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I have tried to research into the legal dispute between DHSC v Novacyt - the key thing I believe holding the share price back for Novacyt, versus it's cash position at least.
Does anyone on this BB know what DHSC are claiming against? Performance? Product issues? Otherwise, Novacyt must have a strong contractual legal position!
Lots of conspiracy theories floating about. The situation certainly warrants it!
But, isn't Andrew Leeser appointed pursuant to BGF rights to appoint a non-exec director into the Board so long they hold 10%+? And given BGF have given their support to the deal, surely they believe this is the best route forward?
I hate to say this, and you all know I have lost significantly on this, unless a competing bid comes, then being absorbed into Novacyt with the capital they have, is the best way forward to realise YGEN potential.
And without an alternative, the dissenting shareholders have little negotiating position.
PS: It's not rocket science that YGEN valuation is so low due to its funding issue. With continued going concern uncertainty and lack of funds to grow, YGEN will not get a re-rating.
With YGEN absorbed into Novacyt, the business valuation should get an immediate re-rating. YGEN business will represent c. 75% of enlarged group. So, Novacyt will enjoy that re-rating. I expect when deal is completed, Novacyt will rise simply from an expectation of YGEN growth - let's watch if this transpires, all things being equal.
Cost synergies will be executed. Growth can be accelerated by cross selling across installed labs on both sides. Negotiations with larger players adopting Ranger can be done at better terms with capital behind it.
So, no, I don't like the 0.522p offer level. But I like the opportunity significantly improve on that by buying Novacyt at these levels.
LOL re hitman!
I guess we think slightly differently on this one. I have, sadly, had to rebase my expectation ie accepted my £m loss, and I reassess how best to recoup my existing YGEN holding value going forward. As below:
> YGEN (without funding) - may chug along and in time, if it survives, will receive a takeover at higher than 0.522p
> YGEN (with funding) - will more likely realise its potential and we have a chance of 5-10x today's value
Do I like 0.522p offer level? No. But better than it being delisted, another big diluted raise (if it can be pulled off) or worse, going bust.
Then I turn to Novacyt - because you are right, I am "forced" to invest in Novacyt if I want to ride YGEN. Market cap today circa £30m with a cash pile of £87m. Problems are cash burning business as they pivot away from Covid and legal dispute. On balance, it's an added risk v reward play I am prepared to take.
That's it really.
Slich, whilst I don't disagree with you - what's wrong with taking 0.522p and then riding it under Novacyt?
Hi Davand, I expected your comments (not necessarily just from you.....).
To be clear, I lost 7 figure sums on this! So, am I absolutely annoyed - yes! But, lamenting won't help recoup / rebuild what I have lost. I stand by my views / projections of the business then BUT I mistakenly thought we had proper financial stewards at the helm! I would have got the cost base to where we are today, 1 year earlier AND working capital management was an absolute shambles. Fundraising, if needed to grow, can be done on a healthier platform.
I am distinguishing what has happened with what can happen.......
I probably will get a lot of slating by writing this but here goes anyway:
Re takeover @ pittance price
What is the value of YGEN (with little funds) - probably higher than 0.522p but not much higher;
What is the value of YGEN (with lots of capital) - probably 3-4x sales.
On that basis, and assuming you like Novacyt fundamentals, then riding YGEN under Novacyt is even better. Novacyt's biggest issues are (a) legal dispute with DHSC and (b) cash burning business post Covid. But they do have a large IP portfolio and a cash pile.
Re Lyn Rees (here comes the slating)
For all his sins re value destruction here, I do think he is capable of building a business and sales. I wrote a piece re his settlement with Illumina, restructuring of Thermo loan, acquisition trail to broaden portfolio, Covid pivot etc and on that basis, he did deliver. But some bad decisions coupled with bad luck on timing / changes, did eventually compromise all that he achieved. The key problem for me was with financial stewardship and management!
With Novacyt, their CFO is tight and can solve the latter. If Lyn can do what he does best on the business development side, and kept in check on finances, then perhaps it is better the devil we know. After all, you would like to think he has learnt a lot in the last 3 years and will apply that learning!
Now that is interesting! (re Myers increase)
Masterblaster - you should read the documents already published. BGF has given their approval unless of course a competing bid comes at 10% higher.....
