By Wallace Kaufman
ALMATY, Nov 8 (The GLOBE)
Chaparral Resources, a small oil company backed by celebrities like Bill Gates and tennis star Andre Agassi, was going down in flames on the American stock market, when suddenly on November 2nd shares of the stock rose from US$6.94 to $18.75 a 271 percent boon to stockholders.
The company whose sole large asset is a 50% partnership with Karakuduk-Munay said it knew of no reason for the sudden rise except that it had a preliminary agreement with Shell Capital Services for a loan of $24 million. Shell Capital is an affiliate of Royal Dutch Shell.
Since the Shell loan requires Chaparral to complete a number of important financial maneuvers including retiring over $9 million in outstanding debt and selling additional shares, the reason for investor optimism is not obvious in any news so far.
For the past year company insiders, including Andre Agassi, were selling shares and buying none, indicating that those who were in the best place to know, lacked confidence in the company�s future. Company reports show over 5 million shares sold or planned for sale by insiders between October 1998 and September 24, 1999.
Investors who were holding almost worthless shares in May suddenly had $40 shares again bh the end of June. After that data in company reports showing increasing difficulties in making payments on its debt sank the stock to about $5 last week.
Even after the company announced in early September that it Karakuduk well No. 101 20 miles from the Caspian Sea had tested preliminary production at 694 barrels of oil per day its stock continued to sink to record lows. The stock hit $57 dollars a share almost a year ago then quickly fell to less than $1, turning million dollar gains by some investors into huge losses.
On April 21 to continue its trading on America�s NASDAQ exchange the company had to require shareholders to turn in 60 shares of stock in return for one share of stock with a price that would qualify for continued trading (a reverse split). The company had to restructure.
In latae June the company had only $667,000 in cash to work with. In the company�s June 30 quarterly report it stated, �There can be no assurance that the debt or equity financing required to fund the company�s operations and obligations . . . will be available to the company on economically acceptable terms, if at all.� It concluded, �the company�s investment in the field [KKM] may be lost.� The company also reported it did not have cash reserves adequate to meet debts due in August and September and could default.
Shell could be the largest beneficiary of Chaparral�s rebirth, benefitting from the terms of its own loan deal if the stock price stabilizes or rises. The terms of its loan with Shell, according to a company news release, entitles Shell to buy up to 15% of the outstanding common stock. A rough estimate puts the price at somewhere between $10 and $15 a share, giving Shell an immediate profit at today�s price of some $3 a share.
To complete the terms of the Shell loan Chaparral must obtain insurance against the political risks of operating in Kazakhstan and retire over $9 million dollars in outstanding debt.
Chaparral has been insured against political risk in Kazakhstan by Overseas Private Investment Corporation (OPIC). OPIC is an insurance firm funded by the U.S. Congress to insure small American businesses undertaking risky ventures overseas. Sources in OPIC have indicated that �small� is a very flexible measure in OPIC�s activities.
Despite the pending Shell deal and the prospect of oil from its first well, Chaparral on paper still appears to be a very troubled little company trying to find a place among the giants like Chevron, Mobil, Elf, and others. Nevertheless the investors who bid up the stock 270% in one day think they know something. But that�s what they thought when the stock hit $50 before sinking to $5.
Chaparral owns 50% interest in Karadukuk (KKM) through its wholly owned Central Asian Petroleum Ltd. but it put those shares up as collateral for two loans it needed to stay afloat this year. On its books Chaparral values its interest in Kazakhstan at some $35 million.
Chaparral looks big on paper but company information indicates that its total staff of 8 people operates out of a small office in America.
