Friday's most followed: RBS, Lloyds, TEG Group, Max Petroleum, Copper Development Corp, Sound OilReported by Proactive Investors on Friday, 22 June 2012 (on June 22, 2012)
Investors were focused on the banking sector today after Moody’s downgraded 15 major banks including Morgan Stanley and Credit Suisse.
Among those downgraded were London listed taxpayer-owned banks *RBS (LON:RBS)* and *Lloyds (LON:LLOY)*, which both responded to the move this morning.
RBS, whose long term and short term ratings were cut by one notch, disagreed with the move, which it said was backward-looking and did not give “adequate credit for the substantial improvements the Group has made to its balance sheet, funding and risk profile”.
The bank said the impact of the move was manageable, noting its £153 billion liquidity portfolio.
The amount of collateral that may have to be posted following this one notch downgrade by Moody's is estimated to be £9 billion.
The response from Lloyds was far more positive with the bank saying that the outcome of the review reflected the “substantial progress” it has made in reshaping the business.
The bank’s long term rating was lowered to A2 from A1, however, no changes were made to its short term credit rating.
“I am pleased that Moody's have recognised the substantial momentum we have made in de-risking our balance sheet and delivering on our strategy,” said chief executive of Lloyds António Horta-Osório.
“I expect this momentum to be sustained as we continue to deliver on our promise of being the best bank for customers and shareholders.”
Other popular RNS statements of the day included* TEG Group’s (LON:TEG)* announcement of the successful closure of the open offer announced earlier this month and has raised £2 million before expenses.
The developer and operator of organic composting and energy plants has now issued nearly 67 million shares at three pence each under the open offer, which was 42.2 percent oversubscribed.
The company had started a formal sale process in January with a view to identifying appropriate partners for the company or major strategic investors.
TEG received indicative proposals and entered talks with potential offerors, but the board decided that the “transaction could not be completed in a reasonable period of time which would lead to further shareholder uncertainty”.
The sale process was terminated in June and the company resumed normal business with immediate effect.
Today’s talked about companies also included the heaviest faller in London markets *Max Petroleum (LON:MXP)*and mining group *Copper Development Corp (LON:CDC)*, which has now has a large enough resource for a bankable feasibility study at its Hinoba-an copper project in the Philippines.
Max its market value halve on a disappointing update from its operations in Kazakhstan.
The report from Max revealed that it may have to curtail its exploration activities amid rising costs following drilling problems in the NUR-1 well in Kazakhstan.
Drilling has again been delayed after the drill bit became stuck for the second time.
The company is currently trying to free the drill bit and, due to the operational problems, the well is not expected to reach its target depth before August.
The cost of the NUR well has been estimated at US$43 million provided the company can free the drill bit soon with an additional US$10 million in forward costs.
Max says it will seek additional capital and it has now initiated talks with a number of providers of both debt and equity financing including its lender MacQuarie Bank.
Fox-Davies Capital said the news is “sure to leave investors scratching their heads whilst asking themselves ‘what next?’”
The broker said the focus will now shift to the workover programme and securing necessary funds to complete the exploration drilling programme ahead of the March 2013 expiry date, adding that success would be a positive trigger and help boost investor confidence.
“However, it doesn't take a rocket scientist to figure out that Max do have their work cut out technically and financially,” Fox-Davies told investors today.
“With management effectively telling investors that that they can't raise equity, the question begs itself, what stops this stock from falling to zero? We believe that this is time for fresh eyes to look at Max's operations, and different hand on the tiller.”
Shares in the company plummeted 52.5 percent to 4.1 pence in morning trade, valuing the group at £41.8 million.
The news form Copper Development was far more positive, lifting its shares up six percent to 10.75 pence.
The group announced a 20 percent increase in the measured resource estimate for its Hinoba-an copper project to 130.9 million tonnes, which is sufficient for a bankable feasibility study.
Contained copper in the total gross resource has increased by 57,000 tonnes to 1,187,000 tonnes.
The company added that there is still potential to expand the resource further with additional drilling.
“The contained copper of the estimate at a 0.2pct copper cut-off grade amounts to almost 1.2 million tonnes, a level that is attractive to many mining companies,” said executive chairman of CDC Mitch Alland.
Other notable risers also included *Sound Oil (LON:SOU)*, which also showed up among the most popular searches on Google Finance.
Sound’s its partner in the Bankanai production sharing contract in Indonesia *Salamander Energy (LON:SMDR)*reported that the DrillCo-1 land rig has been barged up the Barito River and is currently being moved from the staging areas to the drill site on the Greater Kerendan area.
Development drilling is expected to commence in July 2012 followed by exploration drilling before the year end.
Shares in Sound climbed 4.5 percent to 1.18 pence on the news.
Links: Full news story
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