IGas shares hit two-year low

SHARES in the fracking firm IGas have fallen to a two-and-a-half year low after the company became embroiled in market concerns around a share trade conducted by directors of the outsourcing business Quindell.

AIM-listed Quindell, which owns Liverpool-based personal injury law firm Silverbeck Rymer, admitted last week that three senior directors had actually been net sellers of its shares, rather than buyers.

A statement on November 5 titled “director share purchases” explained how they had bought 1.5 million Quindell shares with a loan from US-based Equities First Holdings which required they put up existing shares as collateral. By November 10 Quindell said these shares had actually been sold to EFH.

Four days later IGas, which is also on AIM, put out a statement noting the “recent movement in its share price” and saying that a similar deal conducted with EFH by chief executive Andrew Austin in January complied with AIM rules.

In January IGas said Mr Austin bought 300,000 shares at 135.38p taking his total to 10.9 million, or 5.4% of the company. He borrowed the money from EFH which took 7.5 million shares as security. This stock will be returned when the loan is repaid after a three-year term. The original statement said, “Under the terms of the facility the lender is contractually prohibited from short selling or voting the shares during the term of the loan”. Critics of such deals, which have taken place at a number of other AIM firms, say the shares have effectively been sold and this change should be reflected in the shareholder register.

Last week IGas added that it, “…confirms the detail contained in the statement on 16 January 2014, in respect of Mr Andrew Austin’s facility with Energy First Partners LLP, is full and correct disclosure for the purposes of the AIM and Disclosure and Transparency Rules.”

Its reference to Energy First Partners rather than Equities First Holdings may have been a mistake but no one was available at the company to clarify. After the January trade was announced IGas shares spiked to 162p but have been on a downward trajectory ever since. In the last month they have fallen 36% from 88p to 56p, giving the group a market value of £168m.

Meanwhile, IGas said today it had begun to drill its exploratory well at Ellesmere Port.

It said: “This programme is designed to validate the geological model and has already given us valuable data to evaluate the potential and begin to plan for future development.”