First and foremost I have been accumulating FASTNET stock since early August 2015, when my research led me to the fact that FASTNET OIL & GAS as it was then called was trading at a deep discount to its cash balance.
This when many stocks and Funds were trading at crazy PE’s and premium to NAV. It was doubly nice to find a potential future star in the making that was off the radar of most investors and heading into the faster growing Healthcare sector.
Those of you that are reading this article and know & follow me on Twitter @Conkers3, will know that I tweeted about FASTNET on the 7th December. This is not a share tip merely an blog article prompted by today’s very interesting update from FASTNET EQUITY.
BACKGROUND INFORMATION
FASTNET’s Non Executive Director Cathal M. Friel is an interesting entreprenuer. In June 2009 he created COVE ENERGY out of a £1 million cash-shell listed on the London Stock Exchange. By 2012 following a huge gas discovery offshore Mozambique, the energy minnow COVE ENERGY had attracted the interest of OIL & GAS mega-caps. In August 2012 COVE ENERGY was sold for £1.2 Billion to Thailand’s national oil company PTT Public Company Limited.
Not only did Friel and his team generate investor returns of more than £1 Billion. He also made himself more than £100M.
In June 2012 Cathal M. Friel tried his entreprenuerial flair again alongside OIL & GAS exploration veteran Paul Griffiths by listing FASTNET OIL & GAS. The company floated on ESM and the AIM markets at 11p per share and raised €12.5M on the back of exploration licences in the Celtic Sea and offshore Morocco.
In November 2012, FASTNET OIL & GAS raised a further €19m from investors at 22p per share.
In November 2013, FASTNET OIL & GAS raised a further €12m at 14p per share to satisfy commitments on its Morocco drill. Unfortunately for all parties and investors the drill was unsuccessful and what could have been a company maker led to a major dent in their OIL & GAS exploration strategy and prospects.
Suffice to say that on this occasion Friel lucked out and FASTNET did not make any major discoveries. To compound the Team’s misfortunes WTI fell from approx $92 at the time of the listing to a mere $52 in August 2015.
In late 2014 the FASTNET OIL & GAS team commenced an extensive review of the company’s assets and opportunities. Unfortunately the Board found that due to the economic conditions an environment had been created in which it was not possible for FASTNET to find partners to carry, with acceptable terms and conditions, some or all of the Company’s exploration costs on its oil and gas assets going forward.
They therefore decided at their General Meeting in August 2015 to seek permission to change strategy from OIL & GAS to BIOPHARMA. The timing of their move into the Biopharma sector could have been influenced by the numerous mega-deals in the BIOTECH & PHARMACEUTICAL sector and the numerous inversion deals across both sectors.
At the time of the General Meeting , the company said:
The decision to abandon the exploration sector flows from the worldwide decline in oil and gas prices and the associated adverse sentiment towards small cap oil and gas concerns, it said.
“The board believes that the healthcare industry, particularly the biopharma sector, is experiencing strong momentum and there exist significant M&A and value creation opportunities for both small and large cap companies.”
The board also believes it has access to an international pipeline of such opportunities, the company said in its statement. It will initially focus on opportunities in Europe, it said.
Fastnet, which will change its name to Fastnet Equity plc, intends to take an equity interest in a proposed investment that is likely to be a majority position to 100 per cent, and said that its financial resources are likely to be invested in potentially one or more investments in a single transaction which will be deemed a reverse takeover.
A failure to effect a transaction within twelve months of the general meeting would lead to trading in the company’s ordinary shares being suspended.
Slowly but surely during the summer of 2015 investors and speculators alike, began trading in the FASTNET OIL & GAS stock. Firstly because with €14m in cash left (equating to 3p per share) the company’s stock was trading in the lowly range of between 2p to 2.15p. Plus secondly because rumours were swirling of an imminent deal with a Biopharma business that would be reversed into what was now a cash shell.
The change in strategy was sanctioned by shareholders on 28 August 2015 and the new name of FASTNET EQUITY Plc was also adopted.
4th September 2015 FASTNET EQUITY Plc announced their Final Results for the year ended 31 March 2015
Where it effectively withdrew from and concluded its OIL & GAS endeavours.
Leaving itself with Oil assets and Cash reserves of US$15.9m at 31 July 2015
See full details here : http://otp.investis.com/clients/uk/fastnet_oil_gas/rns/regulatory-story.aspx?cid=518&newsid=567386
Cathal Friel, Non-executive Chairman commented at the time:
“The Board believes that the healthcare industry, particularly the biopharma sector, is experiencing strong momentum and there exist significant M&A and value creation opportunities for both small cap and large cap companies. Furthermore, the Board believes that it has access to an international pipeline of such opportunities that could lead to value creation for Fastnet’s shareholders.
Our near-term focus includes a comprehensive search process to identify and secure Board members with both the appropriate knowledge and expertise base to assess and make investments in the healthcare sector and value accretive deals. We look forward to updating shareholders in due course.”
