The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
February's ST article featuring Truell referencing Sabien was intentional, Sunday’s MoS coverage is fed by City 'pointy heads' fretting the group will run out of cash before it completes the RTO.
Why it’s taking so long is anyone’s guess, having used three Nomads since suspension this could be an indicator the deal is too racy for the regulator and no amount of massaging by any NOMAD can get the deal approved hence the board is on their third Nomad thus far.
Note Truell owns 25% of SNT, if he or any related third party participates in a ‘rescue’ fundraise he'll need to bid the whole company or if he doesn’t participate get heavily diluted which probably signals the deal has failed. With this in mind and to stay at the table he probably needs to complete the RTO before the group runs out of cash.
The article also referenced his wife, a related third party to the transaction as she sits on both the Foundation’s and Sabien’s board. This conflict issue when taken in isolation is probably not a big deal (false drama) but added to the ‘pointy heads’ fear the group will run out of cash, the frequent changing of Nomad and duration the share has been suspended ‘the longer you look at a deal the likelihood is it won’t get done’.
I read a recent post on this thread about the formation of two new companies so maybe the acquisition is now in two parts? (really good spot by poster).
All of the above information is non-material, in the public domain and on the company’s website and forms the basis of my hypothesis. You can’t ramp or de-ramp a suspended stock. In good faith.
Cliveas - agree with your hypothesis if the RTO asset was trading under 'normal' conditions. There are a number of approval hurdles to overcome before an RTO can complete including AiM panel, existing shareholder approval (Swiss asset), attracting new investors/debt. Forecasting revenues in this 'new climate' of Covid19 travel restrictions, lock downs, consumer confidence, high risk age categories (Clients), management have to forecast through the abyss which is very difficult and risky, risk which potential lenders, investors and shareholders may not have the same appetite for. It distils down to valuation, risk mitigation and financial forecasts underpinning the valuation. If it goes ahead well done to Truell and BOD for navigating/pathfinding the deal through unprecedented value destruction market conditions.
Cliveas - Hotels have seen unprecedented demand destruction brought about by lockdowns and closures, this one will be no different. Valuations have fallen off a cliff. The ST article Feb'20 Truell commented on a liquidity opportunity for existing shareholders, Covid-19 preventive measures kicked in in March. Earnings visibility for rest of year and 3/5 yr forecasts would be highly subjective. There is no risk of value being left on the table just to get a deal done as the asset value has been destroyed. In this climate I would be amazed if the RTO goes ahead.
petelutton- agree AIM is the wild west has a horrendous reputation for spivs and shysters both sides of the deal table...however Edi Truell is leading the charge on this transaction, he and his family office have a high and visible profile to maintain.......yes Covid-19 has probably put a spanner in the works, leaving aside his ST article bravado, the deal is probably too racy for the AIM panel. My guess is the extension has not been granted and now in appeal. If the share is re-listed AIM rules stipulate you cannot suspend again for 12 months to negotiate the same transaction. Edi Truell will have to use all of his soft powers to appease and satisfy the regulators the deal is in the best interests of all shareholders. He may well still pull it off. I hope he does it's an ambitious transaction...and if the terms are fair to existing holders could be the deal of the year. Good luck to everyone holding.
correct, however it's not a true shell company as it has trading Sub. Sell the sub or liquidate same buys you another 6 months. You can apply for a suspension extension under certain circumstances...COVID19.
Full year post close trading update in July.
HarryP - you're way too sensitive.......I live and work in SEA so Spark not on my radar for that reason alone....however Neil Baldwin, (founding partner SPARK) when he was at BrewinD was known for being a good guy and a straight shooter...so would have expected an update on RTO trajectory as part of the recent update.
SP on completion?
very difficult, the company value post RTO is underpinned by the incoming asset value, debt, cash and growth prospects. CFC will be important too and is an indicator on timings of further fund raise(s).
The Sub is inconsequential to the valuation hence the RTO route.
'Unabated' is the weasel word. Intensity and strength are subjective a reduction in same is measured by BOD not NOMAD as deals are fluid. They changed NOMAD earlier in the year to SPARK, never heard of them until now but recall Baldwin at BD being straight as a die but guess he can only advise when he's informed about material developments.
