THREAD NOW CLOSED 3 May 2007

LATEST NEWS...(Check RNS service for details)

10/4/2007 - GME removes its minority interest in Patriot so shareholders enjoy 100% of all growth at Patriot
20/3/2007 - GME announces it will no longer support as NIM as non-core but instead focus on Patriot's US$123 order book
4/1/2007 - Cantor Fitgerald report 6.90% Holding
Decemebr - $31m orders reported
w/b 27/11 - Cantor buy >3%, Further order of $11m for rig packages
w/e 24/11 - Orders of $20m announced, but not profitable as expected
w/e 13/10 - Further $8m orders
w/e 27/09 - Further additions by Schroders to 12%
w/e 22/9 - Further orders of c $18m plus Gartmore stake increases to 20%.

Global Marine Energy plc is an Oil services company primarily bringing together and delivering rig component/equipment packages to international markets. GME is the holding company for two subsidiaries, Patriot Mechanical Handling and NIM engineering. Patriot provides the bulk of GME's sales.

GME is a niche player, there being only 1 or 2 alternatives for packaged equipment.
Patriot is a member of Source One drilling - a marketing alliance created by Le Tourneau Ellis Williams (LEWCO). www.source1drilling.com

Thread re-opened post results. Feel free to post away. News summary under picture.

Disclaimer: As always, Do Your Own research as no comments or foward looking statements posted here can be guaranteed.

This is an AIM listed company so high risk - only for investments you & your family can afford and are prepared to loose.



***Latest*** (also see estimated Share position analysis below @ 20 April 2006)
19 Sept - $9m from Brazil & America
14 Aug - GME announces $9m of orders including $1.2m NIM orders for Baker marine
These funded in part from recent raised capital.
11 Aug - GME delivers 11.2m stg (2005 4.76m). NIM issues notified in July addressed.
June - Cobra Ltd take large stake, a few previous buyers add
June - Placings at 15p
25 May - Paul Findlay promoted to Group CEO. S Wild (NIM subsid) off board.
10 May - PMHH signs up to http://www.source1drilling.com alliance
8 May - PMHH huge $8.6M china order+announces multiple chinese deals
5 May - PMH signs exclusive deal with winch company EMCE/Stokvis
4 May - Shroders increase to 11.16%
19 Apr - Shroders buy 10.10% 4,525,000
4 Apr - Gartmore adds stock now 17%, CAML buys 3.52%

Don't miss BOTH bits of news above...last is very significant.

I guess being in a stock that has finally turned round is like being in a growth stock from the start. Just a pity we all got their BEFORE the start :)) However, we look set fair for getting some of our money if not all of it and more back over the next year or so.

I guess we might just be in danger of being taken out before we can get there. How long do they hold and what kind of profit do Gartmore usually look for before putting their holding back in play?

Why wouldn't a major client (Chinese?) want to buy these out and take the profit on it?

Just random thoughts. Whatever happens I beleive we are in the right place at the right time now.

sd

SD.
My own thoughts (and just an opinion) is Gartmore would not tolerate a further placing. Incidently, it would be unlikely to raise sufficient cash anyway, or be fully taken.

If I was Gartmore, I'd be looking to reverse Patriot into GME on a 1-1 share basis.
This would maintain GME's value, and eliminate all outstanding GME shares. The listing in the US is pointless these days anyway, as the 60-70% major insti holdings are in GME, and no one trades Patriot as GME have 82% already.

This move would have the effect of totally reversing all last year's placements in one hit. However, GME may wish to keep the two distinct as it allows easier sell-off etc as you say to the Chinese, a larger American player, or someone else denominated in dollars.

An interesting question now though as Gartmore plus Schroders have a controlling stake at c31%, and a couple of the others could easily take this above 50%.

Owl
Confused by the reverse takeover concept - surrely that applies to reversing GME into Patriot, leaving just a single US listing for Patriot with all o/s GME shares eliminated.

I think what you may mean is simply for the 82% majority to enforce the purchase of the remaining Patriot shares (does the SEC allow this as it would be in UK?), so all of Patriot is owned by GME and its US listing is de facto extinguished.

Or am I talking rubbish? I remember suggesting some time ago my preference for this latter course of action. Besides why run the expense of a US listing for such a minority and why expose to Oxley Sarbanes (spelling?) needlessly. Anyway much better to have GME listed in both places if so desired to raise market and fund-raising profile of the group in N. Am.

