Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
One of the interesting things about Studio is the very full disclosed shareholder list. Thanks to the recent offer period, all holders down to 1% have declared, and on face value their ownership comes to more than 100%, so presumably someone like perhaps Norges Bank is the legal owner of one of the other declared beneficial owners. There is no significant short interest it appears, with Euroclear reporting only 90,500 shares (0.1%) on loan on average in March.
That means there's virtually no free float for retail investors to play in, and only any liquidity to the extent one of the existing declared holders wants to sell.
According to a trawl through the 8.3's, the last declared positions are as follows:
35.6% Frasers
20.6% Schroders
10.0% FIL
6.0% AIB
5.0% Janus Henderson
4.8% Lombard Odier
4.3% Hargreave Hale
3.0% Ennismore
2.6% Premier Miton
2.2% Norges Bank
1.4% Blackrock
1.3% Legal & General
1.2% Teviot Partners
1.1% M&G
1.1% Keith Chapman
0.6% Trustee of Fine Art Developments Employee Trust (Studio opening decl)
0.3% Phil Maudsley (director)
101.3% Total
The 600ml size was added to the range in October.
I would be very surprised if they slip out a TU late on a Friday - that is normally only for trying to bury bad news isn't it?
I am hoping that they have convinced themselves that "the middle of April" runs from 10th to 20th April and therefore they can leave it until Monday or Tuesday. It does feel rather as though they might be waiting for something to happen in the hope they can put it in the TU release when it comes.
Or put another way, they did almost as much adj EBITDA in 2H 2020 ($59m) as in the whole of 2019 ($60m). And they have guided 1Q 2021 adj EBITDA ($26.5m mid-point) to be 44% of the whole of 2019.
So that looks like a very strong growth trajectory doesn't it?
Worth noting the strength of the adjusted EBITDA position:
$59m 2H 2020 (actual)
$25-28m 1Q 2021 (guidance in 22nd March TU)
So in the last 3 quarters they are already at $84-87m. They should easily do $100m adj EBITDA for the 12 month period July-June, and if 2Q matches 1Q then they would be at around $112m.
So TTM (trailing twelve month) metrics should look very impressive once they start to include 2Q.
Personally I think they will effectively issue shares for the IPO. They could come from the treasury shares but that amounts to the same thing as treasury shares are "dormant" and don't get counted for market cap or ratio purposes - so issuing treasury shares would still be dilution as far as existing shareholders are concerned.
A tender offer would be a neat way of securing supply for an IPO without diluting, but I would be surprised if they would want the complexity of a tender offer running in parallel with the complexity of getting ready for the IPO. They would have to run with uncertainty on price and quantity, wouldn't they, until any tender offer was completed? And even then they might leave themselves exposed to price risk if they couldn't get the IPO away at a price which exceeded the price they had paid in the tender.
I don't think there's much "experimental" or "testing the water" about a Nasdaq IPO. The prospectus is a pretty major undertaking, as are the reporting requirements (Sarbanes Oxley etc) that will be in place once TRMR is listed and subject to some SEC regulations. I expect to see a certain poster rejoice in pointing out many of the business "risks" that will be identified in the prospectus, almost certainly including some around the state of financial controls.
The issue about liquidity and price is to some extent one of timing. Summit Therapeutics (another biotech that was originally AIM quoted before listing also on Nasdaq) eventually gave up its AIM listing (SUMM) as its business was increasingly US- focused and it wanted all trading to be on the Nasdaq SMMT listing in order to increase liquidity there. Once a company is listed on Nasdaq, the regular quarterly reporting, business development and IR activity (such as participation in conferences) gets the company known and liquidity and interest should pick up. SLN appears to have taken the view that the key was to establish the US office, Nasdaq listing and start the publicity process (it rang the bell on its listing day, albeit virtually), rather than provide any liquidity immediately. By the nature of its business (just starting its first clinical trials of drug candidates) it will have a stream of material news coming through which should, if trial results are positive, generate investor interest and over time move the price to "fair value" in US peer terms. For TRMR though the calculation may be different if it feels it has fewer natural catalysts looking forward and instead wants to capture investor interest and any US listing premium in the near-term to take advantage of the current adtech/CTV excitement and its own strong current financial performance. That will inform the decision on how much new equity to make available in the IPO.
So although they are in different sectors, the logic for listing in the US is perhaps fairly similar for SLN and TRMR (neither appeared to need cash immediately, both might want to be able to raise in the future and both felt their companies were not fully valued on AIM compared to Nasdaq-listed peers).
