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Mcap £11m. Seriously?!

Mcap £24m now. Get buying, folks.

Well the company has communicated its KPIs for the year, so I assume when one of those is completed we’ll hear about it. Otherwise there’s little to talk about. I suspect a funding update will be next - new investors have sixty days to come on board with the CLN, so we may not hear anything until end-April. Hopefully we’ll get great news before then that all £15m has been committed, and that would take us to end-August (at £5m per two months, as implied by the CLN communication). That, together with good KPI progress, should settle nerves and see the sp rise.

I would see if it’s the case that agreeing a debt package is taking time. The wording of the communications (“...dilutive fund raising, the timing and quantum of which depends inter alia on the timing and quantum of the non-dilutive funding”) implies to me that debt is the preferred way forward right now. Registering the new classes of IP and then using them as collateral sounds non-trivial to me.

It’s very unusual to RNS a new executive manager position. He’s not even a director. Clearly AFC’s way of saying look guys, we’re still here, all well, and the ABB link is strong.

Hardman Research anticipates going cash flow positive in 2025, so it’s not too far away, and I suspect the £75-80m sought for 2023-24 will be almost enough. This is helped by the asset-light funding model whereby a funding specialist funds the machine build for the end customer. So up-front production costs won’t be as high as some think. The company won’t be building lots of machines at $40m or whatever just to sit in a warehouse. They’ll be built to order with staged payments up-front.

A salutary reminder, Kenj, though the amount of finance required here is a lot lower! And SXX was trying to get financing for a junk bond (I think) in torrid market conditions, worse than today. And they tried to raise everything in one go instead of chunking it up.

Anyway, I do wonder if AVO made a slight tactical error in saying what their two year capital requirements are. If they’d said we need £30m for 2023 (or whatever), that sounds quite different from £75-80m over two years. 2024 is a different ball game.

Ridiculous drop today on top of an overdone fall due to the four contested urgent care centres. Revenue strongly ahead, EBITDA still ahead of last year (just). Some headwinds but think this will bounce back well given a week or two.

The French counterparty is protected against a low share price at the time of conversion on 6 Feb 2025. If the share price is lower than 25p AVO effectively pays the difference via a “conversion fee”. So the counterparty’s loan repayment is protected, just deferred. And they get the incentive of some warrants. But of course they must be confident the company will survive.

The CLN holders will get the chance to convert at a lower SP than 25p if the company raises equity capital at a lower price before the notes mature. Plus they get a very attractive stream of income for ten years from Harley Street. So the risk for them is small and the returns great provided the company doesn’t fold. Let’s hope other investors think the same and £15m can be brought in this way (I see the investors included new ones). £15m would take us through to when - August?

The CLN is clearly not a cheap way of raising capital but it does avoid a heavily dilutive placement. Let’s hope the company avoids that until the SP is much higher.

On reading the RNS again I now understand that the CLN remains open for further investment. They talk about a maximum investment of £15m in aggregate should other investors wish to participate within sixty days. I wouldn’t be surprised, then, if we saw total funds raised well in excess of the nearly £5m headlined in the RNS.

I’m really happy. Short of more debt a CLN is the best solution. They can convert at 20% below the price of the next equity raise, so we need a few more of these CLNs before doing that - let the SP recover. Only keeps us going to end-April but it shows there’s support there.

Almost £5m funds secured.

A company statement is very much needed. Again, the number of transactions is modest and doesn’t warrant this drop. I see many more purchases are being shown now in the last half hour. And if a placing IS coming, it’s usually later in the day when leaks occur and the sales start - so I’m not convinced, but even if so, a placing is good news (if on the right terms!). I still think it’s likely this is panic selling.

The drop today has been driven by half a million shares sold worth c£25k. Does that represent rats leaving a sinking ship? Seems more like an overreaction from the MMs.

The CEO of another company I’m invested in said a few weeks ago that the mcap of his company seemed to reflect a bet on whether the company would survive. For some months it had indeed looked like it may run out of cash. While that situation has now been resolved by a fundraising, I do think the same is true here for AVO. Too many think the company is as likely to fold as survive, and this is reflected in the current share price. But it doesn’t take a genius to see that if it does survive, an mcap of £40m (or even £80m, say, after potential massive dilution) is ludicrously cheap. So it seems a binary choice to me at the moment - either the company folds and we lose all our money, or else it succeeds in some form and anyone investing at this level makes a mint. IMHO.

Isn’t the main issue here that the company’s growth is driven by online advertising, yet ad spend is the first thing to go in a recession? That’s generally true, and possibly what is putting off certain cynical investors. And it always sounds dubious when it’s just one company bucking the trend. Michael’s comment today that “AI” is the reason CINC is outperforming competitors sounded a little weak, though he did go into more depth. I can’t deny the results are there for all to see, though.

Listened to the Vox interview with interest. Reluctantly I believe the company does need a little capital buffer, brought on by its own inability to manage the contractor effectively.

However a few points. I would like to hear DB say that all other obvious sources of funds - an overdraft, a short term loan or revolving credit - have been explored. After all, if the funds MAY not be needed (as he admits) then those sources - drawn down if and when necessary - are better.

I also disagree with how much is being raised. Using some capital to accelerate drilling at Kor is completely unnecessary given the level of dilution. Each $1m of exploration costs 10m shares. Further, there shouldn’t be a retail offer nor should it be opened up to existing institutional investors - this is not a time for perceived “fairness”, given the dilutive impact.

“Rescue plan”. Emotive language, Bimini. AVO doesn’t need a “rescue plan”, it needs to raise capital for the next stage of its development.

Wraith, yes, agree. I suspect they’ve made the decision to sell on behalf of all their discretionary clients, in which case we can expect the remaining 20m to be sold too. At current rate of progress that would take 6-7 weeks. Seems like the sp won’t be doing much until April, at which point - with a good Q1 report - it will take off (hopefully!).

So it looks like Ruffer had 39m+ shares at the start of this year and have sold about 19m since then - about half a million per working day on average. Not surprising that the sp hasn’t gone anywhere.

The maths on this look odd - previously Ruffer had almost 10% (40m shares); now less than 5% of c440m (22m). Have they been selling down for a while and have only had to declare their holding now when breaching the 5% threshold?