Shares inCircle Oil(LSE: COP) are sliding today after the company said that followingthe plunge in oil prices, the group may be forcedinto a debt restructuring or rights issue as it struggles to reach an agreement with one of its lenders. Clearly, this is a huge blow for Circle and the companys shareholders.
Indeed, only a year or so ago, Circle seemed to have a bright future with a market cap in excess of 100m and acash-rich balance sheet. But the plunging price of oil and an expensive exploration programme have taken their toll on Circles balance sheet.
At the end ofSeptember, the company reported that during the first-half its net debt pile had ballooned to $64m, and saleshad fallen 50% year-on-year.
Circles market cap has slumped to 16.6m at time of writing, or around$25m. So Circles net debt now exceeds the companys market value by two-and-a-half times. As a result, it could be wise to avoid Circle for the time being.
Its also shaping up to be another bad day forConcha(LSE: CHA). Shares in the company have fallen 16% on the day at time of writing, adding to last weeks declines. Over the last three business days, Conchas shares have lost 65% of theirvalue, although theres been little in the way of news to explain the decline.
Conchas shares slumped 52% last Thursday, which prompted the companys managementto issue a statementsaying that the group wasnot aware of any press speculation that may have contributed to the recent volatility in its share price.
The companys last market update was back in September when management revealed that the investment company was evaluating a specific global opportunity within its investment scope. Last week Conchas management confirmed that discussions are continuing although there can be no guarantee that this investment will be successfully completed. It seems as if the market has taken this statement badly.
Unfortunately, there could be further declines to come as, Conchas book value is only around 0.35p based onyear-end 2014 figures. Unless the company makes a high profile investment soon, its shares could fall back to the 0.35p support level.
Shares inAudioboom(LSE: BOOM) are also under pressure today after the company reported its full-year results for the year to November. They fell significantly short of market expectations. Whats more, the companydoesnt expect to become cash flow positive until 2017 implying that two more years of uncertainty and fund raisings could be ahead for the group.
According to todaysyear-end trading update,Audioboomsreal revenue growth only began towards the end of its fourth quarter, with revenue in the periodmore than double the previous three quarters combined. And the company expects this trend to continueinto Q1 of the next year. As a result, management expectsthe shift in timing and pace of adoption will hit its expected full year revenues for 2016.
All in all, this was a pretty dismal trading update from Audioboom and it was, in many ways, a multi-year profit warning.
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