Shares of three companies of Kyrgyzstan will be introduced in near future on KASE
/IRBIS, Nov.04, 99/
On November 09 the Council of the Kazakhstan Stock Exchange (KASE) will consider the introduction of shares of three Kyrgyzstan companies in the sector �Non-listing Securities� under the second level of admission (minimum disclosing of the emitter information). They are:
- JSC �Kyrgyzenergo� (second listing category of Kyrgyzstan Stock Exchange (KSE); activity: production, transfer, distribution, purchase and sale of heat and power, maintenance of reliability and safety of power objects operation, dispatching management over the national electric system and other networks and stations included in the company; authorized capital - 7,470,107,700 Kyrgyzstan soms);
- JSC �Kyrgyztelecom� (second listing category of KSE; electrical communication services, including long-distance telephony; authorized capital - 620,008,600 Kyrgyzstan soms);
- JSC �Kantsky Cementno-Shiferny Combine� (non-listing board of KSE; production of cement, roofing slate, asbestos-cement pipes; authorized capital 82,795,000 soms).
At the today�s press-conference the chairman of the National Securities Commission of Kazakhstan (NSC) Azamat Dzholdasbekov has told: �Decision about admission of the shares of three large Kirghiz joint-stock companies to the circulation in the Kazakhstan stock market is accepted�. Azamat Dzholdasbekov has declared also, that the arrangement with the National Bank of Kazakhstan about the simplified system of capital export licensing was achieved, and this system will be applied to these Kirghiz emitters.
The introduction of the Kirghiz companies shares on the Kazakhstan organized market was preceded by the series of negotiations between the respective departments and companies of two republics. During a half year KASE and KSE exchange information concerning the stock market. KASE has today the information not only about the current quotations on KSE, but also about the emitters, which shares are introduced on the KASE�s trade platform.
In opinion of the president KASE Damir Karasaev, at the first stage the greatest interest for the Kazakhstan market participants will be represented by securities of JSC �Kyrgyztelecom�.
Capitalization of the market of Non-state Securities of Kazakhstan on November 05 - $1,919.4 million
/IRBIS, Nov.05, 99/
On November 05 capitalization of the exchange market of Non-state Securities of Kazakhstan (A + B + N without the State Block of Shares) has amounted to $1,919.4 million.
For two weeks capitalization has grown by $7,220 due to insignificant increase in prices of some securities.
The deals today can be made on KASE in 88 tools of the 65 companies and 4 state blocks of shares.
Weekly National Bank of Kazakhstan balance on the notes - plus 1.7 billion tenges
/IRBIS, Nov.05, 99/
The National Bank has finished 45th week in the State Securities primary market with the following results. At actual volume of redemption of 1,087.6 million tenges the emitter attracted 2,802.8 million tenges (2,102.4 million tenges + $4,988 million at the official rate on November 05, 99).
The week balance of the emitter under the notes program is evaluated by plus 1,715.2 million tenges.
Nov 1 (PR)
Karakuduk-Munay, JSC (�KKM�), Chaparral Resources, Inc. and Shell Capital Services Limited signed a $24 million loan agreement on 1 November which will enable Chaparral Resources and KKM to develop the 17,000 acres Karakuduk Field, located in the Mangistau Region of the Republic of Kazakhstan.
KKM has also entered into a Crude Oil Sale and Purchase Agreement with Shell Trading International Limited for the purchase of oil production from the Karakuduk Field.
Co-Chairman of Chaparral Resources, John G. McMillian, welcomed the agreement: �We are committed to the development of the Karakuduk Field, We will satisfy as quickly as possible the various conditions to funding, including the conversion of outstanding loans by stockholders to Chaparral Resources, the repayment of certain indebtedness, and an equity infusion of approximately $9 million.� It is anticipated that funding will begin later this month.
Shell Group Treasurer and Chairman of the Board of Directors of Shell Capital Services Ltd, Stephen. Hodge, said: �We are absolutely delighted that Shell Capital is part of me first major deal of this type in Kazakhstan, and with such good partners as Chaparral and Kazakhoil.�
Special Adviser to the President of Kazakhoil, Boris Cherdabaev, welcomed the signing of the agreement, saying mat this was a big step forward not only for KKM, Chaparral Resources and Shell Capital, but for me Kazakh oil industry as well.
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