Member Info for devonplay

Could the future include debt payments, charges from a group company and 80% going off to Castelnau? Nice work if you can get it. Meanwhile....what's left over for SGI? .....Oh 20% minus debt payments, intra-group charges and listing fees.

Debt, equity and suppliers.....Pearls will think it's a wonderfully supportive echo system LOL

https://www.rawnet.com/insights/rawnet-acquisition
- it's all too entwined....perfect Pi Macerator...

"In the Company’s annual report and accounts to31 December 2019 and 31 December 2020,the
Investment Manager outlined its intention,subject to the relevant approvals, to transfer a proportion of
the Company’s holding in each of Dignity PLC, Hornby PLC and Phoenix SG Limited to The Castelnau
Group, a company to be managed by the Company’s investment manager Phoenix Asset Management
- Votes have to be submitted by 24 September.
- the cap table fall's even more under the control of Phoenix and visibility reduced with out the glimpses provided by Aurora. I presume Aurora think it's too small to be bothered with.
It is intended that Castelnau will be floated in early October2021.....
"For example,one of the most interesting activities going on inside the Transfer Portfolio right now is the turning of the
world’s most valuable stamp,and by weight the world’s most valuable tangible asset,into a digital
fractional ownership model with an exchange where we plan to add similar assets.That exchange alone
may have considerable value. This values its 80percent with Castelnau and2 0percent with Stanley
Gibbons, a Transfer Portfolio company.
- more crumbs for poor SGI, I think it would make much better sense to be invested in Castelnau and enjoy the diversified rump....how east would it now be to take all of SGI into Castelnau 's portfolio through a debt default. It feels like an SGI listing might only be a short term option.
Old SGI is just too much bother, so it's time to leverage the name and try to make hay on an 80/20 basis.

Hope you are well Mr Solo, looking forward to your comments on the report! Like Franco I've recently bought some RAVP, 2 Sisters and REA Pref's. I also added Matalan on it's low point. I've held Bracken Mido for a while.
I've made a note he's holding Downing Renewables & Infrastructure. I may have a look at that again on any market weakness. I've got cash sitting in a Downing unlisted product at the moment. (5% yield before it was redeemed early) which I might use.
Like you, I had some notes on soi's high yielders. Like the Board, I expected them to be able to find high yielders to replace the maturing issues, but never expected early call/redemption to be so high and it replaced so easily with lower rates. I may have a look at ENQ1 again, chance that the maturity will require a higher coupon, another couple of %
For the moment, I carry on accumulating NCFY on a monthly basis (alongside INXG)

They can leverage high yield on the debt IF this get's turned around and as an equity holder they also get equity value. It's a wonderful position to be in. You win twice. It also gives them utter control to use the goodwill, reputational capital, to enhance their other position.
None of that requires this to be listed, listed only gives them future liquidity and schmuk's capital.
LOL, "financial magic by Clive Whiley, a merchant banker that specialised in these somewhat opaque deals that even the Board had problems fully explaining to shareholders years ago at that AGM." If you don't understand it, why would you ever want to invest in it?

Pentire / Devon, what chance do you think there is of Phoenix wiping off a decent chunk of the debt in the near term?
VERY UNLIKELY. It's their ace in the hole.

so here are some of the risk as I see them:
1, SGI becomes a high yield debt vehicles, they benefit from any growth to service debt
2, Equity gets diluted if they get substantial share price action in a debt for equity swap
3, NFT is successful, but long term growth is migrated to Phoenix's other vehicle and SGI become a subordinated partner.
- - That leaves them with the residue stamp trading and publication business and their reputation gets leveraged.
4, They go "private"
Having such control of the business though equity and debt should send retail investors scuttling for a bunker. They win almost any vote, not requiring 75%, and if not, they call in the debt. That's a bid red flag.
For SGI there's very little in the way of profit, so having £20m in debt, balance sheet and stamp, tied up is hardly worth the avoidance.
That doesn't mean that if this is successful Phoenix don't offer more finance, that deliver them a profit, and is enough for SGI to service it's increased debt obligation....but what's left over for shareholder?
There may be some muted increase in the share price, that benefits it's main shareholder the most, but it will should always be muffled by the level of debt over the short term/risks. Highly speculative at best. You have to avoid being the schmuk at the table when the risks are so weighed against you.

