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Completely agree, this is just a cheaper vehicle to get Redwood bank listed. If I see 5p on re-open I'll be gone and never seen again.
Rowland set up Jellyworks in the dotcom boom which was valued at £300m and then sold at £67m, right place at the right time.
Rowland also tried to set up Jellybook in 2012 (when facebook became all the rage), trying to be in the right place at the right time again.
The Mode, trying to be in the right place at the right time again.
Demolition123, being valued at £300m will offer us no help as Redwood shareholders would not except £50m worth of equity for a business valued at £300m.
To open at 20p Redwood would have to sell at £50m and then be worth £500m, it's never going to happen.
Crober33 the RNS says a minimum of £50m, if they convince themselves it is worth £300m it's not going to be agreed at £50m.
I'm not sure how anyone could value Redwood at £300m when Metrobank is only valued at £233m.
On a good day I can't see the market cap exceeding £100m but could be as low as £20m once the dust settles.
Crober33 agree if they mentioned crypto today it would explode but the latest hype may be over by June.
This issue if Redwoods valuation goes up is they may ask for more equity which would mean we end up with even less. Increased valuations before the merger do us no favours.
Crober33, I don't see how it is possible.
To give Redwood £50m worth of shares they need to issue them, lets say they issue them at todays market price (no premium or discount scenario).
If they wanted to give the R8 shareholders a bigger share, lets say double then the Redwood purchase would no longer be £50m it would be £25m.
***en39, valuation seems in line with what i'd expect shares may peak at 4 or 5p but then may drop once the dust settles
***en39, if they raised £50m it would be to purchase redwood shares and the redwood share holders would get the money.
the rns is clear that it is going to be a equity swap. all raising £50m would do would mean they had £50m in the bank account with nothing to do spend it on.
they have no need to raise money for what they have proposed.
if they do an equity swap the value of the new company will have an increased turnover, profit and balance sheet so would never be worth £2m. what it would be worth is the million dollar question, personally i think it may peak at £100m and then drop to about £25m.
if it listed on a day like today where there is a lot of crypto hype and they could make use of the licence then a lot of people will invest blindly like they did with mode at ipo so could see a a much higher market cap. the hype may be over again by june though and nothing suggests they can or will make use of the licence.
***en39. they issue more shares and swap it for the shares in redwood bank, absolutely zero funding is required.
in simple terms they are likely to issue another £50m worth of shares to make £53m business, redwood shareholders then become the majority shareholders and we become the minority. we can hope that they do something to make the deal sweeter for the existing r8 shareholders but the likelihood is they look after the majority and if something is done it will be pretty minor.
then in terms of share price the market will decide if the market cap of £53m is high or low. people are speculating multi bagger scenarios but for it to end up in a multi bagger scenario the market cap needs to move.
i see the deal as a quicker cheaper vehicle to get redwood to market without the volatility of going through an ipo. why are they doing it? a majority shareholders of r8 are also the majority shareholders of redwood, maybe they want to offload shares once on the market which they can't do currently or maybe they see a longer term opportunity or need funding through new shares at a later date.
if they utilise the crypto licence this may add some value but no one knows if this is possible or what value it would add.
***en39 the rns says exactly where the money is or isn't coming from "Â the consideration will be satisfied entirely by the issue of new r8 shares". based on this no money changes hands, redwood bank share holders will become the majority shareholders in r8.
When organisations get in trouble one of the first things they do is sell the family silver to raise cash. It sounds like Warrington Council have an unsuitable debt and also the added factor of public scrutiny. I don't think they will have the luxury of waiting for their investment to grow.
If they did do a private placement they would control the price, probably at a discount but private placements at premiums are not unheard of.
An investment that Warrington Council probably find challenging to sell until Redwood are made public.
I'd imagine they try and dispose as quickly as they can once the reverse takeover has completed. If this is the case would it be a private placement or sold publicly, either way would be a big risk to the share price.
JGOO LIMITED INDIRECT, more of a liability looking at their accounts. https://find-and-update.company-information.service.gov.uk/company/10805100/filing-history
Croper33, unless the £9k hit £3k so circa 66% drop I'd not be at a loss.
