Member Info for jimbob1983

Just back from lunch, some really good points raised by all. Just to cover one of the questions raised by Extrader:

At the risk of starting another hare, when you write .."My question now is whether the approximate loan received in consideration for the shares matches the value of the shares purchased by AZ recently.."Which shares do you mean ?It would be odd for AZ to use borrowed funds to buy shares in SYME when the 29/7 RNS said that 1AF2 intended (if allowed) to use the same funds to participate in one or other of the structured fundings (where AZ said there'd been a requirement to cover 'first loss'' risk)."

Yes, you are technically correct. My apologies, it would indeed be 1AF2. When I refer to AZ I meant in his capacity as the economic owner/founder of 1AF2 (which I presume he is). By all accounts I would expect 1AF2 to be owned by an offshore Trust of which he is the settlor/owner. That's usually how these types of structures are set up. Either way, he is the owner of the wealth so from a marco-analysis perspective my theory has legs. The shares were collateralized, the funds paid to 1AF2, who will in turn inject those funds into SYME (in one way or another).

The article concerning Quindell is interesting and by all accounts such margin call provisions could be included in the pledge agreement. The article makes it clear that the agreement was a "sale and re-purchase", whilst that is similar to a pledge, it is not a pledge. Pledges are floating and require certain events to crystalize into real ownership or an actionable right. We will never know as we will never see the pledge agreement.

On other note, the margin call was on the directors in their personal capacity not the company and they decided not to honor the margin call. If such a margin call was included in the pledge agreement the share price would have to tumble towards their LTV offering. The websites (or one of them) say that they offer around 45-65 % LTV. That actually gives me comfort, that an independent business has granted a loan believing that the share price has a low risk of dropping to 45-65% from its current value. If there is a margin call provision in the agreement the share price would have to tumble to a certain LVT to trigger it. If it is triggered I would imagine that we would see 1AF2 selling some un-pledged shares to generate the cash to meet the margin or transferring more un-pledged shares in SYME to the lender (if it has any of course). Failing that the lender would take ownership and then becomes an investor, just like us. Although it's not an ideal situation.

Great discussion all, hope you have a lovely weekend.

Extrader has made some good points and a healthy discussions is important. I think a couple of issues are muddled concerning the pledge but that's what these discussions are for. Extrader, good job finding the LVT offered by the lenders, I would have suspected around 50%, that makes sense right? The more volatile the asset the lower the LVT. My question now is whether the approximate loan received in consideration for the shares matches the value of the shares purchased by AZ recently. If it does, this answer everything (I am not an accountant so I stay clear of figures - perhaps someone has the answer). This would also answer why he didnt exercise any options in the share price(I believe he has some).

The other point I want to flag is that the lender is highly unlikely to be able to sell the shares.. They can trade the pledge of the shares. I want to go as far as to say that the lender cannot. I have not seen it done before and it makes little sense. Trading the pledge on the shares still has value in the market place, it's not a routine product but still a marketable one. You may recall similar products known as mortgage bonds, they are similar in a sense.

Either way, we only need to be concerned if (1) the lender can indeed sale the shares at any time at their discretion as Extrader has mentioned - this is highly, highly unlikely and not in keeping with pledge agreements (2) AZ does not pay back the loans. If number 2 happens then the lender can claim title to this shares OR whomever they have sold/traded them to and they can do as they please with them.

Not now back to work! I still have another 6 hours until COB, I imagine you chaps are at beer o'clock right now!

Last word from me, Extrader, can you share the date of the RNS concerning your comment below:
AZ quite correctly clarified that 'he would never sell his shares' . However, the RNS seems to make clear that the Lenders CAN, for reasons of their own.
I would be interested to review it because if that is right, then the position is different from my proposal.
Cheers
James

Watched the interview and didnt catch anything about 1AF2. But I am at work so cannot give it my full attention, will have to do that later this evening.

I have theory (not validated, so don't shot me). Did AZ get he pledge and the liquidity to then inject those funds into SYME? Was the recent purchase by AZ of SYME shares on the open market or a subscription (so funds go directly to the company). Was via cheap options or at full market price (this would be better because a great value of funds to to SYME to capitalize it). this would then tie in with some of the comments I have seen below about using 1AF2 to avoid a placing and for also satisfy the comment "use shares to create value for the company". You may have read my earlier comment, many directors pledge the shares and use the proceed to invest further in the company, again, very typical.