On reflection why would Gartmore and/or Schroders agree to sell whilst they can grow the company independently - so I don't think they would act against PI's interests. Intersting if a private equity firm tried to take GME off the market - they'd have to pay a pretty premium, I would hope.

BTW - interested to see on another BB your contemplation of a toe in the troubled waters of SEO which I continue to hold at some considerable loss (14.84p av. price - ouch!), having been travelling the week when my stop loss of 13.75p was breached and should have sold and being foolhardy ever since. I must say I loathe the school playground mentality of all parties on that BB in between one or two atempts at serious debate. It is an intriguing conundrum - have they secured funding or not? That's all that counts. The commercial prospects can be re-assessed separately after that happy event.

sd

No, you're right SD. I did mean your second paragraph. Reversed the wrong way ...lol
Absolutely I agree with you re listing. Even US Nasdaq contenders are choosing AIM over the Nasdaq due to SOX & costs. The US listing is pointless, and untradeable. I'm sure they arranged it that way for some good reason which I'm sure will become clear.

Re SEO, was in these last year. Just jumped back in when I saw a 2p price tag. 2p is far too low, but being cautious. Last time I bought at 10p, but had to sell at 8p (at a loss) to buy more GME. The volumes are phenomenal, and conference this week with Wal-Mart.

My calcs say probably 18m or less in free issue now or 28% !

Global Marine Energy PLC
27 September 2006

27 September 2006



Global Marine Energy plc ('the Company')

Notifiable Interest


The Company announces that it received notification on 26 September 2006 that on
26 September 2006 Schroder Investment Management Limited ('Schroder') had an
interest in 8,940,000 ordinary shares of 2.5p each in the Company, representing
12.45% of the issued share capital of the Company. These shares are held in
unit trusts operated and managed by an affiliated company, Schroder Unit Trusts
Limited, and registered in the name of Chase Nominees Limited.



This represents the entire holding of Schroder in the issued share capital of
the Company.



On 19 July 2006 the Company announced that Schroder had an interest in 7,940,000
ordinary shares of 2.5p each in the Company, representing 11.06% of the issued
share capital of the Company.



For further information please contact:



Philip Wood, Chairman, Global Marine Energy plc 01274 531 862


Mark Froggatt, Noble & Company Limited 020 7763 2200


Michael Padley / Susan Scott, Bankside Consultants 0207 367 8888




This information is provided by RNS
The company news service from the London Stock Exchange

Something picked up elsewhere.

Performance bonds allow a customer to pre-fund it's order instead of making stage payments as the order progresses. These are used a lot in Singapore/China/Hong Kong but not so much here.

The way it works is the bank providing the "performance bond" underwrites the stage payments for large contracts. This means if a company does not seem to be delivering a) the bank pays back the customer to avoid lengthy legal disputes etc and b) ensures sufficient finance is provided to complete the order to customers satisfaction.

These are a bit more expensive than normal loans/bonds, however it means orders can be pre-funded. The bond would only be 'called' if the customer presented certain documents. Even then the bank acts as 'arbitrator'. According to Edison, GME can fund up to 40m in this way if it chooses. Of course it can also use other sources of finance, profits etc as normal and does not have to utilise the bond facility.

This seems a very effective way to smooth cashflow on larger orders, and once performance bonds are understood, explains why GME are well positioned.

Owl

I am a provider of bonds in my own area of business. How it works is broadly that GME would borrow the price of the contract plus interest and charges from a bank. The bank would require the collateral of the customers firm order, payable on delivery and assigned to the bank. The bank would require the security of a performance bond (from a third party) that GEM will deliver on time on budget according to specification. On delivery the customer pays the bank the contract price. The bank forwards the profit element remaining after principle repayment and charges to GME.

Not sure who is providing the bond here - bank or 3rd party - suspect the latter (reinsured by a specialist insurer), since the bank would not have the production expertise to assess and monitor the risk.

This method would typically work with project financing which GME have recently mentioned (I believe this is the 40m revolving credit line - as one project repays, the money is free to borrow on the next) in addition to a general loan/overdraft facility. The loan is limited recourse against the project only, not the general assets of GME, hence the need for the bond/guarantor.

