London-listed Braemar was bouncing along at over £5.50 when the deal came to light last May but slipped to under £4 in early January as the crash in oil prices hit global equities. A recovery has since taken hold, with the stock closing at £4.70 on Monday.
Kidwell said: “I think we got swept up in the general ‘you’re one of the stocks that the fall in the oil price might affect’. Obviously, we then put out our trading statement in January and I think that calmed the market quite considerably.
‘Disproportionate swing’
“The price today is about £4.60 and I think that swing is completely disproportionate to the underlying value of the business. Nevertheless, because the market is not working with perfect information, you tend to suffer those swings.”
Kidwell says the removal of doubt about the merits of the merger and uncertainty about the fate of “legacy assets” like Braemar’s iconic church office building in Marylebone, which has now been sold, are aiding the stock.
“Bit by bit you convey a sense that it is all going well, and the natural hurdles you’ve got when you do a merger, you jump over them. Obviously, the market is coming back from £4 to whatever we are at today reflects the fact a lot of the boxes have been ticked,” he said.
He adds that investors today are much more knowledgeable about shipping but it remains difficult for them to secure accurate information about a complex business like Braemar. Looking at market indices like the Baltic Dirty Tanker Index offer is, in Kidwell’s words, a pretty weak proxy for the company overall.
As part of an effort to improve communication and understanding, Braemar management met with some of the city’s fund managers at its new Trafalgar Square offices yesterday. The session included a markets presentation from research head Henry Curra.
“Investors will have some sense of what is going on in the tanker market and, equally, what is going on in the dry and offshore markets,” Kidwell said. “But for us to overlay a sense of what is happening at the coal face, I think they are generally very interested in that.”
Kidwell says that without the respective stock-listings of Braemar and ACM, last summer’s deal may not have been possible. “And there is no question having a currency that is visible in the market puts you in a better position to merge, acquire or what have you, as it’s not all about borrowing to do a transaction,” he said.
“From our perspective having that financial flexibility is undoubtedly helpful. So, I would say it’s entirely logical if other companies did decide to come to the market but it is not necessarily a financial structure that everybody believes in.”
