3 FTSE Shares Being Crushed Today
LONDON -- Last week the FTSE 100 (INDEX: ^FTSE) pretended the eurozone troubles were all over, but reality hit back today and led to a 95-point drop for the index of top U.K. companies to 5,556 points.
Spain's conveniently neglected crippled banks are not back to health after all, it seems, as the Valencia and Murcia regions are approaching the government for a bailout, leading to speculation that Spain is going to need an enormous national rescue. Spanish 10-year bond yields rose to 7.55%, and even Germany's rate was pushed up to 1.13%.
But even without the problems of the eurozone, companies can find themselves in trouble all their own. We look at three high-risk companies in the FTSE indexes that are not looking good today.
Two of the biggest fallers in morning trading were oil and gas explorers Range Resources (ISE: RRL.L) and Red Emperor Resources (ISE: RMP.L) . Shares in Range Resources crashed 20% to 5.3 pence, but that slump was dwarfed by Red Emperor's 48% collapse to 11.25 pence.
The reason for the two was the same: a drilling report from the Shabeel North well in Puntland, Somalia. Each of the two companies has a 20% interest in the licenses in the Dharoor and Nugaal valleys. The drill operator, Horn Petroleum, holds the other 60%.
The problem? The area had shown sands containing evidence of oil, but a test drill that examined a 50-meter interval from 1,910 meters to 1,960 meters deep turned up only water with no traces of oil. Exploration will continue to a depth of 2,400 metres to determine whether there is anything of value down there.
Red Emperor's fall was the larger, as it has fewer other interests outside of Somalia.
The third crushing fall today came from Noventa (ISE: NVTA.L) , whose shares slumped by 35% to just 1.1 pence after the firm -- which describes itself as "the world's largest, low-cost industrial scale supplier of tantalum concentrate, a rare speciality metal widely used in the consumer electronics industry" -- announced problems with funding.
At the end of June, Noventa announced that it had approached institutional and other investors in search of a $35 million equity issue, but the company admitted today that there were no takers, and that issuing new shares is "no longer a viable option" for raising cash. If Noventa cannot now extend its loan facilities, it may become insolvent.
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