Linc Energy share price plummets 79% this year

A Linc Energy facility in Alaska, in the United States. The firm, which promised huge returns from an innovative technology to extract fuel from coal deposits, has failed to generate any meaningful revenue from a string of much-heralded projects.
A Linc Energy facility in Alaska, in the United States. The firm, which promised huge returns from an innovative technology to extract fuel from coal deposits, has failed to generate any meaningful revenue from a string of much-heralded projects.PHOTO: LINC ENERGY

Aussie energy firm listed on SGX hit hard by oil price fall and massive debt burden

Local investors are licking their wounds after the share price of an Australian energy firm listed here plunged in the wake of the oil price collapse and its own huge debt burden.

Linc Energy stock has nosedived 79 per cent so far this year. The stock, which closed 0.9 cent, or 6.9 per cent, lower at 12.1 cents yesterday, is down by a whopping 96.7 per cent from a year ago.

The firm, which promised huge returns from an innovative technology to extract fuel from coal deposits, has failed to generate any meaningful revenue from a string of much-heralded projects.

According to an Australian newspaper account, some investors here and in Australia are also unhappy that the firm's founder and former chief executive, Mr Peter Bond, continues to live it up Down Under.

Investor James Cheung, 84, who lives in Sydney, told The Straits Times by e-mail that he lost more than A$100,000 (S$103,245) after selling his 30,000 Linc Energy shares last week while his brother-in-law lost more than A$200,000. Mr Cheung said the decision to sell his shares "at a tremendous loss" came after reading about the company's debt problems in an Australian newspaper last month.

Mr Cheung has written to both the company and the Singapore Exchange (SGX) to vent his anger.

Linc Energy, which was de-listed from the Australian Stock Exchange to float on the SGX in late 2013, has been plagued by financial woes as oil prices plummeted.

Its second-quarter results note that the firm's total borrowings stood at A$726.4 million as at Dec 31, while it had only A$4.7 million in cash and cash equivalents. It had a market capitalisation of $19.4 million as at the close of trading yesterday, according to Bloomberg.

Mr Bond stepped down as executive chairman and director on Dec 11 last year to spend more time with his family and pursue other business opportunities, according to an SGX filing at the time.

Its new management has been trying to re-finance the company's huge debt burden.

Last month, it slashed the conversion price of convertible notes from 77 cents to just 12 cents. It also entered into agreements to raise $3.5 million by placing out 60.9 million new shares at 5.75 cents apiece, following an earlier round in December to raise $2.9 million via 24 million new shares at 12.105 cents each.

The firm has also been undertaking restructuring moves, including reducing its employee and contractor numbers by more than half since October 2014, which translated into savings of more than A$20 million annually.

Linc Energy, which had 9,674 shareholders as at Sept 4 last year, managed to narrow losses to A$95.8 million in the second second quarter ended Dec 31 - an improvement over the net loss of A$169.4 million in the same period a year ago.

That the company is also caught in one of the biggest environmental prosecutions in Australia, however, has only added to its troubles. It has been committed to stand trial on all five charges of causing serious environmental harm at its underground coal gasification site at Chinchilla, west of Brisbane.

Linc Energy said in a statement to The Straits Times: "We are obviously disappointed with the... decision.

"Linc Energy reiterates its innocence and is steadfast in its belief that the evidence had glaring holes and suffered from inconsistencies and as a result, it fell well short of the standard required."

A version of this article appeared in the print edition of The Straits Times on March 22, 2016, with the headline 'Linc Energy share price plummets 79% this year'. Print Edition | Subscribe