Extrader is right, so long as the loans are repaid, all is well. If they are not, well that may lead to a problem. So we have approximately 24 months to make such a determination. Again, what happens to the pledged shares (the word pledge being very important) we will have no idea. But dont mistake these with actual shares. It is the pledge that is being traded and the pledge will not crystallize until a trigger event, the main on being non payment of the loan in 2 years (but I am sure there are others in the pledge agreement). Good talking, now back to work for me, enjoy the day gentleman.

Thanks. Opening the interview now, will take a look and let you know.

also concerning the following:
"You ask 'why would any of these Lenders sell ?'

The RNS says 'Lenders may trade pledged shares to diversify their portfolio concentration risks.'"

The lender typically cannot sell the shares. Unless someone can provide evidence of this. They can trade pledged shares. Pledged shares are a very different product to "shares". They dont carry the same value or LTV.

The need to trade pledged shares because they are carrying a risk product. They can de-risk their position by trading the pledges and using the proceeds to hedge. Simply as that.
Kind regards
James

As I said before, even if the shares are in the name lender this is mute point, it's very common and I would expect to see it under such arrangements.

I had a quick look and I couldn't see anything that indicated that the lenders "sell the shares at their discretion in the interim, for their own purposes". Can someone share this? If true, that does cause some concern but that isn't common under pledge agreements. The whole point of a pledge is that it crystallizes on a trigger event and only then does the lender take full beneficial ownership.

As far as I can see there is not risk to SYME for a "call for security/margin", that is a separate concept to a pledge. SYME is not even a party, as such, to this arrangement. It is between the lender (and whatever nominee companies they use) and borrower.

As mentioned, very new to this investment and I don't know much of the history but this pledge transaction has all the hallmarks of being rather routine when we look at the collateralization of small cap shares by a director.

Thanks for the info, I didn't scope out the share register, very new to this investment. The point about the shares being in the name of the lender was really a "by-the-by" from my experience to share with others. Overall there are no concerns, uncertainty will only creep in should the loans not be repaid. As mentioned I am new to this investment but I would be interested to marry up the time lines to see if AZ's ownership in the company did increase following the pledge. This may well indicate that the proceeds were used for this purpose, that gives additional comfort (as opposed to the loan proceeds being used to buy a holiday home, car, fund live style etc).

This form of structured financing is very common. Holders with large amounts of shares collateralize them to generate liquidity. The shares are only pledged and the lender cannot take beneficial ownership until a default event (the loans are not repaid in the specified time). That said, the shares are more often that not put into the names of the lender (under a pledge agreement) to give comfort to the lender that they can take effective ownership in the event of a default (but the beneficial entitlement is still with the borrower - for example, the borrower will still receive any dividends). Further, the pledged shares can be traded, not the shares per say, but the pledge. A bit like your mortgage company selling your mortgage to another provider, the ownership of the house does not change but the debt (the asset) is acquired by someone else. Again, this is common with these types of arrangements. You find these arrangements very common and director who own shares in small caps use them all the time. Many times they will use the proceeds from the loan to purchase more shares in the same company (not pledged of course). Hope that helps to add some meat on the bones.

Hi All
Hope you are well, I came across this share on another board. Still looking into it but can any kind soul out there summarize the current position and why the SP is increasing? Naturally I will continue my own research etc but some highlights would be highly appreciated. I am keen to get in first thing in the morning so having to slog in some hours now overnight. Thank you.
Kind regards

Highly unlikely any bank will accept EUA shares as collateral for a mortgage. Sucks that they declined you just because of a minor offence

Romek, can you provided a brief and general summary of what you read please? Thanks

Has the name/ticker changed again?

Well put Thronegames. Finally a sensible voice.

This BB is pure comedy, better than TV. Got everything, the good guys, the bad guys, those in-between and the self righteous fools.

Thanks, I think. Not sure what "style" or "handle" you are referring to. Was just hoping for some info and to firm up my research but clearly I am in the wrong place, and won't be posting again. Thanks for the input.

Hi All
New Investor in EUA, done a fair amount of research but noted mention of asset sale/company sale. Can anyone provide any additional information? Is the company actively looking for a buyer for all/some of the assets? Any help appreciated.

woohh,,what's triggered this!

Like Ogar it appears that there are a lot of old times investors who took a risk and suffered. I guess there always significant risks when investing in AIM and unless you diversify or can stomach the large losses companies like VIY can be unforgiving to someone's portfolio.

What are the AIM rules detailing the time a company can be suspended for? Must be a time limited surely.