Share Talk Weekly Small Cap Movers & Shakers, Saturday 22nd April 2023

Overall, the AIM All-Shares Index closed the week down by half a percent, underperforming against the FTSE 100 and FTSE 350 indices, which both closed around half a percent higher.

UK Oil & Gas enjoyed a strong performance at the close of the week, with a gain of over 36%, following reports of oil shows in the Pinarova-1 well in Turkey. The company has plans to continue drilling at the site following a testing phase over the coming weekend. However, UKOG warned that the end of Ramadan on Thursday could impact the testing schedule.

Meanwhile, small-cap explorer Unicorn Mineral Resources received a permit to drill at its Kilmallock project in Ireland’s Limerick basin, causing its share price to rise by over 20% to 7p.

Echo Energy suffered a decline of more than 50% after reporting a fall in production at its Santa Cruz Sur assets in Argentina. The company is now considering a proposal from a significant Argentine investor to inject cash and assets into the business, while exploring financing options to secure additional working capital resources.

IOG PLC, a gas exploration company, also faced challenges as it experienced a quarter of its market capitalisation being wiped out after reporting pressure issues and non-commercial quantities of gas in the Blythe-2 well drilling programme, leading to delays. The company has said that the gas comes from a reservoir that is separate from the well’s target.

Sureserve is set to become the latest addition to the growing number of companies that are eschewing a listing in London, following its acquisition by pan-European private equity group Cap10.

The deal will see a new entity created by Cap10 pay 125p per share in cash for the AIM-listed social housing maintenance specialist, valuing the company at £214mln, which represents a 39% premium to Thursday’s closing price. However, there are concerns that AIM could be impacted as a result of this trend towards privatisation, as companies like Sureserve cite greater access to funding and capital as reasons for going private.

Sureserve will join other firms, such as Network International, THG, John Wood Group and Industrials REIT, that have opted for privatisation due to private equity funds with significant dry powder. Sureserve’s board has recommended the deal, with two of its biggest shareholders, Harwood Capital and Miren Rawlings, who own 23.4%, accepting the offer.

The core of Sureserve’s business is in Dartford and involves providing gas and heating inspection, installation and maintenance services to social housing groups, with the aim of making buildings more energy efficient. The company had originally listed on the main market in 2015 but later switched to AIM in 2017.

The announcement of the acquisition caused Sureserve’s shares to surge by over 37% to 123p, just below Cap10’s offer valuation

Moving onto the medical technology sector, Kromek Group PLC had an outstanding week, with its share price surging by over 57% to 8.37p. This impressive rise was due to the company’s announcement of two major contract wins. The first was a seven-year deal with a top medical imaging manufacturer to integrate Kromek’s cadmium zinc telluride-based detector technology into the customer’s medical imaging scanners. The second was an agreement with Analogic Corporation to integrate Kromek’s technology into medical imaging and security scanners. These deals were deemed “game-changing” by analysts at finnCap, Kromek’s house broker.

In other news, Advanced Oncotherapy PLC saw a significant increase in its share price by over 50% after announcing that it is considering a listing on the Nasdaq. To facilitate this, the company has started a review of all options available, including a possible sale to NASDAQ-quoted corporate vehicles, and has commenced a formal sale process.

Lastly, the forestry and timber trading group Woodbois was “shocked” to receive a notice from lender Sydbank that it was terminating the US$6mln debt facility of Woodbois’ Danish subsidiary Woodgroup ApS. Sydbank cited Woodgroup’s first-quarter losses as justification for the termination, but Woodbois management disagreed with Sydbank’s conclusion, stating that the company had been well placed to deliver a positive performance for the remainder of the year.

Nonetheless, Woodbois’ shares plummeted by 60% to 0.38p as a result.

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