Member Info for Deepvalue85

Afternoon rock8,

My thoughts were the market priced In the equity raise at 10pence, and the rest if fear.

Rule 9 waiver

When the issue of new securities as consideration for an acquisition or a cash subscription (or in fulfilment of obligations under an agreement to underwrite the issue of new securities) would otherwise result in an obligation to make an offer under Rule 9, the Panel will normally waive the obligation if there is an independent vote at a shareholders’ meeting.

In exceptional circumstances, the Panel may consider granting a Rule 9 waiver where the approval of independent shareholders to the transfer of existing shares from one shareholder to another is obtained.

It could be a paradox... both theories could be correct for different reasons.

Thanks dean01.

Whatever happens here, I am learning alot about m&a. If I lose, its a tuition fee.

That's a really interesting thought dean01, I hadn't looked at it from that angle before. Is that right that the board can publish his offer?

No, it isn't... but, I don't think the game has played out yet. There are no doubt known unknowns (players sitting on the sidelines which may bid) and unknown unknowns (unknowns lol).

Some smart investors clearly saw value In the company. But, my worry here is, you can be right about the valuation but still lose.

You have to ask... why was the waiver In there in the first place? Obviously for a reason. I think it's strategy.

Yes he will... thats when his offer will be announced IMO. I think he wants to keep the minority holders %ownership low but also underwrite it... I think anyone above 5% holding can cause problems with the taking private deal, he won't want that. I could be wrong though.

There is no downside for him playing the game this way from my perspective.

If its a placing, he dilutes the other minority shareholders but at the same time he underwrites it ( maintaining his status as a holder with significant control..., firmly in the drivers seat... controlling the situation). He's playing a blinder, well his advisor is anyway.

This is so obvious. The market is pricing in the equity raise. But... why the equity raise? I suspect, it will be a placement, not a rights issue, and Julian underwrites it. All perfectly legal and very smart. The question is, what will be the next pieces to be moved ( minority holders).

AJ Bell? What are you referring to?

You are assuming they need to raise cash to survive. Have they defaulted on any of their debts? Do they generate free cash flow? Julian Dunkertons advisors are very smart indeed. The question is... who can see the woods through the trees. Anyone who has done a proper valuation on the company wills start to connect the dots.

It doesn't need to be substantial.. think about it. Look at the market cap. If they do a placing, they dilute existing shareholders, but invite new shareholders whilst he also underwrites the equity raise. Very clever. He then picks it up cheap as chips.

I think he might double down. Would take him above 5% holding.

Does anyone know what JD average cost is please?

That's interesting.

So would you put 100% of your portfolio on the position (excluding leverage)?

Hi Gary,

Thanks for the reply. Do you this as the only potential outcome then?

That's is a good point about tax loss harvesting.

They take a position which, if it pays off it could be huge, if it goes to zero, then tax loss harvest.

Here's a few questions:

1) is Ian Kellett an experienced investor and knows what he is doing?

2) is the market forward looking and prices in probability of outcomes?

3) would Julian Dunkerton make his offer for the business at a higher price than he needs to?

4) Would other interested parties show their hand before the first potential bidder has made a move (think chess, poker etc)

5) is the business overvalued, fairly valued, or undervalued?

6) why has their been a reference made to working capital in the rns (trade receivables, inventory, trade payables) when the company has aged stock to sell down and the CFO stated they would not likely require additional funds for the working capital peak?

7) Why would Julian request the door be left open if it was a dead duck?

8) is it likely other companies are looking at the current situation for a potential acquisition?

9) Does the company actually need to do an equity raise?

10) why did the last CFO resign prior to the announcement of a potential offer?

11) does the company have a liquidity issue, solvency issue, both or neither?

12) has this situation fully played out?

13) now we know Julian has not decided to bid, what are the new possible outcomes?

Not sure how you work the business to be insolvent. Free cash flow positive and no defaults in loans?