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You asked what is fishy about the transaction and there is only the „admin“ info missing. And I gave the answer why the „admin“ for some of shareholders is relevant. Not illegal, but question of good CG. Anyway, you get my point.
Lets go forward and see with what they’re coming up.
That is personal to you. And not fishy.
Still believe of a simple pro rata offer, but can’t be sure because of the missing „admin“. If not, it would cost me 25-30% of my return. Kind of a costly bet, thus I sold. If I would hold this position in the tax free structure, no rush to sell at all. Thats also why I mentioned that I will buy in around 8 again and if so, with the more tax efficient vehicle. So no risk at all then, only they would screw it up with the remaining funds.
Director buys after announcement, and you are forced to sell, despite your view it will be a straightforward pro rata return. We differ.
Well, the „admin“ can make a big difference. If I would know the „admin“ I probably wouldn’t be forced to sell my position in the open market.
What is 'fishy' about it. They're not in a closed period. Tender offer announced, including amount to be returned. Just the admin lacking.
I thought exactly the same, this smells very fishy. But at least for the remaining shareholders not a bad sign…
How does a director buy shares when there's a shareholder tender offer pending and the details haven't been announced yet?
Clued - yes sure, that‘s absolutely possible. But they mentioned a tender offer instead of (dividend) distribution. And a dividend distribution would be very tax inefficient. E.g. in my country capital gains are tax free while dividends will be taxed as income.
That said, all speculation. I just said that instead of very complicated tender/distribution constructions discussed here before in my past experience as a private investor and also involved in a similar situation in the role of major shareholder of a listed company I see no reason why not a classic tender offer with proration takes place. Thus offer around NAV, proration, cancellation of tendered shares and then going forward (whatever this will be; RTO or final distribution).
But we will see. Because of this uncertainty I sold my position, would be a disaster for me if they make any kind of dividend distribution but I actually don’t assume so….but assuming can cost a lot of taxes (happened before).
And they speak of an initial return ( presumably just for those who want it ), so I imagine there will be another one.
But we wait for the actual tender offer, and whatever comes with it.
ie. tendered shares are cancelled, and when tender complete NAV remains at same price per share. Then a lucky dip on further return of cash, or remaining lesser number of shares in a new venture.
What is wrong with the straightforward return of 80m dollars, at NAV, on a pro rata number of shares - balance remaining in whatever happens with the shell or return as a final distribution?
But perhaps I have a flawed understanding of previous posts.
Naoma, Couldn't cash be returned as Income Dividend and the sp would fall to reflect that ?
SB - exactly. I saw similar procedures mainly in the US but that sounds for me the logic way how to deal with that.
Never saw a tender offer before where a company sets a price way below market price especially if they want return cash to shareholders. Who would tender? - I guess nobody and I also don’t know how it would be possible if the goal would be that the shareholders keep their shares (as suggested by others here) without get into tax conflicts. Does not make a lot of sense for me.
Disclaimer: I sold my whole position in the meantime but will buy again if the price gets near 8 again.
I'm hoping we get a cash payout (shares held x 6.6p) and the sp defaults to 3p to reflect the current nav. We keep all our shares and see mmx2 take off in 2022 ..... in perfect world :)
Well that would make sense, if we go for the tender offer we get an initial payment of 6.6p on every share we have and we retain approx one third of our shareholding. The nominal value of our remaining holding is 9.6p but the market will dictate that price depending on the efficacy of MMX 's use of that money (some crazy doomed project or an RTO ?) , in the event of MMX winding up the company in March 2022 we get a further and final payment of 3p per share of our original shareholding reflecting MMX NAV Not familiar with this process but it does seem to make sense H
Absolutely Naoma. I think you are suggesting the company would use the £58m tender offer cash to buy shares at the current NAV of 9.6p - meaning the tender offer would be able to purchase c.600m shares - roughly 2/3 of the current issue. This would leave shareholders with roughly 1/3 of their previous holding. So in that situation for every three shares you own the company would buy two at 9.6p. Each remaining share would have a net asset value of 9.6p.....but you will only have 1/3 of your previous holding. What price that new share trades at would be up to the market. Point being in any circumstance shareholders will receive a pro-rata shareholding in mmx post the pay-out. Does that sound right? SB
Silverblade - couldn‘t it be that they will follow just a regular tender offer to an almost NAV price but will implement proration? IMO this would be the simplest and most common way to return capital to shareholders.
