Member Info for Franalex

Probably as pointless as those who thought they could sue over Debenhams, Thomas Cook, Woodford Funds and speculating about Sirius. The only guarantee is that lawyers would get rich. Nothing has happened on Afren and that was pretty clear cut.

Mr Rooster, that is also my concern. There is every evidence that the Board do not know what the position really is. It is only a week since they said the results were in line with expectations but it now seems they do not know when these results will be published. With the business in such a mess just do not see how a buyer could get themselves comfortable other than buying specific assets.

Adze, Yes someone with a lack of knowledge. I bit like all those only a couple of weeks ago saying it was massively oversold, predicting huge bounces on a daily basis and rejecting anyone presenting a more conservative view. Where are all these experts now?

No real surprise given that the Board appear not to have a clue what is going on and presumably have no idea what the actual financial position is. Suspect this could be for a few weeks.

Preserve. Because Muddy Waters have experienced individuals whereas most audit work is performed by trainees with no experience and managed by individuals who have only ever worked in audit. I have been a CFO for over 15 years and never known external auditors find anything, my industry experienced internal audit teams have.

Well all those that thought all the bad news was out have been proved hopelessly wrong. Recall one post saying “Governance is sorted”., and me responding that they had no evidence to support that. This has turned out to be a total shambles and one of the worst examples of corporate governance I can recall in my 40 years of investing., particularly in a FTSE 100 business. Now it seems things are so bad, they can not even get their accounts out on time. Just impossible to say what will happen on opening, nothing would surprise me.

Ceractico. Sirius may have started off as Aim listed but in recent years had had a full listing. People invest in Aim listed companies in the knowledge of the high risks, and potentially high rewards involved. What has happened here is absolutely no reflection of the market it was listed on, it was always high risk and seems that people have been seduced into investing far more than they should have. Would be interesting to know how many of those who have lost a lot took professional advice before investing.

They buy because of that volatility. I bought at £4 and sold at £8 thinking I had done well but another year and it was c£16. Certainly, would not buy at current levels but some will bearing in mind it was £23 just a few weeks ago. Just look at its turnover, Sirius is not a big deal for it. It would probably like it but at the price it wants to pay. It probably has a list of other deals it could do in the various markets it works in.

You have no basis for saying governance is sorted, indeed Questor article yesterday suggests otherwise, given the apparent amount of related party transactions. It may be better but still looks pretty shoddy for any listed company let alone a FTSE 100.

Gertfrobe, yes just look at the daily share price history. In 2016 share price was below £3.

Beekster, Anglo price is probably nothing to do with and mainly due to commodity prices and global economic concerns. If you look at their share price history for even just the past 5 years, you will see it is hugely volatile and this sort of movement had been seen before.

Certainly very short of positive news at the moment.

Spiton, in the unfortunate event of an administration, the administrators act on behalf of creditors. They will try and sell the business in as intact a form as possible, although if they have little income, their time line is limited as they will have on-going (although not pre-administration) costs to meet. The administrators will check the validity of any security and identify any preferential creditors. Secured creditors only get paid in full if the asset over which they hold security realises its full value, if it falls short then they rank alongside ordinary creditors for the balance, if it fetches more, the surplus goes to pay other creditors. Preferential creditors must be paid in full before any ordinary creditors ( typically those who provide goods and services) get anything. There is normally a bun fight over retention of title (the point at which title to an asset passes from the supplier to the purchasers) as to whether it is on delivery or payment and this will depend on the contractual terms. After all of the claims, and of course the administrator and their advisers (lawyers, valuers etc) who always get paid first it is fairly unusual for shareholders to get anything. It can be a long and costly process and a fee fest for the accountants.

More recent than Poly Peck, although still a while ago was Marconi which was huge and cash rich at one stage. Remember well as lost a lot of money catching a falling knife that “could never fail”. Much more recently was Provident which crashed out of the FTSE 100 only a couple of years ago and whose share price is still only about 20% of its peak. It can happen, and very quickly, just hopefully not in this case.

Tuckup, I have posted on others. What you cannot eradicate from your mind is experience both as a Director of large businesses and an investor. Believe me, I have made mistakes in both but some of the comments I see on here and indeed on both Thomas Cook and Debenhams suggest individuals either have or are about to make mistakes I made 30 years ago.

Skid, I am the last person you would want to advise you. My initial entry was at around 90p many years ago and with hindsight I should have sold when Carlyle Group bid an initial £1.30. Like the Board, I also thought they would up the offer, but they reduced it on DD and it has been largely downhill since. I have averaged down with my recent stake at 25p but still have an average price of 70p. Have held now for 15 years so will hang in in the hope of a major shake up of the Board that rejuvenates what I still feel is a good business.

I bought 3 businesses out of administration and am fully aware of the process and rankings. I am also aware that it is the role of the administrator to check the validity of all security and claims and deal with appropriately. Equally I am aware that in the administration of a significant PLC a few years ago, one of the major banks believed it had £30m of its debt fully secured but the security turned out to be invalid. Nothing can be taken for granted. You practical experience is?

We have also got it that you have a different view and post incessantly on it. Time will tell who is right but I clearly have the ability to be more objective than you having much less emotional attachment to an equity investment which always carries risk,

In the event of an administration all the negotiations will be with the administrator. All contracts with the previous business effectively terminate and it is down to the administrator to see what can be salvaged and does not have to pay any of the previous liabilities. The rights to proceeds from the administration are laid down in law depending on whether they are secured preferential or ordinary. If the administrator does not have funding to keep the business going then they will liquidate it which frankly would be a disaster for everyone.

During negotiations I have regularly heard sellers claim our offer undervalued their business because of the number of years of their life they had invested and how much they had spent on investments. If a business does not have enough cash to continue then that is all totally irrelevant and it is worth what someone is prepared to pay. In this instance, so far the only offer is AAL. I am surprised that others have not come to the table but they know the industry better than me, and will have reasons, equally, I did think AAL might increase the offer slightly but as time goes by then that looks less likely. One thing that is almost certain is that in an administration, shareholders will get nothing.