It’s a sad day today as I expose a man I personally had faith in as one of the ‘Good Guys’ who like many before him has now been pulled over to the Darkside of AIM. Matt Lofgran has been involved in what is little better than a Faustian Pact, helping to facilitate shorting his own company for personal financial gain while at the same time promoting it as a good investment to his shareholders and potential shareholders. That is a disgrace and his position is now untenable. He has to go.
Regardless of how he will try to spin it he has while facilitating shorts with Yorkville/YA Global made huge financial gains. Documents now in my possession and independently verified as genuine which have been cross referenced with historical company and FCA information show unequivocally that shareholders were being shafted by Lofgran. The facts are set out below.
On the 29-Jun-2012 Lofgrans’ warrant exercise of 217,842,506 shares at 0.10p of a penny was funded by a loan from Yorkville. The value of that loan was £217,843. The value of the stock on that day was £1,198,134. On the 23-October-2012 Lofrgran loaned to Yorkville (Notorious and well known stock shorters) 155,000,000 shares. The transfer of that stock was made at a circa 17% discount to market value on the day, shareprice 0.324, value £502,750. The actual market price on 23/October/2012 was, shareprice 0.39 value £604,500. In the RNS of the 23rd October 2012, we are told this; “The Loan Shares will be redelivered by Yorkville to Mr Lofgran at the end of the Lending Agreement arrangement”. That infers that the full 155,000,000 shares will be returned. Not so! This was a lie.
In the RNS of 7th October 2013 we are told this; “On 4 October 2013 Matt Lofgran, Chief Executive Officer, received from YA Global Master SPV Ltd 83,956,296 ordinary shares of 0.1p each in the Company. On 23 October Mr Lofgran loaned 155,000,000 Ordinary Shares to YA Global (“Loaned Shares”). Following the full repayment of the secured loan note between YA Global and Mr Lofgran, YA Global no longer has a fixed charge over any shares in the Company and no longer holds any Loaned Shares.” Lofgran never paid any money to Yorkville regarding the loan, as the above implies, Yorkville sold 83,956,296 shares to recoup the loan value and interest. Not one single penny came from Lofgran to fund the warrant exercise. It was a sleight of hand.
At the time of the above transactions Yorkville were actively using the Loaned Shares to short Nostra Terra Oil & Gas (LON: NTOG) as evidenced on the FCA website HERE They held 4 shorting positions. For a CEO of a London Listed Company to get into bed, for personal financial gain, with a fund that uses the CEO’s stock to destroy share-holder value is an act of betrayal.
Yorkville (after shorting the stock) returned a portion of the Loan Shares to ML (Settlement Shares). The portion of shares not returned but instead kept by Yorkville were then sold by them to recover the cost of funds loaned, plus interest charged at 24%.(Annualised at 19% per annum). For the avoidance of doubt: Yorkville charged 24% interest, made a gain on the stock which they shorted and recovered loaned funds in full. The shorting was value destructive to the shareholders and arose on the back of a personal loan made by Yorkville to ML. When you take the shorter’s shilling you sing the shorter’s tune.
And it get’s even worst. The value of the Loaned Shares were underwritten by a director’s loan of £503,000 from Nostra Terra so Lofgrans exposure was nil. From a cash and accounting perspective in the books of NTOG it is unclear how the settlement of funds was recorded, being either: – a cash paid settlement made to ML from a subsidiary of the Company (perhaps Horizon?); or more likely… – a non-cash settlement which would have given rise to an undisclosed gain of GBP 180k in the books, thereby understating the losses by more than 10%. It needs to be noted that Nostra then went on to issue yet more shares, 123,000,000 shares, to Yorkville via the re-jigged SEDAR. Value of those shares? £503,000
During the period of the transactions with Yorkville from the 29-Jun-2012 to 7 October 2013 the Oil price (WTI) ranged from $85.04 to $103. Yet the value of NTOG dropped by as much as 29%. That was a direct consequence of the Yorkville shorts. Despite the disingenuous and duplicitous cheer-leading and promoting. Shorting which Lofgran must have known about and was PARTY TO IT. It was value destructive for NTOG share-holders. The actual value erosion over the 15 month period was circa 53%. Lofgran sought to self enrich himself at the time of the warrant exercise to the tune of £980,291.
For the CEO of any company to enter, knowingly or unwittingly, into what can only be described as a shocking betrayal of his shareholders is testament to why Nostra Terra are where they are today, in the toilet.
Matt lofgran’s position is now as already stated in this article ‘untenable’ he has to resign. He can go quietly or kicking and screaming into the night protesting his innocence. For a CEO to become embroiled for personal financial gain with a fund that uses his shares to short his company while destroying value for his Shareholders is an act of betrayal that cannot be rectified other than by a resignation.
N.B Sources and References below.
Source / reference Stock shorting open “Short positions spreadsheet” link in the following:
Transfer of Loan Shares http://www.investegate.co.uk/nostra-terra-o-g-co/rns/operational-update/201210231130083219P/
Transfer of Settlement Shares http://www.investegate.co.uk/nostra-terra-o-g-co/rns/increase-in-director-shareholding/201310070700078438P/
2012 annual accounts http://www.ntog.co.uk/media/pdf/ar_2012.pdf
2013 annual accounts http://www.ntog.co.uk/media/pdf/ar_2013.pdf