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Rox - Poker and I, and all those who took up their entitlements in full, own a smaller % but of a bigger pie (as Batfasted put it). We've been arithmetically diluted, but not economically diluted. Of course, the effects of the capital raise have since been swamped by the drop in the SP - but it'll come back...
Poker do you think you own the same % value of the Company in Shares now as you had before?
If so then we are going to have to agree to disagree!
Thanks Pokerchips - I should have said "First Firm Placing".
Rox
I understand your point about SRH and the effect of his placing on possible dilution.. and Pianista makesa valued point on the effect of SRH paying an over market price of 27p ....but ..as I suggested..dilution is about % holding in a company before and after such fund raise...and as Batfasted has posted the % dilution effects from the prospectus ..I have made sure that I have increased my holding by the % indicated in the prospectus, and therefore haven't experienced dilution.
The point I think you are making is that the actual number of shares offered to holders at 12p in the fund raise wasn't enough to provide that % indicated and as such a top up would have been necessary , from the market...which many people have done
Interesting points being made getting to the bottom of it all
Hi Bat & Pian
We are all on the same page here and need to work together to make sense of everything and also help others so all is good.
A) Shares BEFORE Dilution.
1,122,003,328
B) 5 for every 9 Open Offer
623,335,182
C) Sir Roger Firm Placing.
348,583,026
D) Total New Shares
B + C = 971,918,208
E) Total Shares after Placing.
A + D = 2,093,921,536
Sir Rogers Firm Placing was completely New Shares and are 16.6% of the total Shares after Placing so everyone is diluted by this regardless of how much the Company is worth at any given time.
The Company hasn’t increased in value by the £60M he paid for them because it was diluted by a further 348M shares!
Pianista
Sir Roger De Haan subscribed for 348,583,026 New Shares in the Firm Placing and is also subscribed for 204,250,307 New Shares in the Placing and Open Offer, and, as a result, from Admission holds 26.40 per cent. of the Enlarged Share Capital.
Applications was made for the 971,918,208 New Shares (pre consolidation)
Ref RNS Number : 8851A 02 October 2020
Batfasted - I see you made a similar point to my last post at the end of your last post.
Rox - the Firm Placing to Sir R was only 224m shares (not 350m), for which he paid 27p, ie well above the SP at the time. This was not dilutive therefore, it was the opposite of dilutive ("concentrative"?). Although it gave existing shareholders a smaller % of the (increased) number of shares, the value of the company increased by £60m, ie the money he put in. The net result of these two factors was an increase in the value of existing shareholders' holdings.
Hi Rox
You say that the clever City people tried to hide the dilution. However the facts relating to dilution were set out in the prospectus as repeated below. The figures provided in the prospectus are correct and differ from those that you posted. I am not trying to be argumentative but only to help with the facts.
Dilution
If a Qualifying Shareholder who is not a Placee does not take up any of his or her Open Offer Entitlement, such Qualifying Shareholder’s holding, as a percentage of the Enlarged Share Capital, will be diluted by 46.4% as a result of the Capital Raising.
If a Qualifying Shareholder who is not a Placee takes up his or her Open Offer Entitlements in full, such Qualifying Shareholder’s holding, as a percentage of the Enlarged Share Capital, will be diluted by 16.6% as a result of the Firm Placing.
I think we are are all aware that there was dilution of our original holdings. This is an obvious consequence of a share placing. The fact that the placee paid over the odds for a large slice of the Company was a benefit to the Company and should be also a benefit to other shareholders IMHO. They own a smaller proportion of the pie (dilution) but the pie is bigger by virtue of the £140m capital raised.
Hi Pianista I can explain the reason for that - with the help of the table.
You are not going to like what I’m going to say but Selecta will vouch for me I’m a good guy!
Ok
The Mcap was averaging around £160M for the couple of months prior to the Dilution.
At the new £1.80 the Mcap was £250M which the Market clearly considered too high and is walking it down IMO back to what it was before the RI which is around the £1.20 - £1.30 mark which I think is the bottom.