All - i think you are overcomplicating matters. For starters we have not seen details of the tender offer so lets not prejudge. However, if you think the II's who effectively agreed to sell the business did so in such a way to make it difficult to extract value then that's unlikely don't you think. Your shares are currently worth c.8.5p each. The tender offer will likely offer you 6.6p for each share you own at the time of the 'initial return' - and if everyone takes up the offer that equates to the total current 876m shares using the $80m cash. IMO (and this is not investment advice but how I see it so please don't rely on this and wait for the details to be posted) - a mechanism will be incorporated in the offer to ensure shareholders remain whole following the conclusion of the offer ie you will retain, pro-rata (possibly less shares if a consolidation takes place) what you currently hold but those shares will trade at a lower price because the companies net assets will be reduced to c.$36m - and there is no certainly on how that money will be used - either a further return or used to capitalise another business looking to list on the LSE. That is different to a tender offer where your shares are cancelled outright - in current circumstances that would make no sense given that would remove any future entitlement to further distributions or ability to trade the shares. Bear in mind the reason a capital return is preferred to a special dividend is all about minimising tax - both company and individual shareholders (esp II's) . The capital return will work in a similar way to a dividend - your shares will trade lower in the same way as dividend stocks do post payout.
Ezzza - as for SJL - I am sure he will update us if he feels he is in a position to do so and I'm pretty sure his input would be welcomed here. He still holds 39m shares. The type of company mmx 'may' reverse into is likely to need access to capital - that's one of the reasons company's list - to secure funding for growth - that's why cash shells are attractive over an IPO which have costs and are often slower to conclude. SB
bit confused here, I was imagining that the tender offer would have special clauses protecting our right to receive 9.6p
but if as you say M007 if we accept the tender offer offer of 6.6p and there is no further upside because we would have sold our shares to the company how would we qualify for the additional 3p if MMX winds up next March 2022, or for that matter benefit from an RTO/ H
I think the reason why sjl is not on the bb is to do with the fact he has a big enough holding that they will be engaging with him along with the other ii.
It doesn’t mean they will necessary go with his business unless the ii agree this etc
If you tender shares, you have no remaining upside b/c you're selling shares back to the company at the agreed-to price. If you don't tender any shares, you receive no distribution. Post tender, there will be less cash on the balance sheet and correspondingly fewer shares outstanding. In other words, unless the company pays a cash dividend, you can't have your cake and eat it too.
My guess: the economics will prove better for those who tender b/c, for those who think they want to be long this turd, the opportunity to re-purchase at a discount to the stub's NAV will be ample.
Hi SB....you mention the possibility of an RTO for MMX2 but I seem to remember that before SJL went AWOL he posted a message on the BB saying something along the lines that he was going to discuss a new business idea he had in mind with TF and the BoD. In his message I think he mentioned not posting again due to a possible conflict of interest. I got the impression he was talking about a completely new venture under MMX2 but not an RTO so to speak. I remember thinking at the time how much would any running costs of a new MMX 2 venture cost on the view that this would come out of the capital they retained from the sale of MMX. A company already trading wouldn't, to my thinking, have such a "hit". I also remember thinking I would be much happier with SJL on the board than not given their 4th division performance to date (I might have been better saying Sunday League here i.e. amateur) . We haven't heard from SLJ since so if nothing was happening on his ideas I thought he may have been back on to give us his views. I haven't seen any recent postings from him and I appreciate that he may have gone off an bought a few more Bentley's and the odd Ferrari but I don't think that's his MO. Just a thought for MMX2.
Cheers
Ezzza
So am I right in thinking there’s a possible scenario here where we RTO a company that then booms at some point and the SP goes north…a lot?
Hucks - glad I can be of some help - again imo your current % shareholding will remain as is - its just the company net assets which will reduce. That said - i wouldn't be surprised if the company attempts a share consolidation - would avoid a share price in the range 1 - 2p which doesn't look so good.....SB