Anyone who thinks Novacyt will voluntary up their offer needs their head examining. Also, from where I am sitting, this is a done deal and you can already see the shares shuffling to enable that. Novacyt likely buying at below 0.522p to collect as much as they can pre Effective Date. Also, as I pointed out, a big chunk of YGEN are owned by II who bought in at 0.3p or averaged down to offer price. Yes, some will lose out BUT quite frankly, if Novacyt doesn't go through, YGEN future even more uncertain due to funding needs.
All said, I do NOT like how we got here and where we are, because we have a good business. However, I do see the benefit of the takeover, and hence will continue to ride it via Novacyt!
The only change will be if a competing offer comes in - unlikely but anything is possible!
Hi Kaeran,
You seem clued up re Novacyt and its history. I have jumped on board today simply to continue the ride of YGEN in a well-capitalised business. Think it is a win-win as YGEN business gives Novacyt a great platform to grow.
The one thing that bugs me is the legal dispute with DHSC. Have read all the public disclosures, but what is your take of likely verdict or indeed potential settlement routes (either party)?
Thanks in advance.
It will get voted through.
The recent circa 2.4b shares issued in Jan capital raising, 2.1b is with directors and institutions (BGF included). All these bought at 0.3p and now exiting at 0.522p or a good premium of over 70% in 6 months! Myers also averaged down and probably see this as the only way to realise YGEN value.
Then you have the proportion with original 727m holding including directors and BGF etc.
To get to 75%, it is circa 2.4b shares. Just the above pieces and a proportion of the original will get it there.
Then there will be retail investors, who like me, will vote for it.
I think, as bad as the price is, given current position - represents best chance to realise YGEN potential under another company with funds to accelerate growth + synergies in sales channels.
I will be accumulating Novacyt to continue the ride! GLA
It's certainly an offer lower than I / we had hoped / like. But, it's an offer nonetheless.
Novacyt has the financial means to accelerate our growth. By removing duplicate roles, particularly in management, I imagine £1.5m savings easy, meaning EBITDA positive. They & YGEN have sales channels and with so many labs in place, a significant cross-selling opportunity.
Rather than fighting the inevitable, I am nibbling at Novacyt for the ride on the combined entity growth.
I imagine their aim will be to grow the business and one of the larger players will buy them up for the tech / patent portfolio and revenue base.
Good luck all.
I mentioned Novacyt before with their big cash pile and synergistic target market. BUT not this price!
Yes.
Pretty shocking really.
Even 1 x sales (!!) is worth 0.6p.......
Telcos, and in particular Vodafone, battered over the last year - but it will come roaring back. Everyone and everything needs a connection and Vodafone is in a prime position. The way I see it:
UK - Merger with 3, with option for buyout, No 1
Germany - this will stabilise but it's the Altice JV that I feel will provide it a back to growth story;
Italy - likely merger with Iliad, with the owner also building stake in Vodafone
MENA - big growth and I will be surprised if Etisalat and Vodacom don't come together to dominate.
Spain - offload / JV.
Then, I imagine, with a dominant Europe and MENA position with over 500m subscribers, the likes of Amazon, Google, etc will swoop in to takeover on the cheap.
Focus on fundamentals......
YGEN management needs to share more positive developments, regularly. That will shift perception and sentiment.
For anyone interested, this is the company buying YGEN Taiwan.
https://inex.sg/
Perhaps we will be pleasantly surprised this time........the fact the discussion regarding strategic investment was deferred to avoid further dilutive impact suggest we should be ok.
With the cost cutting, we should really be break even now with the possibility of moving to cash flow positive later in the year, operationally at least.
I am very keen to hear how NIPT sales in USA via Ambry and others are doing. As I recall, they are targeting 50-100k tests per annum. Also, Ambry Cancer tests here in UK. Separately, of course, the adoption rate of Ranger technology - will we get another 100% or more growth?
A potential acquirer will not be bothered with LR or management - they will all likely go.
Get Ranger tech validated and further adopted, and we should be 10x today's valuation at least and it will be swallowed up by a larger player.
I suspect that is what is being primed.
Now shown in news........get Ranger adopted widespread, we deserve a FULL rerating