Hope this helps.
This share will explode with the slightest bit of good news which is why I am loading up.
Pokerchips
Not true I’m afraid.
Every single person has been diluted by 17% if they took their full allocation of shares issued and considerably more (60+%) if not.
This is because “Sir Rogers” Firm Placing of 348,583,026 (almost 350Million) shares are new.
Try not to shoot the messenger guys I’m on your side but all of this has been hidden intentionally by the clever City people!
Your comment about dilution, Pokerchips: I agree with you, although there are some on this board, I know, who would disagree. In my case, in order to avoid any dilution at all, I simply took up my full allocation of the 972m-odd new shares issued.
The SP dropped slightly by a predictable amount when the shares went ex-offer - which of course you can claw back by taking up your full allocation of the discounted shares - but the more recent precipitous drop from c180p was not directly attributable to the capital raise, and is more difficult to explain. All I know is, as a result, I along with many others have not been able to avoid any "capital erosion" - for the time being.
RoxburyHouse
Share dilution only occurred if a shareholder did not maintain the same % ownership of the company after the fund raise as before ...if they hold the same % now as before the fund raise they have suffered no share dilution.... now..whether the capital value of their investment as fallen as a result of the large number of extra shares being issued and priced at 12p (old) and the market share price reacting to that, well that is a different story..that is capital erosion, but it isn't dilution...
Thanks for that reminder Pokerchips and I agree. I do tend to get bogged down on the past sometimes it just frustrates me when I see messages stating you simply divide the current share price by 15 to get the old as if the share dilution of an additional 900M shares never took place!! Increased my holding again today.
zccax77
yes...now we have to add in the second ship into the figures we have ...good point...but again this is long term finance
RoxburyHouse
Personally I wouldn't get too bogged down in the mechanics of the consolidation and fund raise or you are in danger of making it all more complicated than necessary.
I just measure everything against the H1 report myself and that is that ... the current number of shares and the balance sheet figures are all that I now need , really...and mindful now of the travel cash burn (£6-8m per month ) and how long that might last, which is a key figure to bake into the figures
The share price is very sentiment based at present and overly sensitive to current media data, for obvious reasons ...IMO
They took delivery of the second ship in the last 30 days, so you can add another 275m to the credit side of the balance sheet and 330m to the debit side.
BTFAITH
"so they have around £60 million in cash in the bank at present" - CORRECT (£28.8m at H1 + £36.4m net fund raise )
...including the £140 million - CORRECT ( £100m went on short term debt repayment)
Are long term borrowings around 450 million now then instead of 600 million? - CORRECT - £454.8m
Corporate Bond of £250m due May 2024
Ship loan of £234.8m due June 2031
Term Loan of £70m - due May 2023
Sorry about that. This should make more sense.
“ The £140M equity raise is intended to improve the Group's financial position by reducing the term loan from £134m to £70m and repaying the drawn £40m of revolving credit facility, with the balance of proceeds raised increasing available cash by around £36m.”
#£140M Lol Confusing myself now.
I do genuinely believe all this 5 for 9 and 15 Consolidation is just dreamt up to confuse everybody I really do.
"but the £740M is now £36M."
sorry RoxburyHouse ..but what does that mean ?
Interim Results RNS
“ The equity raise is intended to improve the Group's financial position by reducing the term loan from £134m to £70m and repaying the drawn £40m of revolving credit facility, with the balance of proceeds raised increasing available cash by around £36m.”
All good news of course but the £740M is now £36M.
Fantastic poker chips you really know your stuff. Think that regulation provides a lot of security as we will have sight of finals and 2021 interims by the time the period lapses. And more importantly a year to get cruising again.
Thanks pokerchips so they have around 60 million in cash in the bank at present including the 140 million plus the existing cash as of feb 2020 of 95 million.
Are long term borrowings around 450 million now then instead of 600 million? Many thanks