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Completely agree, Hounddog. Overall, I'm just pleased no other skeletons were found, which I almost expected. This is assuming the lawyers and auditors did their job properly, of course ;)
A whitewash. Only addresses procedures and fails to answer why such a large loan is deemed legitimate at all. Anyway I think it is best for the company that Kailas stays.
Eddie - on GEC yes I was. I stand to be corrected but I think they are in at quite a low level and not at the Indian sub level which may be listed. I wonder what their intended exit route might be and why they went into it. It may be that they wanted a toehold in what is going on in Indian renewables. I agree the problem for everyone is at topco level. Of course Kailas could just keep his stake unlisted (if he delists) but it is not very attractive for him to do so when it looks as though the company is just about at a tipping point. I think like others the threat to delist may be associated with the loan investigation ie if you take tough action against me I will delist the company. However, as discussed he needs to take Caparo with him on that and from the outside I cannot see what is in it for them. The Mauritius intermediate company is there to ensure that the U.K. listing did not result in additional tax. It is a fairly well trodden path for Indian companies, albeit there probably is not great shareholder protection at that level. The share price is creeping up albeit in tiny volume.
Hounddog - are you referrig to GEC and lower down meaning their investment is in one of the trading subs - if so, it is one of these which is talked about being listed in India. So that would be good outcome for them. The issue for the UK investor in the topco, is that if the sub is listed, whilst this topco may seemingly have a valuable investment in holding a large percentage of the listed India sub, it will be very hard to extract value from it as a shareholder, as the UK topco is unlisted and thus difficult to trade the shares. Some murky offhshore company between the India trading entities and the UK topco too.
Kailas may care more about not falling out with the London financial community. He is involved with some big names. It is not a show stopper reason but it may make him more cautious. He may need them in the future. I wonder also how GEC see their exit route for their equity injection as they are in much lower down.
What difference does kalas being in London make, already installed his 31 year old son as CEO and stolen from the company. Look as the fusion ex delist. Shareholders screwed and could do nothing about it.
I went back to the Admission Document and they say they are subject to the Code plus the articles have been written to give the protection of a Rule 9 offer (unfortunately given the state of the share price this may be just in the 20ps). I am not overly optimistic but the more I think about it the more I think it is not going to be that easy for them to delist and screw minority shareholders. However, I would not hang too many hopes on them worrying about reputation. As a general rule Chinese and Indian companies see Western investors as sheep to be fleeced. The difference here being Kailas is London based.
Hi Eddie - yes, this is what I'm thinking - we probably won't ever see the 15x value but I'd think they'd offer something like 50-100p to voluntarily delist rather than just steal the company away. This could be coming and someone in the know is hoovering up all the sells we're seeing recently (as the share price isn't falling much, considering). All speculation and I accept there's a big risk of being shafted though. Maybe worth a look at Greenko who were forced to delist as they got tangled up in convertible loans - and still offered shareholders a 98p per share settlement that, I think (from memory) was 100% higher than market close (after a big fall) and valued the company at approx. �160m - and it was smaller than MYT at the time. I could be wrong. Does anyone have any good / bad experience of owning shares in a company that's delisted before?
we need examples of what the procedure has been of UK entities de-listing, and how the price has been set (at the floor, a premium etc.)
The flip to this is that the majority shareholders could easily offer say 50p a share to delist (100% premium) - this would cost them say �25m. Win for UK shareholders, and major win for them as they have already commented, they could relist the group at 10-15 times the valuation in India, with them now owning 100% of the equity. Perhaps we will see a small benefit here, just not the full re-rating...
what I would love to understand is whether they can offer those initial investors who participated in their �80m fundraising an opportunity to participate (or be granted) shares in the new listing in order to approve the delisting. Us retail investors would then be forced to sell our shares in the UK, and be left in the cold when the group is suddenly worth multiples of today.....
