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"My guess is that might be by the end of this month."
Not a chance of that happening by then Meldrew44.
To consolidate or subdivide the shares, they need to call a general meeting. They have to give at least two week notice to call an EGM.
As regards issuing new shares; it makes absolutely no difference whether the number of shares is halved following a share consolidation, or doubled with a share subdividion. The actual share value is almost certain to double or halve accordingly.
Eg:
Nominal Price = 25p - Actual Share Price = 2p - Current
Nominal Price = 50p - Actual Share Price = 4p - 1 for 2 Consolidation
Nominal Price = 12.5p - Actual Share Price = 1p - 2 for 1 Share Split
With either option the Nominal Price is 12.5 times higher than the actual trading price.
New shares cannot be issued below their nominal value, so none of these options allow the company to issue any new shares.
To issue new shares, AST would need to perform at the very least, a 25 for 2 share split to reduce the nominal share price to 2p. That would multiply the number of issued shares by 12.5 times. The exact opposite of what the directors want.
Following the last consolidation in June 30 2016, there were 56,780,361 - 25p shares in circulation. The current number of 25p shares in issue is 542,573,869.
That is an increase of 9.5 times in 7 years.
Who exactly, if it wasn't the directors, authorised a rights issue, placings, issue of warrants etc, that caused this vast increase in share numbers? So the board moaning about there being too many shares seems a bit rich to me.
Doubling the Nominal Share price will as you say halve the number of issued shares, thus doubling the value of those shares. See examples of this below:
Nominal Price = 25p Share Price = 2p Difference = 23p
Nominal Price = 50p Share Price = 4p Difference = 46p
Nominal Price = 100p Share Price = 8p Difference = 92p
The effect of this is to greatly increase the difference between the actual and Nominal share price. This makes it even more impossible for the company to issue new shares, as they conceded in the RNS. Is that what the BoD consider to be an orderly market?
"A new nominal price of 50p could be created, existing shares would halve in number, then the £100m could be raised at 50p. Exactly the same outcome. Indeed the £100m could just be raised at 25p with exactly the same outcome."
The company could indeed issue new shares after a 1 for 2 consolidation at 50p, or indeed now without the consolidation at 25p.
The problem is who will buy these shares that are priced more than 10 times higher than the last trading price before suspension?
No need to apologize Meldrew44, I don't think that AVO really know what the plan is either. To me, this looks like they have thrown a load of ideas into a hat, and are waiting to see which ones will be picked out.
"Maybe they want to consolidate first, so not having to change the '25p'nominal share setup?"
If they consolidate then the nominal share price automatically changes to the new value.
ie: a one share for every two held consolidation changes the Nominal Share price to 50p.
Meldrew44,
The paragraph immediately following the one you quoted says this.
"In addition, the Company proposes to further undertake a sub-division as, under the Companies Act 2006, a company is prohibited from issuing new shares at a price less than the nominal value of its shares. Accordingly, in order to implement the Prospective Recapitalisation Plan, it will be necessary to reduce the nominal value of the Ordinary Shares to below the proposed Issue Price. Further details of the proposed consolidation and sub-division, which will be subject to shareholder approval, will be sent to shareholders in due course."
So their plan is to consolidate, or reduce the number of shares by increasing the Nominal Value to say 50p. This would halve the number of issued shares.
Then they plan to vastly increase the number of shares by a share subdivision to below the mythical ISSUE PRICE. Assuming this Issue Price was at 10p (as in my previous example), and they proposed issuing new shares at a new Nominal Price of 8p, they would have more then trebled the number of shares in issue from what they are today.
However, who in their right mind is going to purchase any new shares at 8p?
To sell these new shares they would need to be offered at 2p or less.
This would increase the number of shares in issue by over 10 times what we have now.
So, I fail to understand your comment "It seems clear to me that the BoD has in mind a significant reduction in the number of share in issue."
I am not sure of anything iWantThatOne, who can be with any RNS issued by this company?
I take new equity to include the issuing of new shares to existing shareholders. This can only be done at or above the Nominal Share Price (25p).
The term Issue Price does not appear later in the RNS. It only seems to apply to dealing with debt and outstanding payments. Neither is it at any time explained.
My GUESS is that suppliers and borrowers are being offered to settle the debt with new shares at a notional issue price of say 10p.
