Independent Oil and Gas describes £40m offer for its £38.6m LCF debt as “derisory”

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On Monday it was reported that a £40 million offer from RockRose Energy to buy the debt Independent Oil and Gas owes to London Capital & Finance had been ignored by LCF’s administrators, Smith & Williamson, frustrating RockRose to the point they threatened legal action.

S&W briefly commented on the offer when they released their initial proposals for their administration of the FCA-authorised Ponzi scheme on Wednesday. They said only that the offer had been rejected while they try to determine the true value of the debt, and the conversion rights and warrants attached to it.

Independent Oil and Gas has now spoken out to describe RockRose’s £40 million offer as “derisory” and claim the loan should be valued at £57 million, despite the amount owed to LCF by IOG being only £38.6 million (including interest).

The reason the debt can apparently be worth so much more is because it contains the right to convert the debt into equity. Exactly how much equity is what both RockRose and Smith & Williamson are trying to find out.

While £40 million in cash sounds like a great result for LCF’s stricken bondholders, S&W remain under a statutory duty to maximise recoveries for creditors. So if IOG are right, and the debt is in reality worth £57 million, S&W are quite right not to bite their arm off.

But not, in my opinion, to maintain radio silence to the point that RockRose threaten to go legal.

IOG may think that the debt and its conversion rights are worth £57 million, but this opinion is apparently not shared by the market, which currently values the entire existing share capital of IOG at £23 million. The ongoing uncertainty over the conversion rights means it is not clear whether and to what extent this share capital is potentially diluted by the LCF loan.

The decision is any case not IOG’s. S&W, via LCF and London Oil and Gas, own the debt, and, if RockRose is correct in their guess about the conversion rights, IOG’s backside on a plate.

The potential sale will continue to come under scrutiny. As IOG is a publicly listed firm, it is one of the few investments owned by LCF which can be independently valued, and S&W has consistently said that it represents the most likely chance of recovery.

6 thoughts on “Independent Oil and Gas describes £40m offer for its £38.6m LCF debt as “derisory”

  1. Whilst I “admire” the efforts of S&W to get as much for the “victims” and yes, I will call the 11,000+ unfortunate investors “victims” because that is what I really believe they are of this “scam” and yes, I will call this a scam because again, I believe this is what this is, according to the official pensions regulator’s definition of a scam – see Lesley Titcomb’s letter to Rt. Hon Frank Field MP dated 13 Nov 2017, section 3, definition of a scam – what is important but never revealed by journalists, is WHO gave the advice?

    The advisers are an important link in this chain because they are either behaving unlawfully by advising unregulated investments to retail clients employing fraudulent misrepresentations or they have tricked investors to self certify as “sophisticated” investors thereby circumventing the legislation FSMA s.238.

    Advisers acting unlawfully need to be brought to account and when not, the authorities (FCA) need to be called out.

    However many “blogs” and articles by journalists do not mention the “advisers” – often not authorised to give investment advice – and so the architects of these scams get off Scott free!

    Further, many blogs and journalist articles never mention the source of victim’s funds – ie. pension transfers, which is the most common – and so indicate any recourse victim’s may have to compensation. IF victim’s were persuaded to transfer their defined benefit pensions into either SIPPS or QROP’s and then advised to invest into unregulated high risk private ventures, they may have recourse to seek compensation from their ceding trustees for maladministration – see PO-12763

    There has been continual attempts by the Pensions Regulator since 2010 to get trustees/administrators of defined benefit pensions to carry out due diligence and use their considerable industry experience to spot pension scams and bring their concerns to their members so they can make an informed decision to proceed. There is considerable evidence trustees/administrator have been negligent in the discharge of their duties and simply rubber stamped transfer requests with no due diligence whatsoever. PO-12763 set an important precedence – imho – and calls trustees out!

    In my own case, I have submitted a complaint to the Pensions Ombudsman, alleging maladministration against my ceding pensions provider.

    IF blogs like this and other journalists of respected newspapers REALLY wanted to act in the interest of the victims they would also make reference to how the victims could seek redress.

    In my opinion the victim’s are the MOST important people in these scams NOT just the reporting of the scam itself or the developments of the administrator’s – S&W – and ANY possibility of redress should also be emphasised.

    The victims are facing financial ruin and if there are any LEGAL ways of redress it SHOULD be written up, giving them some hope of recovery.

    The system designed – since 2000 – to protect victims fails them at every step in the work flow of a scam and after they discover they were scammed the system abandons them and it is time the authorities took responsibility!!