I think you have it the wrong way round. 72.6% are not in public hands - held by current and former chairmen. Mkt value around �40m. A portion held by funds, a portion by retail investors. If they can, current payback to delist would be �12m say. Bob smith said in an interview in August, based on Indian valuation metrics, value would be about 15 times higher. So you are talking about a valuation of �600m (I kid you not). So, the amounts you are talking about, of simplying delisting and relisting (allowing all existing investors the same % stake in the new listing) is �150m+. That is a lot of personal reputation. They will be holders of a significant Indian group, concerned with Indian reputation, not here. I really thought we would get to participate in the undoubted re-rating, but I just cannot see it now - we will be shafted. For reference, here is bob smith interview, talking about the issue of UK valuation, and the possible indian valuation. This is no co-incedence, I am sure he was instructed to talk about this as the group gear towards their Indian listing. https://www.investorschronicle.co.uk/shares/2017/08/15/boardroom-talk-mytrah-energy/
I wonder whether someone's mopping up shares as there's mostly selling but the share price has generally held. It's very different from earlier in the year when it didn't take much selling for the price to drop.
Here's my current thinking... the value of the shares not in public hands is approx. �10m right now - less than �6m if you take away the two biggest institutions. Now again, I may be being naive here, but I think it's far more likely that management would want shareholders who own the �10m or �6m worth of shares do OK from any delisting / IPO scenario - even if they never get to benefit from a $1-2bn valuation (it's be great if we do though). It would make no sense to me if, for the sake of a few million, people who are about to make hundreds of millions would risk both their personal reputations and MYT's reputation, which could see it list at a lower valuation than what it would have cost to see shareholders right in the first place.
Eddie - I am not as convinced as yourself that Kailas and Esrano are aligned. Obviously MYT was originally called Caparo Energy and a few years ago it changed its name and Paul came off the Board as Chairman. I made the assumption (purely on the public information) there was a falling out but it would be interesting if you have better information. Maybe they have made up.
Esrano is connected to the former Chairman - Hon Anged Paul. See the 2011 annual report (pasted below). 72.6% is not in public hands. Their interests are aligned. Thus there is only 27.4% of share in circulation who have the potential to influence (prevent) the those controlling shareholders undertaking what is in their best interests. From the 2011 report - Note 20, related party transactions. The Directors of the Company who are also considered to be the key management personnel are: 1 Hon Angad Paul � Chairman 2 Mr Ravi Kailas � CEO and Managing Director 3 Mr Vikram Kailas � Chief Financial Officer 4 Mr Rohit Phansalkar � Non-Executive Director 5 Mr Alastair Cade � Executive Director 6 Mr Charles Edmund Wilkinson � Non-Executive Director 7 Mr Philip Swatman � Non-Executive Director The entities where certain key management personnel have significant influence are: 1 Caparo Engineering (India) Limited � Hon Angad Paul 2 Zip Reality Private Limited � Mr Ravi Kailas 3 Bindu Urja Holding Inc � Mr Ravi Kailas 4 Bindu Urja Investments Inc � Mr Ravi Kailas 5 Bindu Urja Inc � Mr Ravi Kailas 6 Esrano Overseas Limited � Hon Angad Paul 7 RKP Capital Inc � Mr Rohit Phansalkar 8 Chakas Investments UK Limited � Mr Alastair Cade 9 Sila Energy Inc � Mr Ravi Kailas
Eddie. I think you are talking about the non-free float not what Kailas owns. I regret I have forgotten the AiM free float rules. I researched Esrano a while ago and I am sure it is Camparo who originally backed the company but I got a sense there was a falling out with. Even though a Jersey company I think it is still subject to the Code (not checked the admission document) which I think could offer some protection in a delisted situation. It helps that at the moment Kailas is UK based. I stand to be corrected.
Oh and another nugget to suggest the press speculation about delisting isn't due to the BOD reacting negatively to the corporate governance scrutiny... they spent best part of $250k on auditors last year and have often highlighted every year how important this is to them. It's funny though how with very little communication, it doesn't take much to start seeing things very differently. I still can't decide if I'm being wet behind the ears and falling victim to confirmation bias OR if I'm actually being measured and balanced. I just can't see Ravi trading in his reputation for a few more million when he stands to make a fortune in any scenario. Maybe I need a towel.
Eddie - Esrano might not be controlled by Kailas. Hounddog knew a little about this (see an earlier post a few months ago). It was the investment vehicle for Angad Paul who committed suicide last year in London when the family steel business collapsed. We're not sure what relationship (if any) there is between the families or if there was a fall out years before when the company changed its name to Mytrah and Angad left the Board. If anyone knows more, please do share. After your post, I went to MYT website to have a look too and we finally now know who the big seller has been over the past several months: Henderson Global Investors. They owned approx. 20% of the publicly traded shares but appear to have sold all 8.5m between May and Sep. I'm not sure what impact the share options granted could / would have in any desire to delist. It appears Ravi transferred 11.5m options to his Trust last year. It also looks like there were 300,000 employee (not directors) share options granted in the Indian company. This is all new territory for me and my only experience is in small Ltd companies. There's one class of ordinary share, each holding one vote so wouldn't Ravi stand to lose the most if the holding company's shares became worthless? Go easy.