A lot can happen between now and July once dilution amounts are confirmed and once the intention of the disposal or use of the crypto licence is announced.
I'll get a feel of which direction it is travelling when reinstated. I like to ride my winners and if it's not a winner get rid before the rot sets in.
Demolition123 for 25p to happen it's going to need a market cap of £500m+ on a good day the crypto licence is worth a max of £50m as that is what Mode spent getting it (including costs of setting up app's, websites etc) so probably half that.
After dilution I can see this opening and peaking at about 4p and then crashing to about 1.5p after. If they develop a crypto arm of the bank some may naively invest and push the price up longer term if the market conditions for crypto are favourable.
People seem to think there is a market place for a crypto bank, but why wouldn't people go with a name they can trust like PayPal or Coinbase which exists already. What would R8/ Redwoods USP be to draw people away from household names doing the same thing?
The whole concept of mode was flawed as affiliate cashback websites like topcashback and quidco already existed with massive amounts of partners in place. If people wanted cashback in bitcoin they could have just cashed the money out and deposited with paypal or coinbase. Just like the concept of mode being flawed the concept of there being a requirement for a bank with a crypto division is flawed.
I actually thought the best thing Mode could have done before they waste all their money was do a rights issue and try to buy Top Online Partners Group and tag the bitcoin function onto what would have been their competition.
Crober23, because trading it was very profitable. I turned £3k into £11k which dropped to £9k and it is now sat waiting for the suspension to be lifted. If the £11k increased it would have been sold and bought back at a cheaper price.
I hope peoples optimism is correct but I can't see any major benefit after dilution. Hopefully I'm proved wrong.
Demolition123, if you were correct bitcoin would always travel upwards in a straight line and never drop, this obviously isn't the case. Even if it hits 100,000 today it could drop to 25,000 by July. Agree with Lionswood one day bitcoin will be £1m but that might be 5 years away or 500 years away.
If an announcement comes out before the deal is done saying the licence is being utilised your predictions could come true but would need no dilution to existing shares which is unlikely. At the moment there is nothing that says the licence will be used, they are more likely to try and sell it to strengthen their balance sheet, that's what I'd expect from a bank.
IrnHaggis, still holding because it was a great share to trade. I'm up about 300% through buying low and selling high, also though there was a chance someone would pay between £5m and £10m for the crypto licence. The Redwood Bank deal may see the investment drop rather than go up,
Everyone on here says JR won't do over himself, mates and other shareholders of Mode, but that means a worse deal for the shareholders of Redwood. Pretty sure him and his mates are major shareholders of Redwood. The better the deal for Redwood the worse the deal for Mode.
IF bitcoin hit 100,000 doubt it would stay there, it would do what bitcoin always does and crashes so unless it was very lucky and hit it the same day could not see this happening.
Also doubt bitcoin is going to play much of a part regarding the valuation of the new business. I think the crypto licence may get used but no one will get burnt on they hype like they previously did with Mode post the IPO, most investors would like to see if the crypto licence actually generates a profit rather than speculation like it was with Mode/ R8.
I've got a bit of skin in the game so would like to be wrong but think all the positive comments on here are blindely optimistic,
Crocqman. Completely agree with you.
Our investment is with Mode/ R8 and not Redwood. Why on earth would they issue updates on R8.
The update we've been given is it will complete on a forecast date. Only other updates expected are the amount of equity being swapped, a change to the date, the deal falling through or a board member leaving R8.
I currently own circa 0.5% of Mode and these updates mean nothing, where all adults that shouldn't need our hands holding. Also have much lower expectations of what this will do when the suspension is removed after dilution, actually think it may drop in price, never going to be the overnight multi bagger some are hoping for.
Until the deal is done there is nothing to be kept in the lop with, Redwood are and will remain a separate entity until papers are executed.
Anything positive Redwood do now may add value to Redwood which may mean a greater equity swap and a worse deal for the existing shareholders. We're better off Redwood keeping positive news to themselves and the rest of the world in the dark.