I am intrigued by the rationale by which the independent directors recommended continued use of convertibles? Why cannot Jim align himself with PIs..just own shares, nothing else.? Pretty simple stuff, Jim..would you Jim invest where someone else had your privileged position? If not, why shd I?
5th Feb 2015, I think..extract from rns: "The Group is pleased to announce the extension for a further five years of two outstanding Convertible Loan Notes ("Notes") that were otherwise due for repayment on 28 March 2015. The extension of the Notes, together totalling £1.71 million, of which Jim Mellon, the Group's Executive Chairman, holds £1.25 million and Rock Holdings Limited, a company connected with John Banks, a non-executive Director of the Group, holds £460,000, further demonstrates the continuing support of the Group's two principal shareholders.
The independent Directors (being all the Directors with the exception of James Mellon and John Banks), have been carefully considering the most suitable method of securing the Regulatory Capital required by the Group's banking subsidiary, Conister Bank Limited ("Conister"), both to maintain and continue the excellent growth experienced over the last three years and to take advantage of further lending opportunities. Although Conister enjoys high levels of liquidity from customers' deposits, this liquidity must be underpinned by its own separate capital on the basis of a ratio as directed under the Isle of Man banking licence. As a result, and having considered other methods of raising capital, the independent Directors have resolved, following negotiations with the lenders, to extend the two Notes for a further five years to 26 February 2020 at a reduced interest rate of 6.5%, down from the previous 9.0%. All other terms remain as those announced on 2 March 2010.
IMO the SP should be around 14p even after using a fully diluted (including all warrants and loans) 200m for the number of shares, using 2015 profit of £2.3m and a market sector average of 13. But as always please Do Your Own Research ("DYOR") and please check my calculations. Something else worth considering is that the Directors may of course wish to defer the date of maturity on the loans with a reduced rate of interest as JM and SR did on 26 February 2015 but again please DYOR.
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