Member Info for Cranleigh

Well that's something to look forward to, Verde.

Yet more very impressive results, Chem.

Anyone for aloo chat?

Totally agree, Casapinos - with those conversion prices, no CB holder in their right mind would convert at current SP levels.

And at an original $200K cost per bond, I think holders are very likely to be sophisticated investors not nutcases.

Hillside, as you are around, I’ll repost my message of a couple of days ago, as I don’t know if you saw it....

“I think you will be able to assess from the feedback from myself and others that your idea of major shareholders buying some of the bonds is hardly novel or likely to be deemed by SXX worthy of “significant remuneration”.

On the other hand, I hope your company will participate in the bond issue through JPM - no doubt alongside other major shareholders - and so both earn attractive interest on that investment and protect/boost the value of your significant shareholding. That would seem to me a shrewd move!

Best luck.”

Hillside, I’ve been busy most of the day, hence my delayed response.

I think you will be able to assess from the feedback from myself and others that your idea of major shareholders buying some of the bonds is hardly novel or likely to be deemed by SXX worthy of “significant remuneration”.

On the other hand, I hope your company will participate in the bond issue through JPM - no doubt alongside other major shareholders - and so both earn attractive interest on that investment and protect/boost the value of your significant shareholding. That would seem to me a shrewd move!

Best luck.

Probably nothing like enough interest IMHO....on its own.

Even if all major holders (representing say 30% of our shares) were willing to buy bonds, they would need each to put in more like £200K per 1 million shares held to raise the $500m, if my maths is right!

Pending your call in a week’s time, I encourage you to get in touch with JPM anyhow.

Hillside, may I suggest (if you haven’t already done so) that you contact JPM to lodge your firm’s interest in purchasing bonds? No doubt SXX will happily give you the relevant contact details.

I would be surprised if several other large holders aren’t already on their list of likely buyers, and as contracts stand JPM are the only source for those bonds.

Malaika - what is there to say they (or some of them) didn’t?

But even if they got some at 15p, why not more at 8-10p if you think that you know the bonds will go.... partly because you’ll help them go?!

I think you’ll find some of them do have a better idea, if only because they can buy some of the bonds themselves.

Even better, also buy some shares over recent weeks at these prices, secure in that knowledge...

I think that particular instalment of nonsense from Casa was put to bed at the time, Aubery.

The end—buyer of a bond of course receives (not pays!!) the coupon along with the other benefits of holding a bond, including its senior security status.

And JPM will be selling the bonds at 100, not with a margin on top - they’ll collect not insubstantial fees from SXX!

And I bet not many of the B Bonds in that chart are senior secured, so surely SXX should be able to get this first $500m away as straight Bonds (no equity sweeteners) at under 13%?.....barring the Donald erupting again first...

And thanks from me too, Eureka.
(resists temptation to add message to GK!)

Thanks GK, but I think you are barking up the wrong tree, and that were you right the company would have had to report any such material "make whole" contractual term in the original Gina Equity investment RNS, subsequent Prospectuses and Annual Reports & Accounts.

If you look at the 2018 Annual Accounts, note 24, there are details of the accounting for the $50m as an "equity investment derivative liability" and a "level 2 financial instrument". It is a matter of accounting for the difference in NPV between the contracted 200m shares for $50m and the projected market or fair value of those shares in GBP, both assessed at their likely issue date.

To me, this is all arcane and technical accounting stuff, and not reflective of any "real world" contractual liability to "make whole" the investor, with potentially resulting hedging, shorting etc.

Good morning GK.
Anything concrete to back up your "FMU" assertion that we have to compensate Gina if the share price is less than c 20.5p, and so would be shorting our own shares to hedge that risk?
Cheers.

So probably just modernising, or removing any possible legal impediment to #beyondwoodsmith

Not a requirement to have an objects clause since Companies Act 2006

What evidence do you have that suggests SXX have to compensate Gina if the share price is less than c 20.5p when her shares are issued to her? I haven’t seen any, only that on completion of the rest of Stage 2 she gets 200,076,829 shares for $50m (eg 1 May 2019 Prospectus p185).

I think the derivatives relate only to the Royalty agreement and the CBs.

Han****!! You know, Gina’s outfit.

GK, I don’t think SXX are shorting their own shares, as you seem to suggest!

The existence of the royalty agreement with Han**** and the CBs requires, under IFRS 9, that these be treated as derivative financial instruments - see notes 15, 16 and 17 to the 2018 Annual Report and Accounts, and indeed the Auditors’ remarks on page 90. As a result of that required accounting treatment you get language such as “embedded derivative” and “hedge”. I think it’s that simple (sic!).

In their shoes I would happily buy say $100m in shares on the market, and then buy all the $500m HY bonds, securing their long-term profitable relationship with SXX.

The likely gain on the shares would offset say 20% of the cost of the bonds, which they could sell on or keep in part for a higher yield than I believe they currently achieve on their huge surplus cash balances.