SLN's experience perhaps suggests that an IPO route, provided enough shares are issued to enough market participants, might be a better way of promoting liquidity in the Nasdaq listing, which ultimately should lead to "fair" value being achieved. Issuing a lot of shares on Nasdaq leads to dilution of course, and leads to cash sitting on the balance sheet until they can find a use for it, which is hardly efficient although it does create optionality to participate in industry consolidation. So it's a tricky balance. If they do intend to issue a "lot" of shares then they really need to do a very good marketing campaign ahead of the IPO so that prices are bid up to a level that existing shareholders are happy with, given the dilution. It is difficult to say to what extent that has already happened given the stellar shareprice run that TRMR has been on this year.
For an example of a Nasdaq listing not involving an "offering" of new equity have a look at SLN. They had and have maintained an AIM listing and did a "direct listing" recently on Nasdaq (8th September) under which various existing shareholders ("Registered Holders") agreed to register their shares for trading on Nasdaq. So around 54m of the existing shares were registered, as around 18m ADSs (each ADS was 3 shares).
The company received none of the proceeds (as no new equity was issued) and it is up to the existing Registered Holders as to whether and when they actually sell any of the registered shares. The company was interested in getting a Nasdaq listing to get more exposure to US investors and to make it possible to raise capital at a later date if they wished. They also wanted, I think, to try to correct what they saw as a valuation discrepancy with US peers. In fact they did subsequently do a raise on Nasdaq, issuing new shares.
The issue with the direct listing for SLN, with no new equity issued, is that liquidity was very poor, although it hasn't so far improved noticeably even after the subsequent raise. If you have a look at shares traded after the listing, it has been very low volume on the Nasdaq, presumably because the Registered Holders (and those institutions which participated in the subsequent raise) were not interested in selling their shares at the price new investors were prepared to pay on the Nasdaq.
The attached links to the first public version of the F-1 prospectus filed by SLN, who had also confidentially filed a first draft at an earlier date (about 2 months before this public one).
https://www.sec.gov/Archives/edgar/data/1479615/000095012320009257/cik0001479615-s1.htm
The intention of MOGP to pursue a reverse was detailed in the recent circular, as was some discussion of the consequences and risks.
"The Company intends to pursue a reverse takeover transaction, subject to shareholder approval, with the aim of delivering shareholder value. Pursuant to Rule 14 of the AIM Rules, a reverse takeover transaction would require the publication of an admission document in respect of the proposed enlarged entity and would be conditional upon the consent of the Shareholders being given at a general meeting. As per the guidance notes to Rule 14 of the AIM Rules, trading in the Ordinary Shares would be suspended following the announcement that a reverse takeover had been agreed or was in contemplation until the publication of an AIM Admission Document or an announcement that the transaction was not proceeding.
The Board has not yet identified any potential reverse takeover targets which will be the primary responsibility of the new board. In seeking and considering potential acquisitions, it is intended that the new board will seek to identify opportunities offering the potential to deliver value creation and returns to shareholders over the medium to long-term. The Company will consider investment opportunities in any sectors as they arise.
Any failure in completing an acquisition or acquisitions which constitute(s) a reverse takeover under AIM Rule 14 (including seeking re-admission as an investment company (as defined under the AIM Rules)) will after 12 months result in cancellation of the Company's Ordinary Shares from trading on AIM."
hTtp://www.mountfieldgroupplc.com/component/docman/doc_details/96-circular-and-notice-of-general-meeting.html
I don't think there's anything to worry about with this, quite the opposite. To my mind this is just CF doing the things he thinks he needs to do to optimise the value of ORPH. CF has said that 2 of the non-core assets are likely to go to AIM hasn't he? i.e. floated directly on AIM or more likely reversed into an existing AIM company with Orph shareholders given shares in the floated or reversed company.
So he needs to find the right AIM company to reverse into. The cleanest one would be one that didn't contain any other assets because then there wouldn't be a substantive negotiation about the relative value of the Orph asset(s) vs that of the existing assets in the other company. MOGP appears to be just such a company following the sale of its previous assets. It has been funded with the £3m or so raised from placees to tide it over and is trying to rename itself as UK SPAC PLC, which gives a very clear idea of the intent. It has said in its 15th Feb RNS that it is prepared to invest in any sector:
"The Board has not yet identified any potential reverse takeover targets which will be the primary responsibility of the new board. In seeking and considering potential acquisitions, it is intended that the new board will seek to identify opportunities offering the potential to deliver value creation and returns to shareholders over the medium to long-term. The Company will consider investment opportunities in any sectors as they arise."
