May 9, 2014 11:03 pm

Small-cap Week, May 10

Wessex Exploration was a star performer among the small-caps this week ahead of a potentially transformational acquisition.

Aim-listed Wessex jumped 90.9 per cent after confirming it was in advanced talks over a deal for southeast Asian assets that would not be classed as a reverse takeover. The gain coincided with news that Andrew Cochran, former chief executive of Coastal Energy and Dominion Petroleum, had taken a 3.79 per cent stake in the explorer.

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Mr Cochran is expected to swap some Philippines near-production offshore assets for a stake in Wessex, whose value has slumped over the past two years on poor drill results from the Shell-operated Guyane Maritime permit off French Guiana. Investors expect details of the deal before next Thursday, when they are to vote on a move led by hedge fund Milroy Capital to sack the Wessex board.

Blinkx, the online video advertising specialist, lost 29.4 per cent on mixed results. House broker Citigroup cut forecasts to reflect a shortfall on non-mobile revenues.

Mothercare lost 10 per cent even after the retailer said it expects to comply with its debt covenants. The statement came in response to a press report that it was renegotiating its bank terms for a third time in two years.

Hume Capital, the broker formerly known as XCap, dropped 31.7 per cent after chief executive Nitin Parekh resigned.

Pentagon Protection warns of need for short-term funding

Shares in Pentagon Protection, which makes protective glass and screens for cars and buildings, were suspended this week at 5.25p after it warned it may have to call in administrators, writes Kate Burgess.

The board said it was discussing selling SDS, a division that supplies specialist search and security equipment as well as training to governments and security forces.

Whether or not the sale goes through, the group said its position had not improved since a profit warning last month and it needed short-term funding.

In April, the company said despite healthy sales, the timing of payments meant it was still straining with working capital requirements. A week earlier Haytham ElZayn, group chairman and a significant shareholder, left.

Since the float on Aim in 2003 at 3p each the shares peaked at £1 in 2008. Last year, they more than doubled after contract wins but have plunged again this year.

Collaboration agreement with oil majors Xcites investors

Shares in North Sea oil minnow Xcite Energy soared this week after it entered into an agreement with two majors of the sector, writes Michael Pooler.

Xcite has a licence for the undeveloped Bentley heavy oilfield to the east of the Shetland Islands, which is geologically similar to the nearby Bressay field owned by Statoil and Shell.

The parties said they would share field-specific information and work towards using common infrastructure and assets for development of the fields.

Analysts said this opened up the possibility of a joint venture. Bentley is forecast to require £416m in capital expenditure before becoming profitable.

Should data show that commercial production is viable, oil majors with deeper pockets may eye a takeover of Xcite.

The Aim-traded company’s share price rose by a quarter this week to 80p.

Renewed investor confidence bolsters Digital Barriers

In what was a fairly quiet week for small-cap technology stocks, surveillance and security tech provider Digital Barriers posted a double-digit rise, writes Michael Pooler.

Shares gained 12 per cent over the week, closing at 106.5p on Friday and taking the company back above the price of its 2010 initial public offering for the first time in more than two months.

Investors had dumped the Aim-quoted stock in February after a profit warning that said adjusted pre-tax losses would be 40 per cent higher than last year’s £7.6m deficit.

In the absence of any market-moving announcements, Digital Barriers’ recovery suggested investors thought its price had fallen too low, said analysts at Panmure Gordon.

The company began life as a cash shell in 2009, with a strategy to acquire rather than develop technology. Products include facial recognition software and intrusion detection systems.

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