On the comment below re shareholding, the second largest holding (Esrano Overseas) is controlled by Kailas. Mytrah's website discloses that 72.6% of shares are not in public hands, the 57.9% trust + 14.7% of Esrano. As regard other investors, there are no rules as such (as far as I am aware) that restrict such holders being offered shares in the new listing at whatever holding/price they can agree between themselves. You will then be left with a minority of holders holding paper in a delisted holding company or forced to sell back the shares to recoup some value. The valuation of these holdings on AIM is peanuts, and so if you could offer and buy back these shares for peanuts before listing in India (which based on valuations of other similar renewable energy groups being quoted in Indian press) on mulitples of the current valuation with you holding an increased amount, why wouldn't you? I had bought in with the long term expectation the shares would be re-rated on a new Indian listing - it seems the company will, but we as small shareholders will be denied that result, and in fact suffer losses on the ever decreasing valuation of the group here in the UK.
Yes Monkf6 i was thinking the same thing about this anonymous de-listing talk, and the previous 'loans' being a coincidence. Also i couldn't understand why the market view (reflected in the share price) was so ambivalent about the loan, and now again about the de-listing. It's down but only at levels seen earlier this year. Something doesn't feel right here, feels like someones got an agenda, tho I know very little about corporate finance so i can't really speculate about what might be going on behind the scenes...
I agree ZENGAS - I'd like to see MYT issue a statement. They can stay quiet and say we'll update the market when decisions are made but I feel their hand is forced here. Just a thought that came to me today... a possible future IPO of the Indian company is nothing new - maybe 9-12 months old now - and the potential to delist to do this is also not a new possibility either. So why now? It seems a little too coincidental, to me, that this story comes out now two weeks after the "loan" RNS casts a shadow over the integrity of Ravi / management. If it's not coincidental, then it could be as Skid says: management don't like the scrutiny so want to leave AIM. Or could it be an outside force with an interest in the share price suffering (like it has over the past year). I don't know. I can see both sides. Like we've said before the education and experience of key people is good. Ravi's exited businesses before without spilling investor blood. They've had an excellent track record with MYT over the past 5 years. They've not diluted shareholders when raising money (although maybe that would have been a good thing in hindsight). If there was bad intent here, why would investors trust them with an IPO next time - the internet is already full of these delisting rumours - and they'd probably suffer in valuation because of it. I'm just not seeing it. But then I accept I'm probably being blind. I just have a feeling the press speculation on delisting would never have come out if the unauthorised loan RNS had not preceded it.
come very close to investing in this company several times. A bad experience with another Indian based company listed on AIM made me hold back. Share holders have been wiped out on that one (DQE). Paul Scott refuses to invest in any Chinese/Indian companies that list on AIM because of the large number that have gone belly up.
Also there should be no leakage on IPO discussions - it is clearly price sensitive. I will have a think about complaining to Investec or the company but will likely get the brush off. I am in court today on the Lloyds litigation where one of the (many) matters the claim is testing is management assertions outside formal documents.
The VP Bob Smith gave at least 2 presentations on an Investors Chronicle podcast in August and a similar one earlier in July on Core Finance spelling out the reasons for investing. I contacted Bob Smith at the time and he rang me from India. One of the questions i asked him if there was any possibility they would delist from AIM and i was told no. Legally i wonder how the company stand after making those presentations where investors built positions only for it to be intimated by 2 sources close to the ipo negotiations that it likely would delist ? MYT say they are undervalued in the UK market but this news article and RKs unauthorised loan tranaction under investigation hasn't helped the share price. With no comment from the company, who is going to buy stock on the UK market if they know the company could possibly delist ?. This creates a further thin market for any seller. So ISA holdings etc can be pulverised. This fiasco is contributing further to the very value of the company in the UK that they hoped to reverse. Bob Smiths interviews should and which are only 12 weeks old, should come under scrutiny and a complaint to the authorities should be made. Down another 14% today and no comment from the company on either the story or the reason for the share price fall. It's 1.20pm (9.20am UK) in Hyderabad.