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That is a good summary GruffJ. It is hard to read the intentions of Seafox, when on one hand they said no increment to the 10p, and then they buy 9% for 22p. Perhaps their play now is to hold 30% and get a seat on the board and push for some sort of merger with Seafox. Just playing the devils advocate here - wouldn't mind selling at 22p and would welcome the bid. Or perhaps them and Perella Weinberg underestimated the shareholder pushback on this
On the bid side, they can only make a bid within 6months under the following scenarios:
1. with board's blessings - rule this out
2. third party bid - possible, but a very likely scenario
3. 'whitewash' proposal - guess this is the rights issue or strategic investor coming in. My personal view is that they would try to bring onboard an investor at 20p or so, instead of doing a rights issue which would be very dilutive (they want to raise USD 75m i believe) at current prices
4. material change of circumstances - perhaps the bank debt agreement. But this would be linked to a rights issue or a strategic investor coming in at a higher price
Again, the 29% stake gives them some power on decision making I would think.
Also it was Belhoul who said he would not consider below 20p, and it seems that he has sold his shares in the last Seafox trade (number of shares he disclosed matches almost 100% the shares bought by Seafox)
Thanks GruffJ, the info/explanation is greatly appreciated and is definitly food for thought.
This is my understanding (happy to be corrected). Their offer would have to be as a minimum the highest price they paid in the previous 12 months. At the point they trigger the 30% holding threshold there is a mandatory offer rule. The issues they have is there "no increase" statement and then no intention to bid. However, there is some semantics in language to be aware of, plus the take over panel rules allow for an offer to be made if a number of criteria have been breached: GMS board approve (unlikely to happen), a counter bid (possible) or a substantial change in circumstances in the company. It is the latter one that I personally think Seafox are holding out for. The BOD have highlighted this month end to announce the new banking and debt arrangements, which IMO would be viewed as a substantial change in circumstances and open the door to another bid. The BOD are therefore in a tricky spot, as they need to sort the debt out, need the share price to rise for a capital raise, but then are at risk that major holders would sell at the 22p level. For those of us that have felt the pain of a significant mark to market loss on this name over the last 12 months, 22p becomes interesting!!
GruffJ, excuse me for asking but I am a newbie and am still learning the ropes here.
In the event of a takeover by Seafox ( or someone else), does it mean that they have to offer all current share holders 22pps for their shares in the hope that enough of us agree to sell for the t/o to go ahead?
I think Kasamar specifically noted a 20p or above pricing point that they would sell at in their letter of support and they held 9%
It would certainly be good to find out who the sellers were, and if they had previously written letters in support of the Board.
Seafox’s % is going up (latest notification 29.14%) while the % in support of the Board may now well be dropping again.
Its a bit odd that we don't know who the seller is....9% bought at 22p. They can make a bid within 6 months only with the approval of the board, or if someone else makes a bid.
It looked like the trade was cancelled, but as it was off book it was reported to the exchange twice by both the buyer and seller, so it looked like a cancelling trade but wasn’t.
Someone mentioned in the forum that the trades from Tuesday at 22p were reversed. Couldn't find this data though......also doesnt make sense in light of the disclosure today
Seafox made the "no intention to bid" announcement last week, which means they can not make a bid for 6months (except in certain circumstances, which I am not aware of what they are). But these are large blocks - so who is the seller?
that purchase takes them to 29.1%. 1% more and its a mandatory bid. Seafox still haven't made a formal bid so there are no waiting times for a Formal Offer as far as im aware.
"Accordingly, if Seafox were to make an offer, it would not able to make any offer above this price"
"IF"
Can somebody explain to me why when you have this activity going through at 22p with Seafox rapidly approaching the 30% mandatory threshold people are selling with a 14p handle ? I must be missing something......
Indeed - at 12:07 today.
Getting interesting !
9.6 million share purchase at 22p.
The "material change in circumstances" clause is a key one I think. If GMS sign the debt restructure deal this month this would be a material change in circumstances in my opinion. Hence, open the door back up for Seafox. So I expect them to increase their position up to the 30% threshold by then.......
So SeaFox did buy another 6% on Tuesday - that’s the 22 million shares.
(Source - TR-1 issued this morning).
My opinion - “No intention to bid” formally killed off the offer period during which they had said no increase above 10p.
Buying now is outside the offer period.
If they go above 30% holding they HAVE to make a mandatory offer to buy the remaining shares (mandatory on them to make the offer, not mandatory on shareholders to accept the offer).
A mandatory offer has to be at or above the highest price they paid for shares in recent months (can’t remember if it’s 6 or 12 months).
So my opinion is there will be further small buys from SeaFox followed by a mandatory offer at 22p.
Watching with interest!
Hi Folks, looks like we now know who purchased the 22m shares in the off book deal on Tuesday.
The TR-1 notice this morning states that Sea Fox has increased its percentage holding to 26.41 from 20.37 with 350 million shares in issue, 22 million shares is just over 6% - roughly the increase in Sea Fox's holding.
Assuming the 22p per share was correct, then how does that square with their 10p no increase previous offer which has some 2 months left to run??
Nemo
Agree with Amtech. Reasonable price would be 20p with the current EBITDA levels. But given the highly levered nature of the company, any improvement in EBITDA will be extremely positive for equity.
You’ll find out before the month end what the restructuring will look like, and whether 30p will be achievable. I can’t see it myself though when revenue is a quarter of the debt pile, the syndicate hold all the cards. Especially as all debt covenants where breached hence the roll over of those covenants until the end of the month.
Frankly, if agreement is reached regarding this company's debt restructuring. This share has 30p written all over it!
Again, great advice. Im generally not a greedy person so will more than likely take back my initial investment from a couple of my options. A life changer would indeed be very nice however, I am not expecting to make millions (not yet ).
I have bought 10 different options, 5 main which are all doing very well at the moment although, I know that is mainly down to the fact that they all dropped significantly due to the pandemic and realistically, should go back up in value. I also have 5 smaller interests which are collectively, running at level £ for now. It wouldn't be a major issue if the smaaler ones drop in value as I view them as an ''interest'' punt that have an outside chance of a small profit.
Where do you see the trade reversed?
I’ve found that the trick in this game is not to be greedy and be happy with a profit. The life changers are few and far between but the slap in the face is hard and often. Just my take on things, good luck with your investing.
Amtech, that makes perfect sense to me after all, who doesn't like a no risk, free ride!! I will give your advice serious consideration once/if the price gets to 16p but, the gambler in me may just win the fight !!
Thank you for the detailed reply, it is all very helpful (noted) advice.
Once the shares are bought, I suppose it's knowing when to cut and run that is the key to this whole process?? Im sure I will win some and lose some along the way however, thats what makes it exciting!!!
Whatever profit you are happy with would be my answer. Id of also sold the 7.67p shares by now to get my initial funds back and left the rest to ride it out for free. Everyone carry’s a different bag though so only you can decide.