RE: Hmmm6 Oct 2019 10:32
So here we are today with a proposal for wholesale change. I would have to say, this looks like a good outcome for shareholders as I was fully expecting a trip directly to the corporate knackers yard this month.
In effect Alan Minty, the former Exec Chairman, gains 100% control of MFDevCo in exchange for outstanding inter-company liability being extinguished with RMRI Ltd – a company he controls. The company has told us repeatedly via RNS and interviews and the like that MFDevCo represented the positive future with all sorts of possibilities of deals and revenue, none of which I considered had much merit. Regardless of my views, if social media posts are to be believed, MFDevCo was the light at the end of the tunnel for shareholders. If this plan goes through Minty obtains 100% of MFDevCo despite all that funding from placings.
The company had a longstanding debt with Shard Capital, which it demonstrated zero ability to repay, and today we are told this debt was purchased by C4 Energy Ltd. We are not told what C4 Energy paid for this debt, but in my view £1 plus a bag of Golden Wonder crisps for each director of Shard Capital would have been fair. The proposed plan will see this debt re-stated at £2.5 million with this sum being convertible into shares at 0.05p. So that’s 5 billion shares to be issued in the future.
We are also told that, subject to this deal being voted through at an AGM, a further 1 billion shares will be placed at 0.05p raising £0.5 million with persons or bodies corporate introduced by C4 Energy. We are also told that Mr Jayanta Bhattacherjee, formally with Aminex (AEX) and Andrew Dennan, currently a director of Coro Energy (CORO) will be joining the board and effectively taking control, and that they are shareholders in C4 Energy. That’s rather interesting, as Companies House records, last updated on 27th September 2019 (last Friday) re-confirms the two directors and only shareholders of C4 Energy as James Parsons and Marco Furmagalli. Perhaps these records will be updated?
If this proposal goes through, the company will become a cash shell. At best it will have the £0.5 million of cash from the proposed placing, less of course the costs and residual liabilities after elimination of the RMRI debt. I would suggest its value would be no more than its listing value – say about £0.5 million assuming it retains sufficient cash to pay the corporate costs until an RTO can be sorted.
Current shareholders own 1.5 billion shares, but on a fully diluted basis there will be 7.5 billion shares in issue. So current shareholders would effectively own 20%, or £100,000 worth of that £0.5 million nominal cash shell value. With the shares trading at 0.05p as I type, that values the current equity at some £750,000 or 7 ½ times fair value in my book.
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