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Strongwoman are you an investor by trade?
If its not share you are interested in anymore @Strongwoman then why so many posts on this forum?
But I agree with you, this is no way standard a 95% dilution is a pi s s take Gary knows that’s the only terms the fca will accept, but it completely f. U. C. K. S. Current share holders in to the floor.
That’s why I’m bewildered people are still buying here, you need to time this right.
It’s already set in stone, there’s legal elements to an rns, passing on information that’s incorrect could be seen as market manipulation I.e people read the rns and make huge financial discussions based on it.(such as well at a loss).
Gary and the bod would face legal action if the figure differs I.e is less than 1/19, even thought he states that’s the minimum ( could be higher but not lower).
You’re fooling yourself.
Because its not a standard, but as soon as Gary goes into court saying that figure it will be set in stone and FCA will use that as precedent in future schemes.
Jimbo, you are the first person I’ve seen who has said that the recent RNS was correct to say 95% is standard in these situations.
In which case, the question remains, why didn’t Gary and his well paid cronies from Freshfields realise that before they proposed Scheme 1? And why didn’t FCA / judge point out that they’d missed this important standard?
Jimbo, do you think them calculations might be close to what they will offer? I'm not far off your example
I don't think it's confirmed. I believe we will have first option on a proportion but it is left vague. Indeed the 19:1 is deliberately only a minimum dilution. It's left open that it could be more!
Any thoughts on the sp before the first court date?
I haven’t checked the detail here but don’t we have right of first refusal (particularly given need for a shareholder vote)
Jimbo - I think your calculations are making the assumption that all the shares will be offered to existing holders and we can take them up and thereby keep the proportion of our holding. I don't think this is guaranteed.
Don't think I have... 500m shares in issue now, 19 times that issued, so 20x the current amount i.e. 10bn shares in issue post-dilution...
(and in any case, as i've now point out multiple times, the number of shares issued is irrelevant if you take up your rights!)
Rosie – struggling to think of many other ways to put this, let me try numerically:
Assuming 500m shares in issue now and a £13m market cap, the share price is £0.026. If you have 100,000 shares, then your current valuation is £2,600.
On dilution, the number of shares increases 20-fold (i.e. to 10bn). If a further £50m needs to be raised in the rights issue, then you will need to fund 100k divided by 500m of this £50m – i.e. £10,000 is your contribution. The market value of the company goes up by £50m to £63m and the share price goes down to £0.0063.
Post dilution, you have 2m shares at £0.0063, which are worth £12,600.
This £12,600 is the same as your current valuation of £2,600 plus the £10,000 you had to put in – i.e. it doesn’t matter that the share price has gone down, your investment does not change.
If you do not have the £10,000 to put in, then you will hopefully be able to sell your rights to buy shares to someone else – in which case, you would expect to be no worse off then you currently are (i.e. your shares + cash should be worth the same as your current investment of £2,600).
If you do not take up your rights or sell them on, then you have 100,000 shares post-dilution which are worth £0.063 – i.e. they are worth £630. Under this option, you have lost money.
Calamari:
On 1 - the whole point here is that the court is stepping in to determine what is reasonable, so that the redress creditors don't need to make decisions about things they do not understand.
On 3 - not sure I understand your point. If you don't take up the rights issue then the only way to protect your interest is selling your nil paid rights. If you just hold on to them without taking them up then you will definitely lose a lot of money!
Cookie1970 - yes I appreciate where you're coming from and that you might not want to stump up a bunch more cash. In which case, you should look to sell your rights when it comes to it.
Jimbo
Unless you’re hugely out of pocket already!
Calamari:
1. Any informed creditors should very much care what the shareholders get - the creditors are giving up their rights in favour of the shareholders here. Having worked on a number of corporate insolvency cases I have seen 95% many times as the amount of dilution of existing equity required in return for creditors giving up their rights. On what basis do you think this is not the case and that HUR is not relevant?? I assume you work in insolvency law too?
2. Yes, we really should be grateful for what we get. Hopefully that will mean a massive gain compared to today's share price.
3. The total value of your holding will be the same as your pre-dilution holding plus any additional amounts you have subscribed, assuming you subscribe for your rights and the entire rights issue is taken up (or more likely, the value of your holding increases, given that the rights issue has been successful and the business has a prospect of thriving). Yes, the share price goes down to a fraction of what it was before... but you have 20 times as many shares! You are no worse off at all.
@calamari where is it written that 95% dilution is FCA requirement? What document are you referring to?
Jimbo - great summation, thank goodness for posters like yourself and Rosie for bringing some reality to the board. Getting fed up of those who think that saying what they want to happen often enough will make it come true. It's been an echo chamber for too long, one of the reasons so many have lost so much no doubt.
I really do despair of the lack of understanding on this board.
1. The 95% is not an FCA requirement. This is a widely accepted level of dilution in situations where creditors (who are entitled to everything a company has) are going to receive a haircut. They take a reduction in their payout and in return, the shareholders (who would otherwise be entitled to nothing) potentially get some upside, whereas otherwise (ie without SOA) they would get zero. Refer to any of the recent court cases where this has been the starting assumption - Hurricane Energy was a recent example.
2. Creditors always rank ahead of shareholders. And within the creditors, secured creditors (ie bondholders) rank ahead of redress creditors. Shareholders come last. We should be grateful that we get hope value here. The question is whether, based on whatever little equity is left after dilution and fundraise etc (representing the net assets of the business including goodwill, systems, etc) the business could see a resurgence at some point in future. I believe that this is the case.
3. The dilution amounts (19 to 1 etc) should make no difference as long as the rights issue is fully subscribed. I can see no reason why it would not be - the SOA will leave the business with a small amount of net assets and so anything further that is subscribed will create positive value in the business. This business is likely to continue to generate decent margins even after having its wings clipped. As long as you subscribe for your rights (or sell them on nil-paid), you do not lose out from the rights issue and it makes no difference what the dilution effect is. Why does nobody seem to understand this?
Just got cleared funds from their calling in the sterling bonds, so now I have just a small exposure to AMIGO. Interesting times, I may look in again after any agreed transaction. The bonds worked out well for me.
So they can vote against it when the rns says if that’s the case they will wind down the company????
I don't agree with you, @Craig. First comes the court and permission from FCA to kick-start the business and only then comes the shareholder vote. Given the first two events are successful the shareholders can easily vote against the 19:1 equity and Amigo would have to put forward a reasonable proposal based on the X amount they need to raise! However, in my view before the court they have to show that shareholders are not getting any benefits out of this situation.
I expect that It’s *******s that the financier or proposed underwriters have told Gary. - shows that most won’t touch it at the moment and that the underwriters who will are robbing bastards.
BUT In a year with much of the uncertainty cleared up I expect other parties will express interest at better rates.
Currently The Whole market is a bit on its head at the moment with companies raising capital, no one’s getting good rates so that won’t help.
The FCA 95% dilution as standard practice, is this a "new term and condition" just issued by the FCA? Can this be challenged in the courts?
Ronnie, so in effect, we vote yes, suck up the pain of stumping up the extra cash, hold a bigger portion than 5%, probably similiar percentage to now if we all cough up, then we start lending, SP increases, share consolidation later, and we all still profit. Or, as the doom and gloom ones upon us say, lets tantrum, vote against it, and lose everything. I know which way I'm voting