very careful about taking Ofex-listed shares. For those not aware of what Ofex actually is, it is an over-the-counter market where share liquidity is notoriously low and is a home for companies that are either unwilling or unable to satisfy listing requirements of the more formal London stock markets.
What is really at the core of the Apple bid is Aminex's $25 million cash pile after the sale last year of its Russian subsidiary to Lukoil. Aminex plans to distribute $7.5 million of this cash pile - about 7p sterling per share - to shareholders and hold on to the rest for investment in its US and Tanzanian exploration interests.
For its part, Apple wants to sell all of Aminex's non-cash interests and later distribute some of the proceeds to Aminex's former shareholders, who, if the bid is successful, will own 50 per cent of the enlarged Apple Oil & Gas.
Apple chief executive David McErlain said that Takeover Panel rules meant his company was not able to put a break-up value on Aminex, so Aminex shareholders have to put their faith in an Ofex-listed company's ability to extract maximum cash from Aminex's assets.
Why should shareholders take Apple on trust that it can deliver this sort of value?
Aminex has a lot of small shareholders, but the Apple bid will be decided by a sizeable group of institutions who invested in the Dublin-listed company.
Aminex might be a step up from the real dross of the exploration market but members of the Bank of England's Pension Fund, which owns 4.4 per cent of Aminex, would have reason to wonder what their fund is doing investing in high-risk exploration ventures in Russia and Tanzania.
Others with a stake in Aminex include the International Finance Corporation - an arm of the World Bank - which owns almost 10 per cent and CSFB, which has a near 6 per cent stake.
