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So for the removal of all doubt, in case anyone is interested.
Yesterday IDE had 496,702,792 shares in circulation at 0.7 GBX & today after a 100:1 split that 'would' ordinarily mean 4,967,028 shares in circulation at 70 GBX.
However, after all the loan conversion shenanigans there will actually be 21,725,449 shares in circulation.
Or putting it bluntly - if you previously owned 1% of the company, you now only own less than a quarter of that.
Sure, the price has gone up & the value of your shares 'should' be the same monetarily, given the debt conversion. But I do wonder given the price was so low per share if this split is partly to reset the share price higher, disguise the dilution, and give the price further to fall without a layman noticing too much.
Driving the price lower (given the percentage shares Mxc holds) would be quite easy now, meaning their takeover could be priced attractively against a considerably deflated price from 70p.
Hopefully IDE won't approve any additional borrowings from Mxc that could be later converted to more equity. Given they own most of the company now, there should be some regulation to prevent that from happening - else it would just be giving them a licence to print their own money.
Once again, those cowboys of the AIM Wild West are rotting, tooting, & shooting.
You forgot to remember they exchanged circ £20 million in debt for £15 million in shares hence “handing” the company £5 million via written off debt plus the accounts will no longer include the £1 million odd annual debt interest (I presume) giving a higher EBITDA going forward.. it’s an assumption also that they will sell down their holding - they want a return like the rest of us! Clearing most of the debt is a GOOD move but agree it could/should have been at a higher price nearer the 2p level but recent selling dropped the 5 day moving average otherwise it had been around 1p
I think 'shenanigans' covered the debt issue. And I wonder how that recent selling came about?
From a more sensible 2p down to 1p means 50% more in equity in the deal for the same amount of cash, so it's only right that 20% gets 'written off'.
To a layman it looks like Mxc are being generous based on the micro economics of today's prices - but zoom out a little for the macro scale, and Mxc just got all that equity at better than bargain basement prices.
Provided this marks the end of Mcx lending for future debt to equity swaps we should be in the clear. But I have my doubts it ends here. Let's see where the next 12-18 months takes us.
they announced a take over bid in Oct hense shares suspended
Let's not also forget that IDE gave one of MXC's other companies the connectivity business.
And lent them money. Which wasn't repaid in time. And MXC lends IDE money so it can lend money to the other company... hmm.
'suspended' you say - I managed to buy shares in the open market on 27th October & looking at the price movements / trading history there hasn't been any lack of activity on a day-by-day basis that warrants a suspension. Even if there isn't a great deal of volume. Although with Mxc owning 90% of the company now any volume would step from them selling as there's only a shade over 2m shares for the rest of us (including the BOD).
It would take a very small player to move the price upwards from here, unless Mxc have a massive sell wall to keep the price in check.
MXC now hold 83% re holdings RNS earlier and it’s not great tbh… although if the other two CLN holders eventually convert it will drop a little.. nice to see us as the LSE top riser today lol
winners - and yet losers at the same time.
A bit like getting awarded 'Employee of the Month'
In my opinion Mxc won’t sell any shares. It would send a terrible message, stifling any buying, and erode their own share price. I don’t think they need the cash unless things have changed, they’re in the process of slowly taking Mxc to a winding up position, during which cash from asset sales is being returned to shareholders by tender offer and share cancellation.
As I see it, the sensible option for Smith and Wheeler and Mxc concert party is to get rid of IDE in one hit, one way or another at what they consider the appropriate time for them.
Acquisitions are mentioned, so I do wonder where the cash will be found to support that. The cynical part of me suspects Mxc will milk this if they can to get all the money back they put in - that’s what they told their shareholders, though not in those words. And the partners only have shares in Mxc, not IDE.
But it can come good for pi’s too, on their shirt-tails, as they build it up prior to sale, and we know the float is such and have seen it before when it can do big movements on news. It won’t take much to shift the price if they can pull something off.
I can still see the possibility of this going private, it would need to to wrap it in with say MXLG, and it’s got very easy to do now. Despite what they say.
I’m a lot more optimistic than I’ve been for years - not hard to say that of course.
In the position anyway of something happening here. From the owners’ viewpoint, it has to.
Previous comment “Hopefully IDE won't approve any additional borrowings from Mxc that could be later converted to more equity. Given they own most of the company now, there should be some regulation to prevent that from happening - else it would just be giving them a licence to print their own money.”
I don’t think any loan from Mxc is restricted by regulation, as long as they deal with it as on previous occasions, and subsequent conversion to shares would require another such declaration ( possibly also with takeover panel consent, as just done this time)
“MXC Capital is deemed to be a related party of the Company pursuant to the AIM Rules for Companies (the "AIM Rules") as they are a substantial shareholder and because Ian Smith, CEO of MXC is Executive Director of IDE.
Andy Parker, being the sole independent director for these purposes considers, having consulted with the Company's nominated adviser, finnCap, that the terms of the related party transaction are fair and reasonable insofar as the shareholders of the Company are concerned.”
But ignoring technicalities, it becomes even stranger than now for a publicly listed company.