It looks to me as though CF has identified MOGP as a potential vehicle to reverse 1 or more of the Orph non-core assets into, and as a sign of goodwill if nothing else has put some of his own money in (through Raglan) in order to set it up as a viable SPAC while the reverse is evaluated. It might work and Orph might reverse 1 or more assets into it (Orph shareholders then getting shares in MOGP/UK SPAC), or it might just be used to keep another potential vehicle "honest" by providing an alternative home for negotiation purposes. I think he has taken just under 5% in MOGP so he is relatively indifferent (having just under 7% of ORPH) to the outcome of any negotiations between MOGP and ORPH, especially as he has the warrants in MOGP which would effectively increase his holding in MOGP if exercised.
I agree on there almost certainly not being enough time for an offer to be declared unconditional.
It looks like I've been reading the average share price test wrong. I was reading it as satisfied if the volume-weighted average share price over the period 23rd Feb to 22nd Mar was above the threshold (i.e. the averaging period is 1 month). But looking up VWAP on investopoedia it suggests the averaging period is 1 day, so that each day a VWAP is calculated. For the test to be met, that daily VWAP would have to exceed the threshold for a (continuous period of 1) month. If that's the case, you're right , we already know that test can no longer be met.
I've put this post an advf n as well, since I see you're also over there skindle and there are some other contributors as well. I generally post over there on my holdings because it's much easier to search for earlier posts that might be relevant, but I have posted over here on Studio/Findel and 1 or 2 other shares just because there was no real debate over on advf n.
Can we expect to wait until 22nd March then before (positive) news on the strategic process?
Given the average for the convertible test is volume-weighted and given the current very low volume, any sudden spike on volume would skew the average very much towards the high volume days. So if for example they announced they had companies who had tabled indicative offers and they were now going forward to seek binding offers in a final round, the price could spike on heavy volume. While it might seem unlikely it would spike as high as 480p, they might want to manage the process so that that risk was removed by delaying any announcement until 22nd March.
Being in an offer period hasn't stopped them updating on Q3 then. Looks very strong.
I think there are issues around publishing "profit forecasts" during offer periods which tend to make outlook statements problematic, although I also think there is an exception to some extent for "ordinary course" statements i.e. if they can point to a history of issuing this type of statement at this time of year.
I've been taking profit elsewhere in the portfolio so decided to get back in here, hoping for great things from the formal sale process and any January trading update (although they may feel they can't issue one while in an offer period).
Big in the US, big in the US, big in the USA...
"Turtle Wax Teams Up with Byotrol24™ to Introduce Revolutionary Cleaner and Disinfectant Safe for Automotive Interiors"
https://finance.yahoo.com/news/turtle-wax-teams-byotrol24-introduce-130200414.html
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I don't think Tesco ever described their byotrol product as a "key blockbuster innovation project", did they? Solvay has been working on Actizone for several years and in a September 2018 investor presentation referenced it as follows:
"This being said, yes, homecare/personal care remains one of the main segments for us and I did not mention it, but when you look at the North Care business today, we have eight key blockbuster innovation projects: three are in oil and gas and we mentioned two. Two are in agro and I mentioned one. We have still two in homecare/personal care, which are progressing well. These are the ones that we mentioned two years ago, Actizone, and one for the new softener."
https://www.solvay.com/sites/g/files/srpend221/files/Solvay%20Investor%20Update%202018%20Transcript_0.pdf
Sorry - a week today, not tomorrow!
The listing is almost upon us, if it goes to schedule. They expect it to begin trading on the Nasdaq on Tuesday (a week tomorrow), after the Labor Day holiday. In the F-1 filing they stated:
"We have applied to list American Depositary Shares, or ADSs, each representing three ordinary shares of Silence Therapeutics plc, on the Nasdaq Capital Market, or Nasdaq, under the symbol “SLN”. The ADSs are expected to begin trading on Nasdaq on September 8, 2020. "
The date could still change, since the document is subject to completion - the SEC needs to declare the registration "effective" and I would expect the "EFFECT" filing to happen on Friday (probably at the US close) if it is still running to plan.
https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001479615&owner=include&count=40&hidefilings=0