Is First Atlantic Bank Selling?
There is little doubt that anticipation of the coming Joint Development Zone awards will drive the share price upwards, as many longs have hoped, and may reduce some of the apparent insider selling that has depressed the price in recent days despite strong support from a front-page Houston Chronicle story last Sunday.
The selling,in my opinion, may originate with First Atlantic Bank of Nigeria Plc, which has vastly increased its asset base in the months following a transfer of some 63 million shares from ERHC Energy chairman Sir Emeka Offor, who was sued by the bank in Houston federal court over an unpaid loan and settled the matter with the shares on Nov. 10. 2004.
While the First Atlantic Bank shares are supposedly restricted for a year, the bank has made no SEC filings concerning them despite being a 9 percent owner of ERHC, and it is unclear how U.S. securities laws would impede the bank's transfer agent from selling the shares if it wished. The only statement of the bank's ownership has appeared in ERHE's own SEC filings.
There is little other explanation for the massive 10 percent sell-0ff that investors saw after the highly positive Houston Chronicle story, headlined "Tiny Player Strikes Gold In Huge Oil Deal."
Buoyed by the story, the price soared $0.115 for a 20 percent gain before a wave of selling drove it from a high of $0.695 to $0.63. As in another instance in December when the share price soared, many long-term holders have asked, "Where are the shares coming from?" The answer, again in my opinion, almost certainly seems to be the First Atlantic Bank shares.
The bank, which did not have enough assets to remain viable under Nigeria's newly-enacted bank-capitalization laws, saw its own stock rise and its assets soar from less than Na. 25 billion to Na. 32.7 billion, with little evidence of corresponding new depositors.
If indeed they are the bank's shares that are being sold, it is uncertain whether anyone but the stock's transfer agent would have committed an SEC violation, and there is currently no certainty that the transfer agent is located in the United States or subject to U.S. regulatory regimes.
The issue is a vital one for investors who fear that the long-awaited awards may be robbed of their benefit by massive selling aimed at taking profits for the bank. A major ERHE investor known as Ruby1100 has cut his forecasts for a post-awards high in recent days from well over a dollar to the $0.78-$0.95 range, prompting some other investors to follow suit in formulating their own exit strategies.
Much surely depends on whether Barry Morgan's optimism about the operatorship awards is borne out by the announcements expected next week. A trio of operatorships would surely clear the decks, and possibly lead to prolonged buying that would exhaust even the bank's cache of shares in a matter of days.
The selling,in my opinion, may originate with First Atlantic Bank of Nigeria Plc, which has vastly increased its asset base in the months following a transfer of some 63 million shares from ERHC Energy chairman Sir Emeka Offor, who was sued by the bank in Houston federal court over an unpaid loan and settled the matter with the shares on Nov. 10. 2004.
While the First Atlantic Bank shares are supposedly restricted for a year, the bank has made no SEC filings concerning them despite being a 9 percent owner of ERHC, and it is unclear how U.S. securities laws would impede the bank's transfer agent from selling the shares if it wished. The only statement of the bank's ownership has appeared in ERHE's own SEC filings.
There is little other explanation for the massive 10 percent sell-0ff that investors saw after the highly positive Houston Chronicle story, headlined "Tiny Player Strikes Gold In Huge Oil Deal."
Buoyed by the story, the price soared $0.115 for a 20 percent gain before a wave of selling drove it from a high of $0.695 to $0.63. As in another instance in December when the share price soared, many long-term holders have asked, "Where are the shares coming from?" The answer, again in my opinion, almost certainly seems to be the First Atlantic Bank shares.
The bank, which did not have enough assets to remain viable under Nigeria's newly-enacted bank-capitalization laws, saw its own stock rise and its assets soar from less than Na. 25 billion to Na. 32.7 billion, with little evidence of corresponding new depositors.
If indeed they are the bank's shares that are being sold, it is uncertain whether anyone but the stock's transfer agent would have committed an SEC violation, and there is currently no certainty that the transfer agent is located in the United States or subject to U.S. regulatory regimes.
The issue is a vital one for investors who fear that the long-awaited awards may be robbed of their benefit by massive selling aimed at taking profits for the bank. A major ERHE investor known as Ruby1100 has cut his forecasts for a post-awards high in recent days from well over a dollar to the $0.78-$0.95 range, prompting some other investors to follow suit in formulating their own exit strategies.
Much surely depends on whether Barry Morgan's optimism about the operatorship awards is borne out by the announcements expected next week. A trio of operatorships would surely clear the decks, and possibly lead to prolonged buying that would exhaust even the bank's cache of shares in a matter of days.
posted by ...Joe Shea at 4:15 AM
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