The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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They said they will raise £300M (debt and equity). We know they have £100m debt already available(the unused downsized securitisation facility. So I am assuming new debt of £100M and new equity £100M. They were asked how much the equity raise would be but declined to answer but this is a fair guestimat and it makes sense. A lending book with a 49% APR , the new business will be lower, lets say 30% but in any event that can support a 2:1 debt equity ratio.
When will details of SOA2 be made public and will it have to include full details of the RI?
Read the FT article. They have said the rights issue is a year away
This sp will go nowhere but down as market is thinking its a £100M raise at minimum given what they said. Their ambition needs to be reigned in because you are right the current shareholder base cant provide that sort of funding so the result will be you will loose your shareholding if you cant follow your money. Given a current market cap of £38M and a £100M raise that would mean shareholders putting in 2.6x the value of their current holding to avoid dilution. So if you had £1m invested you would have to re-invest another £2.6m. This is clearly nonsense for existing retail shareholders and hence the importance of the message to management to scale back their ambition with the first funding. Its so onerous to existing shareholders its a joke. Its like the joke on Amigo is insolvent. Amigo looks insolvent because they have hit reserves with a £344M claims provision to leave a net -£117M equity. Out of this £344m they said the numbers include an expectation of using £270m in cash. In SOA1 they offered £15M upfront and some further odds and sods. No wonder they were kicked up the backside and told to go and get serious. They were taking the **** and got exposed as chancers or incompetent I dont know which. I think incompetent as GJ seems like a straight shooter but financially he is way out of his depth. Now its time for shareholders to give them a reality check and threaten them with litigation if they go ahead at £100M
If the RI is a year away how does the sp behave in the meantime...presumably a day trader's paradise?
so what if its a year away, nothing will happen for 5-6 months and it still leaves the prospect of a £100M raise. Who in their right mind is going to drive the sp up with this coming for a co worth £38M and 2 FCA investigations ongoing. This is like a dingy becalmed in the Atlantic and will go nowhere, up down, up down going nowhere.
Senator - why are you looking at the SP as a valuation of the business? The SP does not reflect the value of Amigo if it is a going concern with a forward looking business. Remove the prospect of insolvency and what do you think the value and SP is?
Insolvency isnt the issue. It wont be let go but current shareholders can still loose 80-90% of their investment so thats a pointless exercise.
Rights Issue wont happen until
- FCA agree SOA2
- Court agrees SOA2
- Lending then allowed immediately
Then Rights Issue.
The SP WON'T be 8p after above - more like 40p/50p
Please watch the webcast and
Just use it for what it is buy low sell high ( but don’t hold to long) I bought a little today, but I don’t believe in the stock at all, it just has a big following ( no real future yet as we’ve heard nothing about new products ect) I don’t think they will ever lend again?
But no doubt the usual dreamers will pump money into it, just ride the volatility .(and hope you dont get caught in to late)
So presumably SOA2 will have to include a RI, say of £100 million....but BOD can wait until lending has restarted and share price is 40 - 50p....therefore, at a price of say 33p aprox 300 million new shares would be needed with the share price settling around 40p as the future is secured? Simples...think I'll hold. :-)
Insolvency is the issue Senator as you raised it effectively by suggesting a fundraise will be pinned to todays SP which is only there because of the threat of Insolvency. With a line drawn under compensation and insolvency off the table, what value then? 100M in the Bank and a green light to relend, what would the SP be?? That is the correct question to be asking and the answer is vastly more than 8p I can promise you that. I believe as we build toward the prospect of a resolution, the SP will rise to reflect the scenario not of insolvency but of a trading business and the traders will jump on this and pump it up as before. Worst case there will be windows of opportunity even if you think inevitably it won't work out.
Freekick - When we go to court to propose a restructure and a commitment to put X into the pot that will of course only happen on a sanctioning. I think the fundraise will already be organised to happen straight after so creditors can get paid. I assume this is the plan. You can't raise funds before a sanction hearing as amigo is uninvestable until then, so I can't see how it can happen any differently. We won't know the level of dilution or what the SP basis is beyond knowing as this all inevitably build up, that 8p is a F!in beautiful bargain. Oh to have spare cash.
Senator (Vauxhall) needs to look at the future and become a Vauxhall Lotus Carlton. They can't put forward a rights issue as NOTHINH like I say NOTHING has been AGREED.
Rights issue has to come after SOA2 agreed by FCA (bang price goes up), goes to Court (banh price goes up), Court agrees to lending and SOA (price goes up again) THEN and only THEN will they have discussion with JP Morgan / Goldman Sachs what price to put Rights Issue.
Please DYOR. You wil NEVER EVER EVER get these shares at THESE prices EVER AGAIN!!! DUH, DUH DUH.
So many stupid crayon eating window licking muppets on here today. DUH!!
Could it be beyond the realms of possibility that after 8 weeks of negotiations with the FCA that they have said "This is the deal, take it or leave it!"
We all know the FCA play hardball, why might it have taken so long to say yes or no to the second SoA? There won't be a third SoA, so this is it. The FCA have made it clear they don't care about the shareholders.
So have AMGO been put in a position by the FCA where they have no choice but to implement what the FCA want to survive? At the end of the day it is totally up to the FCA to make the decision.
AMGO have no choice but to do what the FCA insist. Comply or insolvency!
In the meantime, we as shareholders have to decide what we want from this. I've decided what I am going to do. I don't have the funds to take up the RI and I don't want to be in this for another 4 years after first investing in March 2020. So I think I will be getting out prior to the RI, fingers crossed the sp will be kind to me. My average is 11p so I think it'll be ok.
It's been a roller coaster and like I've said before, you don't need to be holding millions of shares to have balls of steel. It's been crazy for all of us LTH's.
Good luck Amigos.
Am I right in thinking that if we have rights under a RI, we can sell them (assuming someone wants to buy them) if we aren’t looking to invest further whilst holding on to our existing shares? ie we can remain invested and potentially cash out without diluting our total position (cash + shares)?