Potatospud: yes agreed the story is the RTO not the Sub. Not mentioning progress with RTO is in itself is a red flag for me. Progress on same was described as 'unabated' in previous update (March) with a close date expected end of Q2. Announcing the resignation of a non-board member (non-material) could have been added to an RNS on RTO progress. Either the reverse has stalled or isn't going ahead and the BOD are now trying to find a buyer for the Sub securing themselves another 6 months to sell the shell. The absence of a progress update in yesterday's RNS creates a void in the story for investors and market to fill. It wouldn't surprise me if an RNS confirming RTO has failed to reach agreement with all stakeholders arrives soon. I hope I'm wrong but this was always a very ambitious transaction with many moving parts.
I know only what is in the public domain, was just curious at how you arrived at your valuation, with a sub-penny share it's unlikely it will only issue equity for this RTO rather a combination of debt, fixed rate funding, hybrid, and maybe a small amount of equity. I'm not a holder came to my attention only because spotted Edi Truell's involvement. It will be a very interesting transaction if/when it gets away...
Cash in bank gives the board a reasonable runway to get the deal over the line, expect the potential incoming asset valuation will need reviewing to reflect impact of CoronaV on existing and future revenues. Change of Nomad during a hefty transaction is not fatal but not normal either. If the revised asset valuation is materially lower today than yesterdays this may not be the liquidity play Truell had envisaged. I guess there are many ways to skin a cat and hopefully he navigates the deal through successfully. good luck to everyone during these unprecedented times.
A suspended company must still comply with all listing rules applicable to it. This means that shareholders should continue to receive announcements on developments that require announcement under these rules, so you shouldn’t be left completely in the dark. I would expect interims no later than end of March back stop.
In addition, once the circumstances leading to the suspension have been resolved or clarified sufficiently, then a notification to the market is immediately required.
Finally, when it comes to AIM, should the securities of any company be suspended for six months, the securities will be be cancelled from trading unless an extension has been granted.
IMO this will conclude quickly (May'20), most of the grunt work is probably already done with terms in principle agreed. The clauses will be of interest to fund managers and institutions, NOMAD must be strong and insist on a lock-in period for BOD and Truell.
RKB: Edi Truell mentioning Sabien in the article by name is sloppy. We should see an RNS tomorrow clarifying his comment or else a share suspension pending RTO completion. It's an odd way to communicate with shareholders particularly having participated in the recent fund raise as did the chairman. There has been no RNS informing the market PTGN is on the cusp of reversing into SNT. No doubt the NOMAD will comb a couple of scalps over the next few days. That aside still a very exciting and ambitious deal for shareholders.
I don't think we'll get any news on RTOs until later in the year. BOD taking fees in stock indicates progress with strategy thus far is non-material otherwise they would be classified as 'insiders' and we would have had an update RNS on RTO status.
Just need to be patient here.
AnthonyJames, I also hold the view this has great potential (no quarrel). Quick back of fag packet with assumptions on double fund raise fees and expenses, trade creditors and working capital requirements for new board new Chair plus 3 new sales people, this little tiddler costs between 80-100k a month to run. Granted the double issue of equity will carry one off transaction fees.
Regarding cost of RTOs, how long is a piece of string? No two RTOs are the same. You are effectively re-listing the parent. This doesn't come cheap particularly if the business you are acquiring is profitable.
The proceeds from the recent fund raise I'm hoping will go towards paying already incurred advisory fees for an RTO. If as you say the Sub haven't been trying to land any large contracts, then Parris and Truell are subscribing on the back of this 'new direction' which is great and bodes well for shareholders if Truell can pull it off.
Now, the only confusing aspect is the latest fund raise. I too have worked in the City (30 years) the board must make a credible case to their NOMAD on use of funds, the NOMAD is there to protect shareholders interests, if it's not to grow the Sub then the RTO must be further down the line for Chair and Truell to jump in. At what point does the RTO become material? if as you say they filled their boots on the cheap on what basis did they do this? it has to be based on a material development which the market is unaware of but should be updated on.