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"Under AIM rules if the shares were so diluted as you / Devon say, this would also apply to Phoenix's holding"
As the expert in the AIM rules, I wonder if you could provide a link to the rule that stops a defaulting company Directors coming to agreement with it's Creditors and stops those Creditors form converting their debt to equity in a New Co. As you know, or should, in a default positions the Directors of a Company have to act in the interest of it's Creditors, not it's shareholders. The Companies act, it takes seniority over any listing rules. As SGI made clear in it's Interim Report:
"In view of all of the above, the Directors believe there is a material uncertainty relating to the Group's position as a going concern. " BUT:
"they continue to adopt the going concern basis in the preparation of the accounts." with the support of their main creditor.
As Carp has pointed out, if Phoenix want out, they can easily force a transfer from shareholders, and take complete control through their debt instrument.
" the company trading in the black again? " the company isn't in the black, as they make clear in the same Interim Report, they are in DEFAULT and "the Directors believe there is a material uncertainty relating to the Group's position as a going concern. "
"I expect both to pick up as interest grows in the company. The ten year graph indicates that when the turnaround starts happening here it could be very sudden. Just look at the ten year graph if you don't believe me. I suppose the first thing will be the emergence of some big buyers.........how far away can that be?" As you've said over and over again...and the equity just goes down in value. You said the same last year...and you are just down another 50% a year later. The 10 year chart, give it a rest...LOL...it's a desperate approach to valuing a company.
The company may recover, but as Carp says, it might find it impossible to trade out of it's present dire situation. There remains a significant risk that Phoenix could thrown in the towel and in one way or another wipe out exiting shareholders, but retain full value of the company. if you doubt me, see what the Directors say "there is a material uncertainty relating to the Group's position as a going concern."
There's no guarantee that debt payments don't swallow up any improvement, the debt that appear to be growing at 5% per year, and never falls into earnings. All the above means the shares is uninvestable ..in my opinion only the goodwill have any value, and that's probably only worth a couple of million, a generous 0.5 per share.
Carp, if things are so negative at SG towers, then why is the company trading in the black again?
I think the fractional ownership has been a great idea, they have sold a small fortune of these things now, and the Warhol item is due to commence in July at £350,000 value split into £100 fractions. I can't see Phoenix wanting out any time soon of this money making machine.
Under AIM rules if the shares were so diluted as you / Devon say, this would also apply to Phoenix's holding. That's pointless given their 58% stake, and might well lead to them losing overall equity control of the group.
It seems to me that as the good news story continues and becomes clearer, how can either the shares continue at this low level or volume traded per day be so low? I expect both to pick up as interest grows in the company. The ten year graph indicates that when the turnaround starts happening here it could be very sudden. Just look at the ten year graph if you don't believe me. I suppose the first thing will be the emergence of some big buyers.........how far away can that be?
Well said Devon. This is precisely the reason Directors have never bought shares. They don't want to see their investment diluted to near zero. There is still no marketplace for fractional owners, Catlenau share price hitting new lows and SG share price down 50% in 12 months. It seems to me SGI is now past the point it can trade its way out of trouble and the fractional ownership has not been a huge success. I see Phoenix wanting out at some stage and recovering its investment somehow. Devon has a good idea how this might happen.
"On what basis would Phoenix do a debt for equity swap where they lost their £19.45m equity stake to wipe out the £16m debt? "
They wouldn't, they could still have 100% equity and as much debt as they wanted, they only people who would be pushed out through a default would be other shareholders. They've already lost 50% of their equity value, as priced by the market, this would regain them some of the value they've lost...from you!
"I was naive"...you still are, having you forgotten you thought this would be at 20p per share by last December against my 2p>1.75p>0.5p predictions? ;)
I don't think there's much left in the business except intangible goodwill and Phoenix are able to exploit that at will with their other vehicles. What do ordinary shareholders get, as you well know, just the opportunity to average down all the time!
Hence my belief the stock is UNINVESTABLE.
"Devon, your comments are all fair ones"...they always are LOL. Just for your information, Debenhams debt was held by "vulture funds". It was held for the most part by corporate entities wanting the generate max returns for their shareholders, just like Phoenix.
The other thing I would point out is that we seem to be getting more comments on these boards from a wider number of participants. In due course I believe this will translate into a wider shareholder base. The widening client base for each new fraction offered by Showpiece should mean a widening market for the shares and in due course a much higher share price.
I believe some big purchases are not far off being made here, especially once we move into June
Devon, your comments are all fair ones about a normal debt for equity swap and you were absolutely right about Debenhams. I was naive at the time and you were correct about the importance of the debt. I hold my hands up over that.
However, SGI is not Debenhams and the capital structures are entirely different. In particular, the debt at Debenhams was owned by a number of vulture funds, none of whom owned any equity.
Phoenix on the other hand owns 58% of the equity, and 100% of the debt.
Currently the debt is around £16m but you seem to forget that acquiring the 58% equity stake cost Phoenix £19.45m.
On what basis would Phoenix do a debt for equity swap where they lost their £19.45m equity stake to wipe out the £16m debt? This makes no sense does it?
Come on Pearls, you know that happens as you saw exactly that position at Debenhams. Creditors called in the debt and the ordinary shareholder lost their holding, the creditors subsequently ended up with 100% of the New Co equity and a debt instrument. So, if you still don't understand how that works, you really shouldn't be dabbling in shares.
Carrying out a process like that, and as you know SGI can't, and is unlikely to be able to service it's debt ,without forbearance for the foreseeable future (a collapsing share price only exaggerates the potential) is a way for a creditor/shareholder to return value when the equity is diminishing in value and the debt goes un-serviced. In that situation Phoenix could increase it's holding to a 100% of the New Co. and still have a debt instrument in place. The only "massive dilution" would be the non-Phoenix shareholders, who would be diluted out of existence. The only utter drivel is your inability to understand corporate finance.
