Lone Star joins Antares register

A little known US fund manager, Lone Star Value Management, has announced its arrival as a significant shareholder of Antares Energy. Holding just over 5% of the company, Lone Star has already suggested five new members to the Antares board. Although the fund manager, a protégé of George Soros, insists he is not an activist shareholder his actions can hardly be described as those of a passive investor. A shareholder meeting will likely be called by July 20 to vote on new board nominations.

Antares has responded politely, saying it is continuing to seek funding and production growth from its Permian Basin assets. Progress, however, appears slow. Antares must roll over an existing debt facility and the company needs additional cash to develop its fields. The longer this takes, the greater the likelihood of a poor outcome. Lone Star suggests Antares should be worth between 81 cents and $1.49 per share (which are curiously precise endpoints to a wide range). We’ve previously opined the shares could be worth about $1.50 a share (see Antares upping the ante (Speculative Buy – $0.47)). The rewards, like the risks, are high.

Lone Star has some form in releasing value from its investments – US listed Callon Petroleum rose 50% following intervention from Lone Star – so this should be an interesting tussle. There is no need for shareholders to act at this stage and our investment thesis, now less lonely, remains intact. SPECULATIVE BUY.   

Note: Our model Growth Portfolio owns shares in Antares Energy.