London Stock market halts White Nile trade again

By James Boxell, Financial Times

LONDON, May 28, 2005 — White Nile brought yet more confusion to Aim, the junior market, yesterday when its shares were suspended for the second time since its February flotation.

The London Stock Exchange said it had halted trading in the tiny but controversial oil exploration company – set up by Phil Edmonds, the England cricketer-turned-entrepreneur – because of “concerns about the orderliness of the market”.

The LSE’s move came after worries that short-sellers in White Nile stock would not be able to cover their positions because of its poor liquidity.

The company said yesterday it was planning a share placing to improve liquidity and raise funds for a disputed oil exploration deal with the former rebels of southern Sudan.

White Nile’s previous suspension was only lifted on Monday after it reassured regulators about the deal.

The company listed as a cash shell on Aim in February at 10p a share, but its market value rose to 138p in just five days when it emerged it was in talks with the fledgling government of south Sudan about an oil block known as Ba.

The meteoric rise, dubbed “White Nile fever”, led to worries that a bubble had emerged in the market for small oil, gas and mining stocks.

Total of France disputes White Nile’s claim on the block and says it has drilling rights at the concession, based on an agreement made with the northern Sudanese government in Khartoum in the 1970s.

White Nile’s institutional shareholders own almost 60 per cent of its shares. Mr Edmonds, chairman, and co-founder Andrew Groves, own almost 20 per cent and are locked into the company until February next year.

White Nile plans to give Nile Petroleum, south Sudan’s state oil company, a 50 per cent stake in the company in return for the 60 per cent interest in Block Ba.

White Nile’s shares, which rose as high as 174p yesterday, were suspended at 141p, up 15p or 12 per cent on the day. The shares had refloated at 138½p on Monday.