The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
"On what basis would Phoenix do a debt for equity swap where they lost their £19.45m equity stake to wipe out the £16m debt? "
They wouldn't, they could still have 100% equity and as much debt as they wanted, they only people who would be pushed out through a default would be other shareholders. They've already lost 50% of their equity value, as priced by the market, this would regain them some of the value they've lost...from you!
"I was naive"...you still are, having you forgotten you thought this would be at 20p per share by last December against my 2p>1.75p>0.5p predictions? ;)
I don't think there's much left in the business except intangible goodwill and Phoenix are able to exploit that at will with their other vehicles. What do ordinary shareholders get, as you well know, just the opportunity to average down all the time!
Hence my belief the stock is UNINVESTABLE.
"Devon, your comments are all fair ones"...they always are LOL. Just for your information, Debenhams debt was held by "vulture funds". It was held for the most part by corporate entities wanting the generate max returns for their shareholders, just like Phoenix.
Come on Pearls, you know that happens as you saw exactly that position at Debenhams. Creditors called in the debt and the ordinary shareholder lost their holding, the creditors subsequently ended up with 100% of the New Co equity and a debt instrument. So, if you still don't understand how that works, you really shouldn't be dabbling in shares.
Carrying out a process like that, and as you know SGI can't, and is unlikely to be able to service it's debt ,without forbearance for the foreseeable future (a collapsing share price only exaggerates the potential) is a way for a creditor/shareholder to return value when the equity is diminishing in value and the debt goes un-serviced. In that situation Phoenix could increase it's holding to a 100% of the New Co. and still have a debt instrument in place. The only "massive dilution" would be the non-Phoenix shareholders, who would be diluted out of existence. The only utter drivel is your inability to understand corporate finance.
Without the forbearance the company would likely be bankrupt, withdrawing the good will could easily leave Phoenix holding 100% of a New Co. as it's unlikely the other shareholders could, or would, provide rescue capital. So it's plainly right and possible. It becomes more likely when the share price is going the wrong way and there's no discernible improvement. Hence, my suggestion that the share is uninvestible. The further reduction in the equity value element of the cap table suggest the market is only valuing it on the basis of intangible goodwill, and that might make more sense in a de-listed private vehicle. In a market where value is King, there's very little in SGI - hence my 0.5p (goodwill) then the likely of restructuring increases massively. So it's plainly right. 58%>100% is just one Board meeting decision away. Sticking your head in the sand won't change that.
"I can't see why a 58% shareholder should offer a debt for equity swap thereby destroying the value of their 58% holding......"
But they'd turn there 50% into a 100% so they'd actually increase their equity value.....wake up and smell the coffee.
The error of NOT selling in desperation:
Had a quick look at Castelnau this morning, you don't mention them any more Pearls, down c20% since the IPO. Market doesn't appear to be impressed with the fractional guff. I think I remember, from reading the IPO Prospectus, that David Stevenson is involved in the company. One of his recent blogs about private listed equity suggested that it could decline significantly through a recession, - 60% Discount to NAV, you cant help wonder if a private business could fall that amount ...what could happen here.....maybe 0.5p looks a bit generous? With no willingness to support the share price, just a willingness load up the debt, then free fall could result in a debt for equity conversion that leaves exiting shareholder wiped out. It's not like we haven't seen it before....maybe even at 0.5p if wouldn't be on offer, the risks would still be too much to the indebted downside? Perhaps it's just completely uninvestable.
That's of course if it opens, you would think those who bought, foolishly, thinking there's potential of a trading profit might be getting a bit twitchy now. They will be sitting on a diminishing asset that can't even be realized.
A failure to open soon will be a crushing blow to future appetite. Never say never, but it's surprising they've left the "sometime time in May" to the dog days of the month. Sign of troubles at mill?
You see Pearls, the consensus is building round 0.5p... LOL Now every one is accepting that's where we are going and is mentally prepared for it.
"error of selling in desperation"...........maybe it should be "error of averaging down in desperation"
Didn't you start at 7p and your last statements suggested your average was 3.5p. So are your still 75% down?
There's a reek of desperation with these endless "unevidenced predictions"....LOL mine have at least been very accurate over 3 years.
It'll be 0.5p soon, will you be desperate enough treble down again? ;)
LOL Pearls......you never learn.
What was you predicting the share price would be by the end of last year? 20p wasn't it? What did I call 2-2.5p.
Subsequently revised down to 1.75p with a target of 0.5p.
Bear in mind this...you've been calling this wrong for 3 years now...
Of course you disagree, you also disagreed with my analysis of Debenhams. haha
Sure there's people waiting on the side, because they know it's going lower soon. Maybe they agree with my 0.5 p ;)
Large purchase? You mean someone who's punted on Ol' Magenta might punt another £100 quid here? Big buyers indeed!
(-6.45%)
I'm expecting the price to collapse from this point on.......
"My algo is pointing to this being down another - 5-6% today. There's sometimes a lag, but it's been pretty accurate up to this point. Not a recommendation."
Bang on the money again.......0.5 still my target.
Victoria, at the 6 month mark c£700k.....on which (I believe) they lost c£70k.
And the -40% decline in consumer confidence. That's going to be a big issue, people on fixed incomes, of pension age, will be effected and there's going to much less interest in "dead" money assets. I'm still at 0.5 target.
My algo is pointing to this being down another - 5-6% today. There's sometimes a lag, but it's been pretty accurate up to this point. Not a recommendation.
"SGI is as exposed as most to the adverse winds that are now blowing over the market"
Just as it pegs all it's hopes to NFT's, there's become an appetite for income generating real assets and the demographic clock keeps ticking for their declining core business. The debt pile keeps growing, but it is out performing the market in one way way, it's declining in value quicker. Guess that's what the Pearlster meant by "share of the year".
I hope you followed my advice on DARK Pearls? You were hot to tip it at 420. Still a buyer now? I suprised you aren't filing your boots here...I'd wait til it get's to 0.5p
Another 6% today
Almost 10% drop this morning, and a spread of 30%. That's what you call a bloody nose.
Still, we've got a long way yet to go.....0.5p looks more likely every day.
No, I didn't have any exposure to McColls. I have been buying REA prefs and Sterling issue and I'm likely to pick up some of the Miller Homes junk issue that's just happened. I take little interest in press speculation and try to just apply my own view's of the potential for the acquirer. If that doesn't stack up, then I'm happy to miss out if I've got it wrong. I'd rather miss out than gamble and loose cash. I didn't think Ashley was going to make an offer on acceptable terms, but I think I said that at the time. Saying that I wouldn't suggest opening up a new position in REA today, too much of the juice has already been squeezed.
FCA....they need to be less involved and not more.Even better, we shouldn't think there's ever easy money to be made in the market.
Interesting few days, lots of things getting well marked down. I'm sure that will put pressure on SGI. I mean, why buy speculative, when you might be able to buy quality at a discount?
I've got 10% of my portfolio hedged with inflation projection. That's taken a bit off the correction, but I'm sure there's more pain to come. I think DARK look vulnerable. I'm sure you'll disagree. DARK could head south and stay there. I keep looking at LMP. I've always thought it's a quality team and it's getting a kicking at the moment. I'm also thinking about TLEP/TLEI they could be effected by a global recession but less than oilers. They are the only listed "green" stock that appeals.
Sellers out again today> soft end to the week, softer than Wednesday's 6% drop? Maybe.
Down nearly 6% today, we are edging towards that predicted 0.5 pence. There's going to be a lot
of pain here.....
Hahahaha.....