Without the forbearance the company would likely be bankrupt, withdrawing the good will could easily leave Phoenix holding 100% of a New Co. as it's unlikely the other shareholders could, or would, provide rescue capital. So it's plainly right and possible. It becomes more likely when the share price is going the wrong way and there's no discernible improvement. Hence, my suggestion that the share is uninvestible. The further reduction in the equity value element of the cap table suggest the market is only valuing it on the basis of intangible goodwill, and that might make more sense in a de-listed private vehicle. In a market where value is King, there's very little in SGI - hence my 0.5p (goodwill) then the likely of restructuring increases massively. So it's plainly right. 58%>100% is just one Board meeting decision away. Sticking your head in the sand won't change that.
Devon, what utter drivel. If there was a debt for equity swap, then there’d be a massive dilution in Phoenix’s equity holding! There is 42% of the shares held by other parties - your email implies in the debt for equity swap Phoenix’s 58% would suddenly become 100% of the equity which is plainly wrong.
"I can't see why a 58% shareholder should offer a debt for equity swap thereby destroying the value of their 58% holding......"
But they'd turn there 50% into a 100% so they'd actually increase their equity value.....wake up and smell the coffee.
Showpiece Blog is worth keeping an eye on. There is now a survey with a few teasers for their next purchases. Banksy and/or Batman ? Rolex and/or TAG ? Etc.
Unfortunately SGI only currently own 1/5.
It is going to be fascinating to see how much they are going to ask for their Warhol (picture of it framed on their Twitter ac.).
I can't see why a 58% shareholder should offer a debt for equity swap thereby destroying the value of their 58% holding......
Perhaps like you Devon, I am missing something here?
I can’t wait to see 0.5p- simply because it’s rather boring . But with such big sales like 621 sold I doubt if it’ll drop even to 1.00…
Probably later.
The error of NOT selling in desperation:
Had a quick look at Castelnau this morning, you don't mention them any more Pearls, down c20% since the IPO. Market doesn't appear to be impressed with the fractional guff. I think I remember, from reading the IPO Prospectus, that David Stevenson is involved in the company. One of his recent blogs about private listed equity suggested that it could decline significantly through a recession, - 60% Discount to NAV, you cant help wonder if a private business could fall that amount ...what could happen here.....maybe 0.5p looks a bit generous? With no willingness to support the share price, just a willingness load up the debt, then free fall could result in a debt for equity conversion that leaves exiting shareholder wiped out. It's not like we haven't seen it before....maybe even at 0.5p if wouldn't be on offer, the risks would still be too much to the indebted downside? Perhaps it's just completely uninvestable.
That's of course if it opens, you would think those who bought, foolishly, thinking there's potential of a trading profit might be getting a bit twitchy now. They will be sitting on a diminishing asset that can't even be realized.
A failure to open soon will be a crushing blow to future appetite. Never say never, but it's surprising they've left the "sometime time in May" to the dog days of the month. Sign of troubles at mill?
Hardly likely to open a marketplace where the sale price will be less than the cost price.
My understanding is the market will only be for those with pieces, not an open market anyway.
To be fair, there are a few days of May left but failure to open the marketplace this month would not be good at all
It has been planned to commence Showpiece marketplace before June but no update yet. In my view it could be partly explain the drop. Some positive news about it should be issued any day now.
You see Pearls, the consensus is building round 0.5p... LOL Now every one is accepting that's where we are going and is mentally prepared for it.
Speaking of desperation I am mentally prepared to see the price drop to this 0.5p because clearly someone is desperate to keep walking this share down (possibly before any next RNS?). After that it will sharply rise again.
"error of selling in desperation"...........maybe it should be "error of averaging down in desperation"
Didn't you start at 7p and your last statements suggested your average was 3.5p. So are your still 75% down?
There's a reek of desperation with these endless "unevidenced predictions"....LOL mine have at least been very accurate over 3 years.
It'll be 0.5p soon, will you be desperate enough treble down again? ;)
Victoria, I can easily make the connection because at the current share price, this is clearly a highly speculative share. There's a whole legion of investors out there who just look at shares priced at this sort of level, so this could very quickly move sharply either way in fairness. Equally, no-one knows the resale value of any fractional purchase, and whilst some undoubtedly buy them to hold for the long term, I'd imagine a proportion will consider trading them - it is speculative.
Today's fall is after just over £1000 of shares have been traded which is a ridiculous over reaction.
Andynic, unfortunately for you I was spot on with warning about the pointlessness of investing in bitcoin / ARB though!!
Pearls, how can you possibly make a connection, presumed or otherwise, between people buying pieces of the magenta and then buying shares in SGI. I don’t think it will enter their heads. If the thought did, they would soon be put off.
Pearls, you are clearly deluded, and seem to believe that if you keep spouting unevidenced predictions of sharp uptrend, this will come true. Nothing that you have said since I started looking in on this share following your silly postings on ARB has been proved correct. You are out of your depth. Stick to your Post Office savings account, it's safer for you.
LOL Pearls......you never learn.
What was you predicting the share price would be by the end of last year? 20p wasn't it? What did I call 2-2.5p.
Subsequently revised down to 1.75p with a target of 0.5p.
Bear in mind this...you've been calling this wrong for 3 years now...
Of course you disagree, you also disagreed with my analysis of Debenhams. haha
Sure there's people waiting on the side, because they know it's going lower soon. Maybe they agree with my 0.5 p ;)
Large purchase? You mean someone who's punted on Ol' Magenta might punt another £100 quid here? Big buyers indeed!