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I assume they will just muscle through their offer of 10p per share now?
8.72 GBX +3.12 (55.71%)
11 Nov, 09:28 GMT · Disclaimer
Now that Seafox control the BOD, let's see what capital injections are available to resolve the debt issue. I expect to see a number of RNSs over the coming days as they look to firm up the balance sheet in advance of some form of takeover early Dec.
Thought that SF and friends were only 49pct of the company, but the votes today for the new board was 60pct of the shares! Did SF convince more institutional shareholders or do they have more than what they report? If its the former, maybe a deal cooking?
I like how GMS is in a privileged position of being able to announce results of a general meeting the day before the vote :)
Some decent selling pressure today following the Friday bounce.....
Malcy says this today:
"My own view on the Seafox activity is less charitable. As I understand it, on Monday, Seafox with its 29% holding, along with 2 supporting shareholders in Mazrui and Horizon, will remove the entire board and replace it with three directors who have never sat on a PLC board before.
I cannot understand how a company listed on the London Stock Exchange has not received the backing from the appropriate authorities. ‘The Panel on Takeovers and Mergers (the “Panel”) is an independent body, established in 1968, whose main functions are to issue and administer the City Code on Takeovers and Mergers (the “Code”) and to supervise and regulate takeovers and other matters to which the Code applies’.
I would contend that the GMS affair, as it will surely become known, is potentially one of the worst abuses of corporate activity in the history of the LSE. The very fact that right from the beginning this, what appears to be a concert party, has been able to act unchallenged in this process is a mystery to me and I’m sure others…"
Don't hold here (used to) but very happy to read that RNs, I want Gms To give a long term "up yours" to those clowns at seafox
Very positive RNS; all the more so considering the challenges of oil price and COVID etc. I feel it likely that were Seafox to have stopped it’s disruptive practices in pursuit of its own agenda, remaining SHs would be seeing a very different SP right now......
https://www.bloomberg.com/news/articles/2020-11-03/billionaire-has-no-regrets-about-pulling-his-money-out-of-banks
Article on the Man Capital guy, the guys behind SF. Seems more like a PR type article
Administration vs. Massive dilution, one would think there is 26pct shareholding (i know atleast 10pct) who know that SF has more to lose from an administration, and could demand better terms. This is a complicated one
@4C - Indeed they would need shareholder approval, but I imagine if that is the scenario, they would easily get approval. If I recall correctly, they would need 75% shareholder support but faced with the alternative of administration, they would easily get the shareholder support. It might all be bumping up against the 31 DEC 2020 "deadline" but with a path forward clearly set out, it would just be a formality for the banks to extend by a month or two to get it all closed and funded.
It would also mean Mazroui and Horizon injecting capital of $15m to maintain their % which I am not sure they want to do. They can ofcourse inject capital at a higher valuation (i.e. less dilutive terms for e.g. at 22p) and making it easier for anyone to maintain same ownership levels.
Not sure how they could raise 75m from anyone without a shareholder approval. However, if you remember, one of the agenda at the AGM was to give the board the power to raise capital without getting shareholder approval. Perhaps they will go this route once the new board is in.
The result of today's vote was of course signaled two weeks ago so nothing really new in today's RNS. My overwhelming hunch is still that SF and friends are forcing the company into raising the $75m from themselves and/or some other sort of similar transaction e.g. reverse merger. That wouldn't be ideal for other existing shareholders as it would be at a dilutive valuation, but so would raising $75m through the traditional rights issue process. All still better than the administration scenario and we would still have exposure (albeit diluted) to the recovery story. Of course, one can mitigate that dilution by snapping up an implied pro-rata amount of shares once SF's intentions are clear.
Personally I dont see anything encouraging in the RNS release today:
"On 8 October 2020, the Company announced that as a result of Seafox International Limited's recent actions, having taken advice from its financial adviser and having sought feedback from its corporate brokers, it is currently impracticable to proceed with the Equity Raise and that, therefore, there is no reasonable prospect that the Equity Raise can be completed prior to the end of 2020.
In the absence of the Equity Raise, and if the Warrants are not issued by 31 December 2020, the Company will be in default under its bank facilities. If the Lenders enforce their rights, the Company could be put into administration and shareholders could lose the entire value of their investment."
I think (and hope) they have just been causing disruption to stop the board turning the company around and completing the equity raise. If the BOD had been free and focused to do so then the share price would be north of 30p and SF would have to bid considerably more given the positive platform the BOD would have created. Whereas now, if they bid 22p a lot of shareholders would sell through boredom !!
