Shares in Gulfsands Petroleum (GPX:AIM) are down nearly 80% at 0.98p as the company reveals plans to delist from AIM as it secures a new £4m financing deal with its major shareholders.
The company, whose flagship asset is in war-torn Syria, is promising to facilitate secondary trading in the shares and essentially mimic many of the qualities of a quoted company for the next two years.
Investors are apparently unmoved by these safeguards and are rushing to sell the stock. The news shows the risk of investing in companies with dominant shareholders - the major shareholders in Gulfsands own more than 80% of the stock and a vote to approve the delisting on 10 April looks a formality.
It has been quite the fall from grace for Gulfsands as the company has been unable to carry out production and exploration activities on its Block 26 in Syria thanks to the conflict and resulting sanctions. Prior to this output from the block had reached 25,000 barrels of oil per day.
Back in spring 2010 it had been pursued by an Indian consortium bidding 315p per share. It rejected the approach which it said ‘materially’ undervalued the company. The shares subsequently peaked at £4 on 5 January 2011.
