Member Info for CJohnSpain

It's curious that LMFA is up despite having lost at least $1.5m on its year-long ownership of IIU inc.

Perhaps the fact that it no longer has the promissory note to repay to CRV has given more confidence of its financial viability
Also, LMFA shareholders may feel the reduction in CRV's stake is a positive. (Escaping the anaconda's coils.)

CRV now has only 178,675 shares in LMFA.

I should also add that in the last couple of months I've been buying more CRV stock.

Gyllenhammer's increasing stake gives real confidence in balance sheet values. And the company is trading at around a fifth of tangible book value, even prior to any successful deals, like the two with LMFA.

Mark Pajak has resigned as Chief Operating Officer at LMFA following the reduction of CRV's stake in LMFA, (640,000 shares returned to LMFA.), on the 8th Jan 2020.

Thanks very much for the heads up, Tully, re the development at LMFA. I really appreciate your efforts to keep us all informed.

So this is the next chapter in the tangled love saga of LMFA and Craven.

To summarise, CRV have bought back all of IIU inc from LMFA. To pay for this, they have cancelled the $3.6m promissory note that LMFA took out with CRV to pay for their purchase of IIU inc from CRV about a year ago on Jan 16th 2019 (and the accumulated 100k interest on that loan.) But LMFA also paid $1.5m in cash to CRV to pay for IIU inc.

So CRV have bought back IIU from LMFA and have made a $1.5m profit.

The conclusion must be from both this and the deal of the other day that LMFA are in financial difficulties and CRV are "helping them out" and taking their pound of flesh as a reward.

Of course, CRV don't want to totally do over LMFA, as we are still shareholders at LMFA:

Thank you very much, isthisawinner.
I will get a t-shirt printed and buy a furry lamb.

"Only the Swedes know why they are continuing to invest fortunes in Craven. Would only need one more substantial holder to join with them .."

Hi Tully, the increased investment of the Swedes is a serious vote of confidence. It may also be a catalyst for outing value.

Here's hoping.

- As a supplementary note, the LMFA to CRV loan is very short - matures April 2020 - as you'd expect given the intention for CRV to repay the loan in LMFA shares.

- Why doesn't LMFA simply repay the CRV to LMFA loan in cash? given that it's now lending $1.5m to CRV.

It probably can't raise the cash to do this, unless it can set an asset - the loan to CRV - against the liability taken on (a loan) to raise the cash.

You will remember that the original stake that CRV purchased in LMFA (14th November 2018) was for 640, 000 shares for which they paid LMFA $1.5m.

The current loan deal - LMFA to CRV - is for $1.5m and CRV can repay the loan with 640,000 LMFA shares, valuing each share at $2.40.

CRV have since purchased further LMFA shares at prices below $2.40.

So the paying back of the loan will represent a profit for CRV on their AVERAGE purchase price of LMFA shares. It also mirrors the original transaction. ( It would not surprise me to see CRV buy more LMFA shares in the market at prices below $2.40.)

CRV will almost certainly "pay back" the loan in LMFA shares.

The net effect will be to reduce CRV's holding in LMFA and turn a reasonable profit for CRV. Both positives in my view. ( However, it would not surprise me to see CRV buy more LMFA shares in the market at prices below $2.40.)

LMFA is clearly strapped for cash and can't repay the CRV to LMFA loan. CRV don't want to action the convertibility clause in the CRV to LMFA loan as this involves purchasing LMFA stock at $2.40, above the current market price.

Hence, they've done things the other way round, so CRV is rewarded by being given the option to pay back its loan by a profitable share conversion.

The end game is that CRV and LMFA are in a close and dependent relationship. This deal is an attempt to keep the relationship symbiotic, rather than dysbiotic.

I hope this wins me the boffin prize you've suggested. Could this please be in CRV shares (but not at an implied value of $12.50, thank you very much.)

Hi Tully and others,

They would have said in the results, if the Blacktail acquisition was off. They wouldn't have just cited it as an ongoing acquisition. That it's late is no surprise, of course.

Re the stake-building in the listed companies: they said they were trying to go under the radar and not alert others. Is there a minimum percentage stake below which there's no requirement to inform the market? (I've no knowledge in this area.)

Mostly, I put delays down the fact that the directors are trying to do too much on a shoestring operation.

The CRV results mentioned Blacktail.

Stake now up to 19.33%

Yes, that is a posible explanation, but the fact the 21 Nov announcement was a correction would normally be highlighted.

In any case, it's good news.

20th Nov: G raises stake from 17.44% to 19.18%.

21st Nov: G lowers stake from 19.18% to 18.58%.

I hate convertibles.

The cost of capital for the issuing company can end up being unacceptably high.

Gyllenhammer's involvement is a major plus.

- It reassures about the reality and value of the assets.
-He could take an active role. in which case, his involvement may be the catalyst we've been waiting for.

As a cautionary note, he doesn't always take an active role.

In my opinion a lot of the transactional and presentational problems with CRV arise from the fact that there's only one active director. He's got far too much on his plate. But the company is having to be run 's being run on a shoestring, because cash isn't generated which could pay for an extra operative (which is possibly all they need.)

My sympathy with the very long-term holders here. I started buying only 2 and half years ago and am therefore a relative newby.

Hi Tully,

The share buybacks were to happen when there was cash available and when there was no other "opportunity" available.

Capital has been invested in the ski resort and LMFA. The director clearly thought these represented a more rational use of capital than buybacks.

At the current price, any free capital should be absolutely used for buybacks, in my opinion.

I personally think it's unlikely that LMFA or the ski resort represent a better use of capital than buybacks, but it's very difficult to say, given as non-insiders, we don't have access to the figures for LMFA and the ski resort.

Hi Tully,

Even if the formalities for the buybacks had been already completed, there would have been no buybacks, because there have ben no asset sales. Hence no cash.

Rather there is an upcoming asset purchase: the ski resort.

I think this is why the necessary formalities haven't been "prioritised".

So I'm not holding my breath re buybacks.

I'd just like to repeat a message I've posted on here several times before.

Exceptionally illiquid stocks sometimes have sharp movements in share price on miniscule volumes. DLC is the classic example.

The recent descent of DLC to one cent should not be sweated over, anymore than the chart topping 1200% rise yesterday to 12 cents.

Detachment is something I find v difficult in the rest of my life, but quite easy in my investing life. It's v necessary with this sort of stock.

If, as I expect, the ski resort deal goes through, this will give a realistic valuation for DLC stock.

HI Steve,

I think you're probably right.

Gyllenhammer takes positions in companies trading at deep discounts to net tangible asset value and waits. The same calculation that all of us on here made - I'm assuming. I don't think his being invested implies that he's seen any specific forthcoming catalyst.

However, he will certainly have done a thorough examination of the quality and valuation of the assets, to the extent possible.

Thanks Tully, I've tried through my three brokers to buy DLC.

None can trade on line. One is getting back to me re trading by phone.

Hi Maccking, Gyllenhammer is Swedish.