Woodbois (LON: WBI) (OTCPK: WODBF) shares are down 15% in the latest disaster to hit the company. WBI shares are down today not because of anything within the corporation but because no one had a military coup in Gabon on their scorecard of things that could afflict business. Giving us a neat reminder of why business is worth less in some places than others. The stability of the jurisdiction really does matter. As the BBC says: “Army officers have appeared on national television in Gabon to say they have taken power. They said they were annulling the results of Saturday's election, in which President Ali Bongo was declared the winner.” The French language press is adding that the military have already said they’ve won - which, well, they would say that, wouldn’t they?
Woodbois themselves say there’s no immediate cashflow implication because operations were closed to allow everyone to go vote anyway: “As fully scheduled, production at the facilities in Mouila is currently suspended to allow the workforce to travel to vote in the national elections. The Company will be monitoring the situation and will update the market should there be any significant delay in the scheduled recommencement of production or any other material impact on the Company's operations in Gabon.”
Allow us to be properly cynical about this. Mr Bongo was not known as the most honest and upright of Presidents even by West African standards. The removal could improve matters therefore. It’s also possible that the imposition of a new group of rulers, each of whom would like to gain a share of the oil wealth, will make matters worse. There’s also the idea that the French will reimpose their long standing insistence that only they get to decide whose coup succeeds in Francophone West Africa.
Woodbois share price from Google Finance
As we’ve said before, they’re not having much luck at Woodbois: “Woodbois (LON: WBI) shares are down 63% this morning on news that no financial director really wants to hear - the bank has withdrawn the lending facility. Woodbois has some cash left but not much and while it's still a going concern in the short term definitively needs to find some new source of finance.” WBI had a rights issue, the money from the rights was used to pay down that facility, so they still had no working capital. Then they asked for permission to do an emergency - another - rights at WBI: “Woodbois (LON: WBI) shares are down another 23% this morning on the announcement that they'd like to have a general meeting. Which, if it were just that, could be thought of as a bit of an over-reaction to the news. But of course it's not just that, it's the reason they want to have the general meeting that matters. The suggestion is that the board should be given the power to issue more shares. More than that, they need such permission even at today's horrendously low price.”
This all led to us being rather harsh about Woodbois: “That's 30% and change of the company gone for half a pence a share. Still, it does transform the balance sheet, gets the bank off their backs, gives them some working capital. As we say, we have some sympathy with them - they have a rights issue and the bank just takes the money - but not enough sympathy to want to invest in them.”
We agree, we didn’t have a Gabon coup d’etat on our likely scorecard but that’s what appears to be happening. We do have a slightly uneasy feeling though. That old adage that bad things come in threes? Well, is this the third? Or the fourth and so the start of a new set of three?