Between September and early December 2015 investors in FASTNET EQUITY patience and enthusiasm waxed and waned. Causing the share price to trade in a range of 2.20p to 2.55p giving wide discounts to cash of 15% to 26%.
However on 18th December FASTNET EQUITY completed the demerger of oil and gas assets. By efficiently moving the oil and gas assets into a new company, with the shares in that company being placed in a trust for the benefit of Fastnet shareholders. At a stroke FASTNET EQUITY became a clean cash sell and expectancy of a BIOPHARMA deal rose again.
Helped also by Cathal Friel saying:
“Today’s announcement positions Fastnet to focus exclusively on the Company’s strategy of pursuing acquisition opportunities within the healthcare sector,”
“Ring-fencing the Company’s existing oil and gas assets in a trust structure is designed to allow the search for a buyer of these oil and gas assets to continue.
“In the event that this search process is completed, the Company’s existing shareholders would receive any value generated from the disposal of these assets.”
See full details of the Demerger here: http://otp.investis.com/clients/uk/fastnet_oil_gas/rns/regulatory-story.aspx?cid=518&newsid=631740
Today’s 21 December 2015 Interims Results brings us right up to speed with events at FASTNET EQUITY.
Unsurprisingly FASTNET EQUITY announced a $1.5 million loss however what was clear from the data was that the company had reduced its capex dramatically. Because for the same six month period a year earlier, the company reported a $1.6 million loss.
The company confirmed the Oil & Gas subsidiaries had been demerged into a separate company, Fastnet Hydrocarbons Limited, on 17 December 2015. With Fastnet Hydrocarbons Limited being held in trust for the benefit of shareholders on the register of the Company as at the close of business on 16 December 2015
This left the comany in a very healthy position with a Cash balance of €13.6m as at 30 November 2015 prior to the grant of an unsecured 4 year term loan €660,000 to finance residual running of oil and gas assets
NB €13.6m = £9.982M FAST 2.52p = Mkt cap £8.03M
Cathal Friel, Non-Executive Chairman, commented:
“Following the recently announced demerger of our oil and gas assets the Company is well positioned to focus on identifying and assessing potential investment targets within the healthcare sector.”
See full details of 21st DECEMBER 2015 INTERIMS here : http://otp.investis.com/clients/uk/fastnet_oil_gas/rns/regulatory-story.aspx?cid=518&newsid=632188
Today the company also followed the postive tone of the above Interims, with a potential catalyst in their transition with the announcement that. In line with the Company’s strategy to acquire companies or businesses in the healthcare sector, Fastnet (AIM: FAST, ESM: FOI) is pleased to announce the appointment, with immediate effect, of Mr. Harry Stratford as a Non-Executive Director.
Harry has over 40 years’ experience in the pharmaceutical industry and has built two successful publicly listed pharmaceutical companies. Harry founded Shire Plc in 1986 and was CEO for almost a decade. The Company has grown from humble beginnings to be one of Europe’s largest specialty pharmaceutical companies with a market cap of around $40 billion and its stock is a constituent of the FTSE100 index.
What was staggering about this news is that Harry Stratford not only has over 40 years of experience in the Pharmaceutical industry. He also happened to the founder & former CEO of SHIRE Plc (SHP:LSE) a speciality pharmaceutical company that is now valued at £25.735 Billion.
Harry Stratford then went on to be founder, CEO and Executive Chairman of Prostrakan Plc, another International specialty pharmaceutical company, which was subsequently acquired by Kyowa Hakko Kirin of Japan in 2011.
Interestingly Harry Stratford is also currently working with Consilient Health http://www.consilienthealth.com/, a rapidly growing pharmaceutical company with a portfolio of generic and speciality pharmaceutical products a Non-Executive Director
Cathal Friel, Non-Executive Chairman, commented:
“We are delighted to welcome Harry to the Board as a Non-executive Director. We look forward to working with him as we investigate potential acquisition opportunities within the healthcare sector, where we expect his extensive knowledge and experience of the specialty and orphan drug pharmaceutical industry will be of particular value.”
Investors cheered this news sending FASTNET EQUITY shares up by 8.6% to 2.52p. Corresponding share trading volume was 2.35M Versus a 30 Day Average Traded Volume of 885.5K shares.
See full details of the NED Appointment here: http://otp.investis.com/clients/uk/fastnet_oil_gas/rns/regulatory-story.aspx?cid=518&newsid=632197
SUMMARY
Having lost several battles across numerous front in their attempts to achieve another COVE ENERGY phenomenon. The team at FASTNET EQUITY are now putting the chess pieces together for an all out assault on the speciality pharma and Biopharma sector in 2016.
More pieces and players to take the company forward could be announced within months. Furthermore the final piece, that of the company to be reversed in the FASTNET EQUITY could also be announced within months. Thus enabling FASTNET EQUITY to complete its transition into a BIOPHARMA company.
FASTNET EQUITY (AIM: FAST, ESM: FOI)
SHARE PRICE 2.52p MARKET CAP £8.72M
To quote former American professional baseball star Willie Stargell “Life is one big transition”
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