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A maelstrom!
Bought a few more today. I think intrinsic value is north of 100p even with full (and unnecessary) dilution.
If this is carnage, how would you describe what happened in 1987 or 2008?
...considering the carnage elsewhere.
What news Monday? Why do you think there will be news? I suspect this process will take some time to resolve.
Full text...... It would appear that the board of Greenko (GKO: 55p), the Indian developer, owner and operator of clean energy projects, have been listening to their shareholders. They have now entered into discussions with two major investors to work out a compromise deal to prevent a highly dilutive share issue on the conversion (into ordinary shares) of the minority interests in Greenko Mauritius held by the Government of Singapore (GIC) (whose investment has a value of £140m), and Global Environment Emerging Markets (investment has a value of £75m). This is clearly good news as both GIC and Global Environment Emerging Markets (GEF) have the right to convert their investments (GIC owns 17.38 per cent of Greenko Mauritius and GEF owns 14.09 per cent) into Greenko’s ordinary shares from the start of July, so this issue needs resolving as soon as possible. I discussed this important point when I last updated my view when the price was bombed out at 44p (‘Catalysts for share price moves’, 4 Jun 2015). The latest news initially sparked a 50 per cent plus rally in Greenko’s share price to a high of 68p yesterday morning, albeit it only returned the price back to the 70p price level they were trading at seven weeks ago (‘Break-out looms for mobile wonder’, 12 May 2015) before some profit taking set in yesterday afternoon. My advice is to hold firm and await news on details of the compromise deal the company is trying to work out with these two major investors as there could be more significant share price upside in the event of an amicable resolution. That's because after factoring in a December 2015 year-end net debt figure of around $920m (£590m), an increased issued share capital of 329m shares - assuming that GEF and GIC accept conversion terms around 100p a share as I discussed in my article in May - then Greenko's enterprise value of $1.5bn (based on a share price of 100p) would still be only 8.5 times fiscal 2016 operating profit estimates and 7 times likely cash profits. Of course a conversion price of 100p a share is well above Greenko’s current share price, but still represents a chunky discount on the 180p level the shares were priced at last summer, and more importantly the share price at the time when they made their investments in the first place. Moreover, there is no point at all for the two major shareholders to undermine the ability of Greenko's board to progress with its expansion plans as GIC and GEF are still only minority shareholders in Greenko Mauritius, owning less than a third of that subsidiary between them. Hold.
Surely to goodness it's better selling some assets if they don't have all the cash? They seem obsessed with MWs, a result of their idiotic LTIP. That's why I worry, that and poor non execs.
Yup agree. My chap says that execs and Board are poor at this sort of thing, chairman esp so and so I really hope they have good advisors.
But I can't imagine they will want to end up with 30% of GKO particularly unless they have a buyer lined up (unlikely I would have thought). They have compounded up very nicely at 16%/18% so would guess taking a large chunk of that in cash (perhaps somehow deferred if GKO cannot pay) makes commercial sense for them.
I agree it'd be very odd for them to accept a premium. GIC is very hard nosed and won't do a bad deal. I'm hoping there will be a cash or partial cash solution that'll ameliorate the dilution. But a big premium? I doubt that.
I don't understand what's in it for the 2 funds to exercise at 100p rather than down here. They are not philanthropic corporations.
ST has an article out today this is his concluding bit:- My advice is to hold firm and await news on details of the compromise deal the company is trying to work out with these two major investors as there could be more significant share price upside in the event of an amicable resolution. That's because after factoring in a December 2015 year-end net debt figure of around $920m (£590m), an increased issued share capital of 329m shares - assuming that GEF and GIC accept conversion terms around 100p a share as I discussed in my article in May - then Greenko's enterprise value of $1.5bn (based on a share price of 100p) would still be only 8.5 times fiscal 2016 operating profit estimates and 7 times likely cash profits. Of course a conversion price of 100p a share is well above Greenko’s current share price, but still represents a chunky discount on the 180p level the shares were priced at last summer, and more importantly the share price at the time when they made their investments in the first place. Moreover, there is no point at all for the two major shareholders to undermine the ability of Greenko's board to progress with its expansion plans as GIC and GEF are still only minority shareholders in Greenko Mauritius, owning less than a third of that subsidiary between them. Hold.
Thought it might hold up rather better but guess it'll drift until news is out. Hey ho.
It was meant to be a tongue in cheek remark!
Is there such a thing as the AIM police? I thought AIM operated under a lite touch regulatory regime overseen by the Nomad and LSE - which in layman's terms means little or no monitoring.
Yes well IMO this should be trading above 70p now. Patience will be rewarded on this one good luck.
Rocket who knows where it goes to until the deal is announced. It's pointless speculating. And a tiny bit tedious!
Tree shake over looking at stabilising now. This should gradually climb towards 70p before news as the market makers now have their shares IMO
lukeskyCBG, you're surely not suggesting that AIM police look into yesterday's trading pattern, are you? Fat lot of good that will do.
Yes but the price drop whilst significant has been happening over the last 6 months. The latest drop from 60 to 40p was over the last 3 weeks. I can understand it if the drop happened on Monday and the put out a statement on Tuesday that it would have been an understandable reaction from the company to allay any fears. The management team unfortunately for us appeared to have been asleep at the wheel in dealing with this capital structure issue and investor communication on the matter. They appear to have finally decided to release a statement yesterday after much prodding from PI's like me. But someone on the inside appears to have had prior knowledge yesterday morning that this announcement was going to be released and traded in the shares beforehand.
Yes seems a bit like that. But I think it was more that the RNS was forced on them by the price movement not the other way round. The RNS doesn't really say much and I think you would normally want in these circumstances to put out an RNS to say what you have done to solve the problem. I guess people were relieved radio silence had been broken. It will be a roller coaster until that does happen.
Then there is serial rampers like Rocket79 who regardless of underlying movement in share price of the day or the fundamentals continues to up-ramp the shares on a daily basis. One has to admire his dedication to the cause
Tree shake don't let them trick you into selling up. This should be trading over 70p easily before any news.Buy the dips this is only going higher. Good luck
Distortion and market manipulation are just more hurdles that private investors face.