Member Info for jimbogains

Broker can’t give the institutional investors any more information than we already have. We are all excited but nervous about completion of the deal that is yet to come. Investing in AIM, we clearly have a big risk appetite. Risk goes down when you know cash flow is sorted for the medium term. In the new year I fully expect some positions being taken by low to medium risk-appetite institutions who are happy to invest knowing they won’t need to stump up any more cash in the mid term. If you have appetite for risk, now is surely the time to jump in, before Cenkos’ efforts come to fruition

Chill out guys. It’s someone with a view/interest

I’m with OB… if you’re planning to hold for the long run then the rahels of this world shouldn’t matter

Of course, a clever investor takes into account changes in circumstances when evaluating their investments…

I suppose my only concern is if we have been drip fed this piece of information because the TheoremRx deal is looking unlikely to complete in 2021. Hopefully not… and all indications are that it’s going to happen in the very near future!

Can’t see why not - the RNS is quite clear that this agreement with CRT enables the TheoremRx agreement to proceed. Everything lining up beautifully

There’s enough pressure to get this done that I would imagine it’s this side of New Year or not at all. There might be moving parts on the legal docs but I would imagine substantially agreed now. Once there’s a final meeting of the minds it’s very easy for the lawyers to confirm agreement then Suzy and TheoremRx to DocuSign the final agreement from home whenever. Focus on 31 December, that’s the key date!

Had a quick look at the financial statements just now… most of the debt seems to be floating rate, although there do seem to be some interest rate swaps which could effectively convert some of the interest to fixed. That said, it seems that there is indeed exposure to interest rate movements, and not only by reference to UK base rate

I suspect the Letter of Intent will have provided exclusivity to TheoremRx until 31 December. In which case, this could well go up to the wire (as it often does on deals) - no doubt TheoremRx would want to make the most of the time available to get themselves comfortable. Just need to be patient… might not be a Christmas gift, but hopefully one for New Year at least!

Definitely excited about this company. Fingers crossed on VAL201, slightly too nervous to put more cash in right now but sure I’ll end up regretting it.

Any idea what the additional opportunities will do to operating costs? I assume they will need to take more people on to fund the extra work, but it’s a pretty strong indication that the deal is in the bag to see that the pipeline is being actively expanded particularly given cash is (currently) tight

Do we know anything about the FCA perspective on all this? I see the comments in the docs that FCA hasn’t approved etc etc but do we have any idea how involved they have been in getting the scheme to where it is now? Presumably to an extent at least?

Any idea what drove share price on Friday? I really don’t understand why it went up when it had been flat/negative following the Suzy presentation

Valtree - what exactly is it you don’t believe in? The drugs or the management team?

The FCA has the Practice Statement Letter and will agree to it (or not) before the end of 2021. If they're on board, then surely it wouldn't make sense for them to then reject the Scheme or deny Amigo the ability to lend. I assume the court will go along with the FCA (it seemed happy to do so last time), and the customers would presumably go along with the committee.

So... is it reasonable for me to conclude that we are likely to have a very clear view of the future of the business before the start of 2022?

Because if (big if!) SOA agreed, that means a line is put under past issues and the FCA accepts the new lending practices are responsible. Looking forward, the business becomes attractive to lenders and investors again.

Not sure that means anything though, assuming funds aren’t ring fenced… fundraising cash comes in and settles liabilities of the business and/or is used to lend. All part of the same pot.

Re the payout percentage - I think that based on the current loan book and the fact that a rights issue might be required that getting to £100m equity feels about right.

That would mean total payout of (say) £200m, which compares favourably to the pre-problems market cap of >£1bn. I get that the business will be less profitable going forward after it’s wings are clipped, but 50% payout ratio just doesn’t seem that harmful as long as the business can start lending and producing some pretty fat margins going forward

Thanks Hereshopin. I think the institutional placing was the bit I missed. Can they do that at a discount to share price without offering to existing investors first? ie wouldn’t the institutions just be underwriting the risk that the entire rights issue isn’t taken up by private investors?

Investor6:

Price only rises if the agreed compensation leads to positive equity in the business. Most recent balance sheet shows negative £117m of equity, so (broadly) the same amount of compensation claims need to be written off to get to £nil equity value. Agreed no RI until there’s certainty both on SOA2 and ability to lend going forward. But we have no ability to forecast what the SOA agreement will look like, so there’s no way of predicting what happens to share price other than hope value.

I was surprised that share price did what it did following the RNS. Yes, there’s a whole load of risk here, but isn’t the real point that the board are talking about a rights issue which means they have a degree of confidence that an agreement will be found that leaves the business solvent?

If compensation pays our 50p in the pound, that leaves us with around £50m of equity. If there’s half as much lending when the agreement is reached than before the issue started (at which point there was around £200m of equity in the business) then that would mean a capital raise of £50m required to get to a corresponding amount of equity to loan book as before.

To me, this seems like a reasonable outcome for all concerned.

You don’t need the cash. You can just sell your rights if you don’t have it. Your stake in the business will be lower but you’ll get the same cash for your rights as the discount. So all is well (assuming all the rights are taken up…)

Not sure what’s changed - surely we are the same now as before. If equity is negative due to compensation payouts then the business goes bust as nobody would subscribe for rights. If equity positive then any rights issue proceeds go to funding new lending. What difference does the share price at the point of rights issue make? Issue needs to be at discount to market price - fine - and the price set/number of new shares just determines how incentivised existing shareholders are to take up their rights.

What am I missing? We are the same as before the RNS, albeit now knowing we may be 4 months from resolution if all this