    It’s time for change and scammers need to fear the consequences of the career they choose!

    It’s time victim’s stood up and fought back and it would be NICE if the powerful media ASSISTED!!!

    (The BBC assisted to a point, in my case – – then bottled out and didn’t finish the job and the actors reported in their article of 2018 continue their trade! It is believed by some journalists I have spoken to, in my case reported by the BBC, the same perpetrators are spear-heading LCF 2.0! – BE ON YOUR GUARD is my advice).

  2. In the vast majority of cases, if not all, there was no advice given. If there had been then the victims would not be in this situation. Most seem to have invested on the basis of adverts or fake comparison sites none of which are regulated. Selecting a product from a website or advert does not constitute advice

  3. “In the vast majority of cases, if not all, there was no advice given.” Do you have hard evidence of this? I would like to hear it from the victims themselves.

    “If there had been then the victims would not be in this situation.” – this is not necessarily true.

    Blackmore Global fund (an earlier opaque unregulated venture owned by Nunn & McCreesh – owners of Blackmore Bond, their latest venture) used unregulated – with no authorisation to give investment advice – advisers who fraudulently stated they were regulated and misappropriated pensions of hundreds of people, transferring pensions into QROPS in Isle of Man, Malta and Hong Kong then investing those pensions into Blackmore Global.

    The Capita Oak scam, masterminded by Stephen Ward – a regulated IFA as it happens – advised hundreds of people to transfer their pensions into the Capita Oak pension scheme and then invested their money into high risk unregulated investments including Store First Storage pods.

    However when an adviser is involved it is most likely by an unregulated adviser who fraudulently claims they are authorised to give investment advice. They will often have an FCA registration but then the victim later discovers that the stated registration carries limited permissions and doesn’t include giving investment advice. This small detail is difficult for “retail” clients to spot because the FCA register uses industry “jargon” – like CF30 – and isn’t helpful to “ordinary” people.

    I am keen to know if the victims were actually advised on false pretences and by whom and why journalists are not calling them out?

    If money is coming from pension transfers – as was the case with Nunn & McCreesh’s earlier ventures – then trustees/administrators have been required since 2015 to check that advice has been given. If subscriptions are coming from pension transfers, then what on earth are trustees doing to discharge that responsibility? Journalists could investigate these areas and see if there is negligence somewhere in the work flow, or some victims could speak up and tell their story, calling out “advisers” and/or “trustees”, if there are any.

    When an investor sees an ad on a fake comparison site and makes an enquiry, presumably to the likes of Surge Financial, what dialogue then follows? I would be most surprised if the subsequent dialogue to the enquiry didn’t include “advice” … and most likely unauthorised advice. I feel journalists could easily expose such practices if this is how these deals are closed.

    btw, I like your “lies-damn-lies …” blog – think that’s yours anyway.

  4. Re Pension transfers – as far as I’m aware LCF never offered a SIPP, so anyone who invested what they called pension money was either moving cash removed from pension or money they had earmarked for pension. I have seen no mention from any bondholder or from the administrators that investors in LCF were offered advice by an adviser about buying LCF bonds

  5. ok. However it wouldn’t be LCF offering the SIPP or organising a QROP. The way many pension scams work is the fund – LCF for example – stays at arms length and a firm of unregulated advisers organise the pension tfr out of defined benefit pensions either into a SIPP or QROP then wrap it in a useless life assurance wrapper and then the money is transferred into the fund requiring subscriptions. That way the fund claims they are only taking investments from “institutions” and not retail clients. That’s generally how they work. So in the case of Blackmore Global ( precursor to the Blackmore Bond) Nunn & McCreesh owned two companies – Aspinal Chase & Pensions & Life UK Ltd and these companies provided the back office services to Square Mile International Financial who acted as the “IFA” albeit unauthorised to give investment advice according to the FCA. Aspinal Chase did the paperwork with trustees to transfer the pension into several QROPS – in the Isle of Man, Malta and Hong Kong – and the money then winged its way back to Nunn & McCreesh’s Blackmore Global Fund making out it came from institutional investors not retail clients.

    I guess the unregulated mini bond market is not using the same process which is bizarre because the pot of defined benefit pensions is a far greater pot of gold than just cash “removed” from a pension or earmarked for a pension.

    It would still be interesting if journalists were able to investigate exactly where the LCF investments were coming from and how they made their way into these mini bonds.

  6. Hi Stephen, I’d really like to find out more about what you describe in your post. What’s the best way to contact you?

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