Just like you never want to hear a doctor say "oops" in the operating room, you never want to see a going-concern statement in a financial report about a company you own. Accountants throw these in when they've been over the books, talked to customers, and checked the horoscopes and have concluded there is "substantial doubt" about a company's ability to remain in business. In short, don't blame the accountants if the company files for bankruptcy protection.

You¿d reckon that a going-concern statement would be enough to send investors running to the exits, but it's not. True, many large institutions automatically bail when an existing company gets slapped with one of these, but many individuals (often wrongly) take a chance they know more than the bean counters.

During the tech boom of the late 1990s, many companies actually went public even though they had been hit with going-concern statements. Many of those companies subsequently disappeared. Enough said.

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Tuesday, August 26, 2008

India's ONGC Makes Takeover Offer for Britain's Imperial

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Associated Press

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LONDON--British oil and gas company Imperial Energy PLC said Tuesday that it is in talks about a 1.4 billion pound ($2.6 billion) takeover by India's Oil & Natural Gas Corp.

Imperial said that the state-run company had made a preliminary offer of 1,250 pence ($22.95) per share, adding that a further announcement "is expected later today."

"Imperial Energy confirms that it is in the course of finalizing the terms of a possible recommended pre-conditional cash offer with ONGC Videsh Limited," the company said in a brief statement to the London Stock Exchange.

Imperial, an independent oil and gas exploration company with holdings mainly in western Siberia and Kazakhstan, revealed earlier this month that it was in negotiations over a possible offer, after receiving more than one approach, without naming the prospective bidder.

Media reports have suggested that state-owned Chinese oil refiner Sinopec Corp. was the other potential bidder.

Both China and India have encouraged their state-owned oil and gas giants to diversify and expand their access to scarce energy resources.

ONGC is India's largest oil and gas explorer and buys hydrocarbon assets abroad through its overseas arm, ONGC Videsh Ltd., to meet a growing domestic demand for fuel and energy to sustain the country's booming economy. About 70% of India's fuel needs are currently imported.

Sinopec, whose parent company is China Petroleum & Chemical Corp., is Asia's biggest oil refiner by capacity. Its earnings have been pummeled in recent months by the widening gap between surging international crude oil prices and Chinese domestic prices for oil products, which are government-controlled.

Imperial shares were trading below the offer level midmorning Tuesday, down 0.7% at 1,232 pence ($22.62).