Member Info for jimbogains

I haven’t checked the detail here but don’t we have right of first refusal (particularly given need for a shareholder vote)

Don't think I have... 500m shares in issue now, 19 times that issued, so 20x the current amount i.e. 10bn shares in issue post-dilution...

(and in any case, as i've now point out multiple times, the number of shares issued is irrelevant if you take up your rights!)

Rosie – struggling to think of many other ways to put this, let me try numerically:

Assuming 500m shares in issue now and a £13m market cap, the share price is £0.026. If you have 100,000 shares, then your current valuation is £2,600.

On dilution, the number of shares increases 20-fold (i.e. to 10bn). If a further £50m needs to be raised in the rights issue, then you will need to fund 100k divided by 500m of this £50m – i.e. £10,000 is your contribution. The market value of the company goes up by £50m to £63m and the share price goes down to £0.0063.

Post dilution, you have 2m shares at £0.0063, which are worth £12,600.

This £12,600 is the same as your current valuation of £2,600 plus the £10,000 you had to put in – i.e. it doesn’t matter that the share price has gone down, your investment does not change.

If you do not have the £10,000 to put in, then you will hopefully be able to sell your rights to buy shares to someone else – in which case, you would expect to be no worse off then you currently are (i.e. your shares + cash should be worth the same as your current investment of £2,600).

If you do not take up your rights or sell them on, then you have 100,000 shares post-dilution which are worth £0.063 – i.e. they are worth £630. Under this option, you have lost money.

Calamari:
On 1 - the whole point here is that the court is stepping in to determine what is reasonable, so that the redress creditors don't need to make decisions about things they do not understand.
On 3 - not sure I understand your point. If you don't take up the rights issue then the only way to protect your interest is selling your nil paid rights. If you just hold on to them without taking them up then you will definitely lose a lot of money!

Cookie1970 - yes I appreciate where you're coming from and that you might not want to stump up a bunch more cash. In which case, you should look to sell your rights when it comes to it.

Calamari:
1. Any informed creditors should very much care what the shareholders get - the creditors are giving up their rights in favour of the shareholders here. Having worked on a number of corporate insolvency cases I have seen 95% many times as the amount of dilution of existing equity required in return for creditors giving up their rights. On what basis do you think this is not the case and that HUR is not relevant?? I assume you work in insolvency law too?
2. Yes, we really should be grateful for what we get. Hopefully that will mean a massive gain compared to today's share price.
3. The total value of your holding will be the same as your pre-dilution holding plus any additional amounts you have subscribed, assuming you subscribe for your rights and the entire rights issue is taken up (or more likely, the value of your holding increases, given that the rights issue has been successful and the business has a prospect of thriving). Yes, the share price goes down to a fraction of what it was before... but you have 20 times as many shares! You are no worse off at all.

I really do despair of the lack of understanding on this board.

1. The 95% is not an FCA requirement. This is a widely accepted level of dilution in situations where creditors (who are entitled to everything a company has) are going to receive a haircut. They take a reduction in their payout and in return, the shareholders (who would otherwise be entitled to nothing) potentially get some upside, whereas otherwise (ie without SOA) they would get zero. Refer to any of the recent court cases where this has been the starting assumption - Hurricane Energy was a recent example.
2. Creditors always rank ahead of shareholders. And within the creditors, secured creditors (ie bondholders) rank ahead of redress creditors. Shareholders come last. We should be grateful that we get hope value here. The question is whether, based on whatever little equity is left after dilution and fundraise etc (representing the net assets of the business including goodwill, systems, etc) the business could see a resurgence at some point in future. I believe that this is the case.
3. The dilution amounts (19 to 1 etc) should make no difference as long as the rights issue is fully subscribed. I can see no reason why it would not be - the SOA will leave the business with a small amount of net assets and so anything further that is subscribed will create positive value in the business. This business is likely to continue to generate decent margins even after having its wings clipped. As long as you subscribe for your rights (or sell them on nil-paid), you do not lose out from the rights issue and it makes no difference what the dilution effect is. Why does nobody seem to understand this?

The determined price per share is the amount of equity that needs to be raised, divided by the number of shares that need to be issued.

It makes no difference how many shares need to be issued - more shares = lower price per share. Total amount to be raised is the same.

The only difference number of share makes is that existing shareholders will be diluted more heavily, the greater the number of shares issued.

Storm in a teacup. There is no news.