My guess is the bond fee would be between 3-7% (pure guess) of the contract price, depending on how much of the first loss GME could underwrite internally and/or how much contingency was added to the contract price to protect overcost etc - e.g. it may only be a catstophe bond, much cheaper than a 90% loss bond.

I expect it works a little differently in each business. In the building world, for example, the guarantor also guarantees to find tenants for the completed buildings. Don't suppose GME's bonder guarantees to find oil!

sd

Here's the article I saw:

"In large commercial projects a heavyweight customer dealing with a new supplier for the first time will often require some form of performance guarantee or bond from a trusted third party such as bank. Under these bonds the bank irrevocably commits to make a fixed payment to the customer on a project failure simply upon the customer presenting certain documents and certificates.

Performance bonds put up by suppliers banks have been a way of life in the Hong Kong construction industry for many years, but they are increasingly found in high value IT projects.

Bonds enable the customer to make upfront project stage payments to the supplier, which help the suppliers cashflow, safe in the knowledge that if the supplier fails to perform the customer can obtain repayment of some or all of the payments on demand, without having to having to wait for lengthy disputes with the supplier to be resolved"

A different version of the same theme in essence. A bank providing the bond would almost certainly have production expertise to advise it and a substantial re-insurance contract. Yes, it also works for customers who fund in stages, rather than project loans from a bank - although I recall we've been told GME needs to ante up about 10% of any contract to get started before customer payments start cdoming in. This could be funded out of the RBS loan facility, whilst contracts paybable only on delivery could be funded out of the project finance being talked about.

All adds up to a well-conceived finance strategy for GME, to lend credence to the large orders sitting on the book. As ever, it's the quality of management that is crucial to turn these orders into profits. Looks like we are well-endowed in that department now.

sd

http://www.thebusinessonline.com/Stories.aspx?&StoryID=993DA3BF-7A31-43CE-AE3F-F3478508418A&SectionID=8099C021-87B0-48CA-A5F1-6335FDE21694&edition=10/01/06

With any luck SEY will buy EEN! A perfect solution to my current dilemma.

Seems to me that bonds are another form of commercial factoring in effect..

Maybe in reverse :-)

One is a performance bond, the other is a financial instrument - different animals really.

Yes but are they not both a garentee by a third party of payment ?

I am finding it a little worrying that the plus points are stacking up for GME but the interest is still mild to put it nicely :-)....

As an aside line......i find it worrying that the interest/investment in the AIM is dropping off alarmingly in IMHO on all fronts....it is not the institutions that will drive this up, its the PI's fighting over the limited shares available. I worry that the PI's willingness to invest in the risky AIM is greatly diminished in the last year or so......
Any thoughts anyone ?

No - one is a guarantee of payment, the other is a guarantee of delivery (which may be incapable of remedy, other than paying the entire cost to date of failure to delilver or abandonment) - different risks/skills. True, each one gives financial protection to the guaranteed party, but in a different form.

I agree with your assessment of AIM - suspect institutions are steering clear of them - but have done nothing about it with my curernt holdings - how long till the next revival of interest in AIM by institutions v. how long is your investment timsescale. If you beleive in the business, who needs the SP to rise before you're ready to cash in - in my case over 10 years hence. Could be a great long-term buying opportunity, resulting in many x-baggers. What price contrarianism? Answer: depends on your timescalce. However I do find myself tending to research FTSE350 a little more frequently for my new funds.

sd

Interesting comment re AIM, SD. I have done very well from 4 companies which moved down from main market (HDYS (susequently taken over) JHD, LTHM,RSG). All have strong balance sheets and good cash generation. There are also others such as MJW which prompt me to think that a decent quality portfolio could now be assembled from AIM companies, with attendant tax benefits if, as you and I seem to be, you have an investment time frame which extends into years rather than minutes!

Oh my God, patridge - two YEARS, and I though it was 2 minutes to get your tax break. lol!

Yes, I also agree with you that the top of AIM has probably got at least as respectable as the bottom of FTSE smallcaps.

It's funny how, with all that knowledge out there available to you, you only really learn the hard way by doing it yourself, when you finally work out what your appetite for risk and other psychological make up and how many minutes a day you can devote to the whole game, blah, blah . . . .

Still, I reckon I can cover most of my losses to date before I retire!

sd

"Still, I reckon I can cover most of my losses to date before I retire!"

Ehh.......well you seem to have the hang of this game then :-))