RE: House price drop6 Jun 2024 09:00
£800k is still above the Mcap atm.
This deal looks interesting and potentially promising especially due to the loan that's already been done.
Currently we have 401m shares at 0.0645p each which is just under £260k value.
Let's face it that's very low and cheaper than the cost to add a new listing in the market, which is probably why the RTO is undergoing talks.
From the post the other day the ESports company was brought out for around £12m from its parent company. And have already provided a no strings loan equivalent to our pre suspension Mcap.
I'm not 100% sure on how RTO's work but have checked a couple of sources and these are worth a read;
https://www.investopedia.com/articles/stocks/08/reverse-merger.asp#:~:text=A%20reverse%20merger%20is%20when,of%20its%20board%20of%20directors.
https://www.investopedia.com/ask/answers/040815/how-does-merger-affect-shareholders.asp#:~:text=If%20a%20publicly%20traded%20company,sold%20to%20the%20acquiring%20company).
The second link suggests that current shareholders will just be paid out from the agreed value of the takeover, which could mean hardly any rise, and just getting 0.0645p a share, or they could pay a premium and we may get a little more.
Other bits in these suggest that the private company will take majority ownership and shareholders will continue to own shares at a lower % ownership, I believe this would mean the number of shares would increase substantially (let's say they issue 1600m to the RTO, and therefore the current 400m are worth 20% of the new business.
If the new business is worth £12m that would value the 20% at £2.4m which is nearly 10x the current Mcap.
I don't think this will happen, but I do think if the deal goes ahead we will either be paid or have share worth between 2 and 5 times the suspended price.
If we have shares in the new business they could see a good rise afterwards as well.
If not I may buy some back anyway...
It's also interesting to see that an RTO is often used to be quicker to listing a company rather than the usual IPO process, and is more likely when the private company doesn't need to raise cash.
So it could be done in 30days... although I think 3 months would be good tbh.
Good luck holders. Fingers crossed