Yes exactly! I don't see any point in the RNS other than as you say. Nothing has changed. And frankly it doesn't make a difference whether it's 2 for 1, 19 for 1 or 1,000 for 1 - all that goes to is how incentivised shareholders are to participate in the rights issue. The number of shares to be issued has absolutely no impact on anything, it just determines the price at which shareholders will have to subscribe for additional shares

I can't see that the RNS actually provides any new information, other than that the rights issue will be on a 19 for 1 basis. Didn't we already know that shareholders would be asked to contribute £15m to fund the scheme plus additional contribution to fund new lending? So... the only actual news is we now know how the rights issue will be priced. There is no update on the court's view on the SoA etc, all comments in there relate to the previous discussions. I just don't understand why everyone is panicking.

I assume no need for a prospectus if you’re just going to ask your mates for the cash. Looks like the TheoremRx guy could have some useful friends on that front. Fingers crossed they’re just pushing him to get the whole suite of services to deliver value (including service agreement with Val) before they start shoving massive bundles of cash our way.

The most recent (2020) financial statements show that Suzy had 233,335 shares, 4,512 options and 83,333 warrants - that's a fairly significant exposure to the business! Couple that with the fact that she's not massively cash remunerated (£23k in the last 7 months of 2020 from her appointment as CEO) and I really do think you need to get real.

Whilst i'm struggling to see how the RNS is positive (at best it's neutral), Suzy does have confidence that TheoremRx will get the deal done and that Valirx will have sufficient cash to see this through to completion. So... a deal is still there to be done, it's just not going to be as rapid as previously hoped for by many of us.

I sold down a bunch of my other shares pre-Christmas to invest heavily in Valirx, so I trust you can understand my jitters in relation to the delay and uncertainty.

It’s only positive insofar as the deal hasn’t fallen over.

Amber light flashing in that TheoremRx still hasn’t been able to raise the cash - given the sub-licence was expected to be executed by end of year, the fact we are now looking at end of Q1 clearly means something has gone wrong.

How far out is Val’s cash runway? I am getting mighty concerned that this will mean more fundraising necessary.

I appreciate that services under this new service agreement are payable from November, but if TheoremRx doesn’t have any cash then they won’t be able to settle amounts due until after the fundraiser is complete.

So TheoremRx haven’t completed their fundraising and it may not be until the end of Q1. Surely this is not a good RNS?

An RNS is required for material announcements. “There may be a delay of a few days” is not a material announcement and therefore is not required. It is good that we haven’t had a “the deal fell over” RNS so far. Nevertheless, I do feel as nervous as everyone else as this drags into 2022.

News could drop at any time and we have no assurance that TheoremRx aren’t just stringing us along. Slightly concerned that there is still precisely zero literature on this company on the internet.

This board seems to have bipolar disorder. Chill out! There has been no backtracking. It’s in TheoremRx’s court. To say that Suzy didn’t need to give a timeframe is nonsense. She gave one and is trying to stick to it. What sort of idiot calls Suzy an amateur for doing exactly the right thing all the way throughout this? Muppet.

Only a half day of trading tomorrow then I think closed til 29th. 7am RNS from Val would be good so we have a good idea how the market is assessing the deal

Not just that Suzy would take a dim view… it’s also criminal to trade on insider information. I just don’t understand what pushed the price today.

Agree that the ups and downs are a bit of fun… most of my investments are in my nice boring pension plan, just like to play with my extra cash on the stock market… just nice to have more wins than losses!

I currently have covid and not looking like there will be much going on over Christmas for me, thus my increased interest in the boards right now!

Nothing obvious driving the price movements today, although it was on low volumes.

It’s not just Suzy that will be in the know on this though… presumably lawyers, brokers, etc all on the Insider List… and there’s always a risk someone will accidentally let something slip.

I’m definitely hopeful the moves were based on something positive, sold a bunch of other shares to increase my stake in Val today so I hope it’s more than a pump and dump as I have lost too much money elsewhere this month!

Perhaps I’ve misunderstood, but I didn’t take from the RNS that Valirx now has full control over VAL201… happy to be proved wrong! My understanding is that payment schedules have been changed (presumably so that Valirx only needs to pay CRT when it gets cash from TheoremRx) and there’s a greater level of flexibility in future sub-licensing deals (perhaps limited to deals with TheoremRx). At the end of the RNS it states that approval is required from CRT for future licensing activity.

I can’t see why this would be problematic, as CRT have an incentive to get VAL201 out in the world… but clearly Valirx still has obligations to CRT.

Do we have any idea what any payments to CRT will look like going forward? In particular would this materially reduce our net income stream expected under the sub-licensing arrangements?