Aker Carbon Capture, does anyone know about this situation?
Is it still worth buying this?
I’m not quite up to date on the company’s situation.
Today %
+14.29%
Dividends
Payments Ex-dividend date Dividend/share
May 7
Apr 28
0.98 NOK
Mar 19
Mar 10
Mikko Mäkinen has written something on the subject, I haven’t had time to delve into that either.
What do you think?
Here’s Mikko’s story:
I’ve slipped into making trades a few times. It’s stupid if you’ve decided not to. Especially one case, where the slip-up was a bit bigger. I’ve owned Aker Carbon Capture (ACC) on/off with quite good success. Now it was back in my portfolio, as the share price had fallen significantly, but I believe that carbon capture from factory chimneys will grow enormously. It may not be as effective a solution as often presented, but I’ve thought that if support money pours in, projects will probably start popping up like mushrooms after rain.
I had perhaps a couple of percent of the stock in my portfolio when, a month ago, the American giant SLB decided it wanted ACC under its own firm. ACC would own 20% of the new firm, receive 7.5 NOK/share in cash upon the closing of the deal during Q2. In addition, the company would retain a 20% ownership in the joint venture, which SLB commits to financing with debt. Then, in 3-3.5 years, ACC can sell its stake. At an absolute minimum, it will receive 1.7 NOK for its ownership. In addition, it can receive 2.3 NOK in performance-based rewards if the joint venture performs well. Furthermore, SLB has the right to buy the stake for 4.2 NOK even if ACC has no desire to sell (+ACC has the right to sell for 3.4 NOK under certain conditions, for which no precise information has been obtained). The structure is unnecessarily complex, but ultimately, the owners will receive 9.19-14 NOK in cash.
I know both the situation of ACC’s owner, Aker Horizon, and ACC itself quite well. That’s why I couldn’t resist placing buy orders for ACC, because I see no realistic obstacle to the acquisition going through, and it would be in the interest of the main owner, Aker Horizon, for ACC to pay out as much dividend as possible immediately, i.e., at least 7 NOK. So, if by buying at 7.5 NOK you are very likely to get a 7 NOK dividend in a couple of months and an option for an additional payment of 1.7-6.5 NOK, albeit years later, it’s a damn good deal.
But it was a bit bad for my vacation that all my buy orders were executed when the share price fell below 7. Probably for legal reasons, the company didn’t want to say what would be done with the money yet. But the main owner, Aker Horizon, is already a holding company for green tech. Creating another holding company would be insane and would put Aker Horizon’s debt repayment in a weak position, as many loans mature in 25-26, and cash flow is not yet coming in, and the stock is at rock bottom. ACC should be left with minimal staff to keep the house running, so costs are also small. The only logical solution is a large dividend. (Norwegian dividends are subject to 25% withholding tax, unless registered in advance; in an NN insurance product, withholding can be avoided entirely, but then one also doesn’t get the tax benefit of the dividend, as 15% is tax-free).
Now I have over a million shares in my portfolio, and it’s a bit annoying, as I wasn’t supposed to do anything like this. The bet itself, in my opinion, has a very positive expected value, but I’m just not really happy that I had to stick my spoon into this soup during my vacation. Especially 1.2 million shares are already over 40 thousand euros in the red.
If it happens as I suspect, that the merger is finalized in June, and the company distributes a 7 NOK dividend, it would be natural for the share price to rise above 9 NOK before the dividend. Although the latter pay-off is a long way off, one doesn’t need very high probability percentages for the additional purchase price and earn-outs for the stock to be worth paying over 2 NOK even after the dividend. Of course, one CC-deal went past ACC in recent weeks, but surely many more will come.
Perhaps my problem, however, is that I always assume people will act more rationally than they actually do.
Well, this weighed on my mind, so I thought I’d write down my thoughts. Since I’m in vacation mode, my train of thought might not be the clearest.