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LL,
The other aspect is voting rights - a party may support or reject a takeover. The CLNs don’t carry voting rights, they only do when converted.
Depends if they then sell a load lol ...... which indeed would be strange with the timing? but not impossible... so I dunno I'll go with the positive of them now possessing more scancell shares thereby increasing their overall holding % though no idea why they felt the need right now... looking forwards to the pre AGM presentations.
Indeed:)
I agree many good posts, hard to see how this can be a negative, as we get closer to the AGM............
GN
It is his new 'safe place' :)
Not knowing too much about the technicalities and what can be read into these conversions I think today's BB has been informative from all sides ... all we have at the moment is the fact vulpes has chosen now as their time to do it...
Bermudashorts, thanks for that. Good to see you posting here ATVB
LL,
I'm not absolutely sure what you mean, but I think you're asking how the CLNs would be treated in the event of a takeover by a 3rd party. I believe sometimes the terms at outset specify exactly what would happen under these circumstances, but if not, then I assume that it would very much depend on the takeover price. If the cash being offered per share was higher than the conversion price, Redmile would convert prior to the sale and receive full cash payment alongside the rest of its holding. If the price was lower then I guess they could decide to allow them to continue to sit as a debt and the existing repayment terms would apply. I'd guess that in the vast majority of cases, they'd be converted prior to the sale.
Hope this makes sense and answers the right question.
BS, C7, Ivy, etc, Do you know if "CLNs" counted as share if there is a takeover deal? Apologies if this has been asked and answered; I know I'm late to the chat party today - busy day. ATB
Stakis, I agree with your post, makes me think we will get more news around the time of the AGM, as Vules seem very keen to increase their holdings now.
Think there's a bit of a time warp going on with this board!!!
Bermuda ignore my last post - found reference to it.
So, who knows what the reasons are for such a quick conversion? I felt negatively about this at first but on reflection my best guess is that Vulpes are using this as to acquire further shares in the open offer at 13p and see this as an opportunity to maximise capital growth - a positive move then?
Jesus - not sure what's wrong with this site today - my first post just disappeared so re-typed and now the original has suddenly appeared. Hopefully they both say the same, please ignore one or the other or both if you wish!
Stakis - The full terms of the CLN's are laid out in the circulars posted on Scancell's website (under 2020 Captial Raise section). You'll see that no interest is payable to Vulpes or Redmile on the 6.2p CLNs but Scancell must pay 3% per annum in interest on the £17m @ 13p.
Ruck - I have no idea why the conversion price is 6.1p other than all the documentation states that the 6.2p is subject to customary deductions. So perhaps it's a standard deduction?
AB124 - agreed, no doubt we all have our own ideas but as you say time will tell.
Stakis - The circulars for both the July and October fundings outline the terms of the CLNs. You'll find the link to both documents under the 2020 Capital Raise section of Scancell's website. In short there is no interest payable to either Redmile or Vulpes on the 6.2p CLNs but Scancell must pay 3% per annum on Redmile's £17m at 13p.
Ruck - I have no idea although I notice all the documentation states that the conversion price of 6.2p is subject to customary adjustments. So it's either a standard deduction or it's a mistake.
AB124 - agree, it's almost impossible to second guess Vulpes reasons and we don't even know if they're related to Scancell at all - could be some sort of internal issue that has prompted the conversion.
Konar,
They haven't lost 1p though. If I buy something at 6p and sell at 12p I've made 6p. If I reinvest that at 13p I may end up losing 13p depending where the share price goes or it may double or treble in price in which I make a profit. But until I sell those shares I don't know if they've made or lost money. The one thing you can say without doubt though is that they've made money on the shares they bought for 6p and sold for 12p (if they do this)?
Equally they do have form for selling and making a quick profit in the not too distant past (which took the shareprice down).
This is a silly discussion really though as at present we really don't know. We don't know why they've converted to shares now, we don't know whether they will sell any of those shares and we don't know whether they will be taking their oo shares.
I'm guessing if they do start selling we're notice soon but hopefully they don't.
The point I was trying to make earlier though was I'm not convinced converting now is necessarily a positive which a lot of posters seemed to be saying/implying. We really don't know at present but fingers crossed it is.
Bermuda - not saying you're wrong but I can't see anywhere detailing what the rate of interest is on the £1m CLN's that Vulpes had. Where did you get this from? I note that Redmile also took £5m of CLN's at the same time - presume these are also interest free? (NB Redmiles subsequent CLN's are earning them 3%).
Bermuda,
"The 6.2p CLNs are interest free"
So what gives with the 6.1p purchase price rather than 6.2p?
It seems to me that Vulpes' conversion of their CLNs gives them flexibility to do what they wish with their entire investment in Scancell.
They consolidate their voting rights, move from an illiquid asset and have a freely transferable shareholding which can be moved to any fund they maintain present or future.
Whether it's significant at this stage only time will tell.
Vulpes may have preferred to have invested the money as shares but the possibility of Vulpes gaining 30% of Scancell was real at the time so they agreed to have CLNs instead. That possibility has receded now.
moonparty -
The 6.2p CLNs are interest free. Not sure it takes you any further forward but Vulpes don't lose any interest payments by converting.
Moonparty,
It does look like they have made some interest even selling so soon.
Moonparty,
Sorry, posts crossed again. Shows we are thinking on the same lines though!
I don't get it. Why is this positive?
Vulpes can convert any time they like at 6.2p. (BTW, this latest CLN was done at 6.1p I can't explain that either)
They have absolutely nothing to gain and could lose (unlikely) if the SP dropped below 6.2p. I suppose you could argue if they bought at 6.2p, sold at 14p and it THEN dropped below 6.2p they would be quids in. If that's the tactic, this is a negative not positive.
I suggested (as did moonparty) that it was to secure voting rights. This reduces Redmiles's holding from 25.48% to 24.91% and increases Vulpes holding from 13.38% to 15.31%.
Thinking about it, Redmile could easily nullify this by selling some of there own CLN's and getting back above 25% (but keeping lower than 30%)
Look out for an RNS tomorrow. Either way, somethings afoot!
Konar, something still doesn't add up - why convert now? They effectively have the shares at 6.2p via the CLN, they can convert at any time and they get the interest payments until they convert. There's no financial gain for converting now unless:
- they intend to sell come
- they count towards OO
- something that we don't quite understand to do with voting rights
Anyway, we're going around in circles now. Take your choice from the above, or possibly:
- some skullduggery that we are not aware of
KonarA that makes sense to me...cheers! So likely is more a positive sign than a negative one...
@Chester18
"Which ever way you dice it the only reasons to convert at this moment in time must be positive."
that's the way i see it. They could have left the CLN and never convert to shares. The fact that have converted to shares is because they think that is worth more, be it in the short or long term.