"On the other hand, it cost Phoenix £19.45m a few years ago to buy 58% of SG's share"
it's become a smaller and smaller part of their listed vehicles assets. Last time I checked it was under 3% of their NAV. That's hardly a large exposure, and it means they are unlikely to waive the debt, quite the opposite in fact, loading more debt gives them more upside, the one's most likely to lose out with be retail investors who have no security, beyond the Companies Act, put your rose tinted spectacles aside, and over ambitious predictions, for a moment and accept the equity for Phoenix is now marginal in comparison to the debt and consider the risks of a successful NFT campaign, they could quiet easily reverse this part of SGI into there other NFT vehicle and leave SGI retail holders high and dry. SGI is just a very speculative investment. I'd much prefer to be in the debt if it was available, even though it's in default, because of the anticipation of junk level yields if they ever do manage to serve it again.

Thanks Pearl for reminding us how often insolvency and administration have cropped up in SGI's trading history.
Many times it's needed rescuing and hit the buffers.

"Its a £10-£15 million turnover company "
- with North of £14m of debt. Which it's unable to service.

From the August update:
Turnover - down
Losses -up
Debt - up
Earnings per share - negative
Company Secretary - retired, since then Chief Finance Officer stepped down, on top of "staff and directors who voluntarily took cuts in remuneration " always the way when the staff know they are drinking in last chance saloon!

I'm wondering if SGI have sneaked out this "good news"....whenever has insolvency been good news...because they are going to deliver even more awful news on the 22nd....there could be a blood bath if they aren't able to demonstrate NFT success....nail biting stuff.

I agree Carpe....it will cost them in legal fees. I can't imagine the landlord will just roll over, they haven't so far.
It's surely going to dent the interest in the NFT from potential US buyers.....UK stamp collectors, well they are used to SGI's regular financial crisis LOL ...I'm afraid this time it could all be fatal. We are on a knife edge here, now.

So now they've completely defaulted on the debt and the debt is payable on demand....
If the NFT isn't a raging success then there's a very good chance it's curtains time and they call in that debt, sell the assets and leave the shareholders high and dry.
For the outside world: would you want to hold a fractional share in an asset that's likely to be used in a fire sale to repay debt holders? Tarnished before it even gets out of the stable door.
These things are a massive distraction for management, Chapter 11's can go on for ever...I know, I've been there....it's all such a mess. Insolvency, debt default and terrible finances. Phoenix will be planning their exit as I type. One false step and it's...Hasta la vista, baby!

potential "heavy losses" from the "loss-making dealer" with no secondary market! Wonderful stuff.

"update on current trading so hopefully the meeting will be well attended."
Let's hope it's better than the last terrible update! The one you don't like to talk about LOL hahaha

"Last throw of the dice as Devon said."
You only need to look at that last set of financials......

Hi John, just seen your message. Last few days I've been struggling with my large mp3 collection and Linux. Wonderful command line application called beets. Didn't work for me though, I need to deal with permissions, maybe another day.
Well, the Sterling bond has played out OK and the purchase of the Preference Shares. I've held off buying the common equity , although I believe I do have some rights connected to the Sterling's if memory serves me. I may still feed some of the income in that direction, but I'm never in any rush. I might have another look when they've calmed down again. I guess I've got some decent yield off the company tucked away. Even if it's adventurous by income standards. I've another income and growth play I'm buying monthly at the moment and that remains my "go-to" for excess cash. But, if I was feeling adventurous the common stock here or Raven Property common/Pref's might appeal. That's if I wasn't worried about the odd sleepless night.

"If present ideas fail, we might get a sale of the SG business at a knock-down price, perhaps to one of the other big dealers or auction houses."
I doubt there will be much left after the debt holder have stripped out there chunk of flesh. There'd be little value in the equity. As the recent financial update provided;
they can't service their debt obligations without goodwill,
turnover declined,
and they fell back into substantial losses.
I doubt very much anyone will want another try, more likely they de-list it, write off the losses and let it see it's days out as a private vehicle (with the hope that a private investor will stumble in).