Also this assumes that Mazrui and Horizon (who have been voting with SF and are roughly 20%) will benefit elsewhere with SF to the tune of 22p/share (if they are not dumb, they would have asked for more). So that leaves screwing the remaining 50% of shareholders to drive the company into bankruptcy to pick up assets on the cheap that you are not sure of? Possible, but odds are low
Along with what AA2020 pointed out, the other options are:
1. Renegotiate with banks to avert bankruptcy (banks already said no, but that will always be their stand) . In this case, frustrate existing shareholders and they come back and bid at lower price in June 2021. In this case, you should also assume that nobody else would come and bid for the asset at a higher price before that :)
2. Reverse merger with SF creating a stronger company (why wasn't this presented to the board already?)
3. Buy out remaining shareholders at 22p
4. Capital raise from SF at dilutive valuation (again they have to compensate/pay Mazrui and Horizon elsewhere)
5. Hope and pray that ADQ crashes this party
If you know the outcome, you will either sell down completely, or load it up to the hilt
Gruff, you possibly have a better idea of how many sharks might be circling in the water around GMS and I truly hope you are right when you hope for something sensible to be the outcome. Personally I've seen very little sense in what SF have done recently (e.g. hokey kokey with the board). I've sold my meagre holding for a small loss, but will continue to watch with interest.
Potentially a risky strategy, as they would not be the only interested party in the asset sale, plus they would lose their equity investment along with their co-voters, who apparently are voting completely independent of each other!!! Sure.
I hope they come up with something sensible at the end of Nov and we can all move on. They're just too disruptive for this to be the BOD turnaround story I had hoped it would be 18 months ago.
I suspect SF will be happy to see GMS fall into the hands of a liquidator and then pickup the assets / business commitments for peanuts. I have to say the way that SF have handled this leaves a nasty taste.
27th or 28th November I think
Anyone remember what the date is that SF are free to put in another bid? Assume they want their people on the board in advance of this date - if bidding remains their strategy that is
50.2% of outstanding shares voted against the warrants. Next one on board changes is on the 10 November.
Will they call another General meeting to reinstate Heikal onto the board? SF is keeping board/management busy by calling general meetings :)
Agreed that it was the SF shake up in 2019 that lead to the mgmt changes - I did vote for them last year to get them on the board.
However, their moves this year have been nothing short of hostile, opportunistic and predatory, and intended to cause 'disturbance' as you rightly said. If they can add value, they haven't made it clear it will be for the benefit of everyone. Rather, they are keen on snapping up GMS or its assets on the cheap to add value at SF.
Will be interesting vote on 10 Nov. Mazroui & Horizon hold the trump card
@4C - in terms of why the 2 SF reps resigned from the Board (with one requisitioning within an hour to get back on), it's difficult to assess. But one has to assume it's part of a rational tactic and strategy. I suspect it's either to cause further governance disturbance (as GMS has itself postulated) in order to make it more difficult for GMS to raise fresh capital (...except of course fresh capital from SF). Or it might be for some procedural purpose to make it easier to raise fresh capital from SF (e.g. by possibly reducing some of the conflicts of interest, making it relatively more "arms-length", etc.). Either way, with SF indicating they will not support the issuance of the warrants, I think what is going to have to happen over the next few weeks is SF and GMS are going to have to get together around the same table and finally have some grown-up, sensible negotiations on the path forward. I think MAN Capital and SF are clearly in the driving seat now, although GMS isn't completely powerless. Everything I've read and come across about MAN Capital and the Mansours suggest they have a somewhat different style than your classic, ruthless, short-termist, a**hole private equity players, so I suppose that is positive, but then again interviews/public info can be deceiving.
More broadly, I do think SF have value to add to GMS. Kudos to the GMS management for turning around the business and cutting costs, but more can still be done and it was achieved by GMS partly only by the prodding of SF since early 2019. The OSV market is fragmented and a tie up between SF and GMS would make a lot of industrial and financial sense and deliver some juicy synergies. The market needs consolidating, which would in turn (and in time) bolster day rates. Better yet would be a three way tie up between GMS / SF / Zakher Marine.
Also, thanks for the .kvk.nl link. Agree, I wouldn't pay any money for that, especially as I suspect it would only have various subsidiary level documents (less useful) rather than the more useful group consolidated accounts which, as the company is registered in BVI, are publically unavailable.