Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
GKN is a classic case of how a dud chairman can set a business back years. Turner has been hopeless so it's no wonder the company had no strategy, useless management, and slapdash accounting. Now the management proposes to repackage the Melrose proposals and slot itself into the jumbo payout seats, with less arduous conditions. For liquidating the company it's supposed to be running? This is very unprincipled stuff. Apparently, after giving all the unsubstantiated quotes to the weekend press, Stevens took off for Easter in the US. This is what we have all got used to at GKN - they're not even at the wheel, let alone asleep at it. It would be unconscionable for this lot to still be in charge after Easter.
What is going to happen here is that investors are going to realise that in the hands of Melrose, GKN becomes of investment grade status once more. The Melrose expectation will be to double the value of GKN over five years, which annualised, will return 15%. If you add a dividend of 2/3% it's a return of 17/18% p.a. and it's not dependent on turnover growth. This is too high, and on a risk adjusted basis should be bid down towards 11/12 %. UK investors will buy up loose GKN stock for as long as they can assent it to the offer, and they're all underweight at the moment. So the bid will end up becoming a self-fulfilling prophecy once it passes the inflection point where it's no longer about the headline figure and entirely about the future investment return. When the bid goes u/c the Melrose price is 285/300, and all the Range Rovers in Redditch with personalised GKN plates will be for sale! Two weeks to go.
I found a piece on ************* by Tom Winnifrith on the Redleaf deal. You need to register to see it. However, he points out that the deal was done in April 2014 for 50% of the business at headline £1.8m, 50:50 cash:shares. So Porta shell out £900k in cash and issue 7m ords equivalent £900k when price is about 13p. Included are puts and calls over the residual 49%, plus a lock in for 24 months and further 12 month orderly market period. Emma Kane ends up with 4.5 m Porta ords which must be her and Rosenblatt together. Then in Aug 2016 two things happen. A 15% tranche of Redleaf is put on Porta. Emma's holding goes to 9.8m, an increase of 5.3m. Consideration terms are similar to 2014 deal, so 15% costs £270k in cash, and £270k in shares at say 5p which comes to 5.4m ords. So Mr Polhill the other Redleaf partner didn't sell any stock? Here there was a lockin for four months, which elapses just before the year end ie Dec 2016. Maybe I've been a bit slow here or have misanalysed the situation. However, it looks like Redleaf took no risk on the Porta shareprice in April 2014 and in effect have a put at 13p. They are only at risk for the difference between what they are allocated the stock at, ie 5p in August and what they can sell it for, ie a wee bit less as it turned out. So Emma's share sales were at 13p, less any loss say 1p, meaning she was receiving the equivalent of 12p. That's why she was biffing them out with such zeal? Any road there could be another 5.4m coming our way in early December. If any of this is on the money, it is indicative of how the old regime have been playing with a listed business, are incompetent, and not abreast of events. Steffan needs to get a grip on this pronto.
Adastra is right about Gary Wright. Seems he is a pal of NED Raymond McKeeve. These two were allocated some stock a couple of years ago for something, though I can't find out what.
You do have to wonder what the new Corporate Broker is doing here? N+1 Singers have just come on board and the demise in the SP pre and post the interims would normally have been a classic opportunity for them to start showing a bit of leadership. There must be a reason why they are doing nothing?
Yes big invoices going out in Q4 Adastra can you help me on the debt refinance statement in the interims in my first post this AM. Why was it rolled out to April 2019? It doesn't seem consistent with the refinancing we're all expecting with a bank. All the other stuff I agree with. However, we all know that share prices in these recovery situations can lag the inflection point where operationally the company went onto a new trajectory ie Williams and others coming on board and fairly promptly bringing in new accounts with corporate activity.
And we all missed this I think. Should result in a few invoices in Q4 http://www.wsj.com/articles/endurance-confirms-deal-talks-with-sompo-holdings-1475610908
In the interim statement is says " Debt with Hawk Investment Holdings Ltd was restructured to allow roll-up of interest and deferral of redemption to April 2019." Anyone got an angle on this? Why did the restructure happen now? Had the term run out? Doesn't seem like the refinancing we were hoping for or am I missing something?
This lot are beginning to look like a load of chumps, which we know they are not. A fairly anodyne set of results last week 'handled' by Redleaf ended up with the share price tanking further. The share sales by Redleaf MD Emma Kane were very unhelpful, and bound to unsettle shareholders. In the circumstances it's hard to know which side of the tent she's at. Plus there's no theme for investors to latch on to as to why the stock is cheap but going to get dearer, ie a lack of clear direction as to where the group is headed and how it's going to get there. One possible explanation is a lack of agreement between the four players at the centre. Who really is in charge? Morton is Chairman, the biggest equity holder and controls the company through loans, so he's empowered. Wright is the architect of this construction - the man with the vision, who's done it before and GG the CFO is his stooge, so he's has a franchise. Williams is the saviour, brought in to realise the potential and is therefore the future. An important role on which the whole Group depends. It has to be said that however visionary Wright is, he and GG have got this Group into a hell of a mess. Over borrowed. under managed, and profligate on HO costs, there hasn't been much value added to all these acquisitions. Yet I see that for their troubles Wright and GG helped themselves to a doubling of salary in 2014, adding other fringe goodies in 2015. They're probably keen to perpetuate this situation for as long as they can, which is going to be an obstacle for Williams possibly to the point where he can't implement and realise the Group's potential. If there's any truth in this then others will work it out. Possibly Emma Kane already has. Morton could just sit there, in the knowledge that if the Group continues to drift he could eventually pick it up as the biggest creditor. However, he's been a bit more proactive in the past, and he needs to be so now. So all of us stale bulls can crack on all we like about sexy hires, new accounts etc. etc., but we're not going to see anything in the share price until there's a management reorganisation, and you don't have to be Jack Welch to know how that should be configured. I am very confident though that Morton is abreast of all these events. However, he needs to take at least two decisive steps on the management front without much further delay. Otherwise Williams was brought on board under false pretences.
Something is not right here I agree. It may simply be ineptitude on the part of senior management, who don't appear to have much of a handle on managing the group, let alone shareholders and their expectations. A key aspect of the strategy is to use options to bring teams on board. In December Steffan was granted 1.5m but at a strike of 10p. Not much of an incentive now. All this talk of acquisitions at the current share price looks completely bonkers. Are the management really that incompetent that they would currently grant options to people joining when the share price looks so out of step with the fundamentals, locking themselves out in the process? There is no real, credible message coming out here. This is a small business boasting a CEO, a Group MD and a Group CFO. The share price says that operationally it's out of control, and financially stretched. The management aren't managing the fundamentals. As Chairman Bob Morton needs to take the Group's failings on board and do something to address them. Neither should it be that difficult, but for some reason the key issues are being ducked?
Do we know if Emma Kane is finished selling? Do we know if the company has shareholder approval to issue options to the new hires at these levels?
With all these subsidiaries in the communications space, the Board have done a poor job for the parent company. Having all these pod profit centres is one thing, but they need to be joined up at group level. David Wright has had previous success accumulating pod units but at group level you need to be doing more than just the consolidation. For the last couple of years the group looks to have been rudderless, and a bit out of control. The Emma Kane share sales are symptomatic of this. Just ahead of the interims there's a big, but unknown seller around who's banging out stock with some zeal; very disquieting. Then the night before the interims it's Emma Kane; very clumsy. If the senior management can now start running this group cohesively the stock is cheap.