Eg: with the share price at 2p assuming AST owed you £100,000.
You would expect to receive payment of 100,000 x50 = 5M shares.
Eg: with a notional Issue Price of 10p assuming AST owed you £100,000.
You would only receive payment of 100,000 x10 = 1M shares.
All these payments would be made in 25p shares.
Assuming the supplier immediately sold his Issue Price shares for 2p (their trading value),
he would receive £20,000. An 80% haircut on the £100,000 owed by the company.
I think that I may have made some sense of all this. Or on the other hand, I may be completely wrong!
"Shares in lieu of fees
In addition, subject to obtaining the necessary shareholder approvals and reaching agreement with the various counterparties summarised below, the Company intends to satisfy amounts owed to various parties as follows through the issue of new Ordinary Shares at the Issue Price:"
Suppliers bills and adviser fees, plus some director remuneration is to be paid by the issue of new shares at the "Issue Price". But what is this? The issue price is not stated in this long winded RNS. It is also interesting that all this is discussed before they mention a subdivision of shares.
The suppliers and advisors are, I suspect, being offered payment in shares based on a yet to be negotiated price - the Issue Price. A similar, but more generous offer has been made to some lenders.
"As per the Company's announcement of 1 March 2023, various lenders who hold £6.4 million of secured convertible loan notes will have the option to convert their secured convertible loan notes into Ordinary Shares at a price that is equivalent to a 20% discount to the Issue Price."
They will be offered a poor price to settle this debt with the threat of insolvency hanging over negotiations. I'm guessing an Issue Price of somewhere between 10p - 20p. With the shares last valued only 2p, that is quite a haircut, but it is better than nothing.
I am sure that I am not the only one here confused by some of these terms, so I have looked them up, and posted the definitions below:
A SHARE CONSOLIDATION reduces the number of shares a company has in issue.
This is also referred to as a REVERSE SPLIT.
Eg: After a 1 for 10 consolidation, you would receive one new ordinary share for every ten existing ordinary shares held.
A SHARE SUBDIVISION is where shares are each subdivided into two or more new shares, thereby increasing the number of shares in issue. This is also referred to as a STOCK SPLIT.
Eg: After a 10 for 1 subdivision, you would receive ten new ordinary share for every one existing ordinary shares held.
Not sure that I follow your logic Meldrew44.
You said that "The rest of the proposed plan, including the subdivision, seems to me to depend on there being a higher share price than we currently have".
I would have thought that the subdivision is the very first thing that the company must do. They cannot issue any new shares until this is completed, as they admit in the RNS.
"In addition, the Company proposes to further undertake a sub-division as, under the Companies Act 2006, a company is prohibited from issuing new shares at a price less than the nominal value of its shares. Accordingly, in order to implement the Prospective Recapitalisation Plan, it will be necessary to reduce the nominal value of the Ordinary Shares to below the proposed Issue Price."
MasterPlan,
I suspect that you are right, but why talk about issuing shares before you talk about a share consolidation, especially when the one has to precede the other? And why have they still not said what the new nominal share price will be? They have had plenty of time to think about this. The whole RNS is disjointed and confusing, because it has been presented in the wrong order, and is full of wishful thinking rather than factual information.
And here is a prime example of their muddled thinking, and poor phrasing.
"In addition to obtaining the shareholder approvals noted above, in order to implement the Prospective Recapitalisation Plan, it will be necessary to first implement a capital reorganisation of the Company. At the date of this announcement there are 542,573,869 existing Ordinary Shares of 25 pence each in the capital of the Company in issue. The middle market share price of each Ordinary Share as at close on the date prior to suspension of trading in the Company's shares on 30 June 2023 was 1.925 pence, giving the Company a market capitalisation of £10.4 million. The Directors consider that the number of existing Ordinary Shares is not only unwieldly in volume for a company of Advanced Oncotherapy's market capitalisation, but when combined with the prevailing share price, is not conducive to an orderly market. Accordingly, the Directors believe that a consolidation of share capital will result in a more appropriate number of shares in issue for a company of Advanced Oncotherapy's size in the UK market."
So the Directors think that the number of existing Ordinary Shares is unwieldy now!
Do you think that someone should tell them that there is likely to be ten times more shares in issue after the share consolidation, and then anything up to another ten times that number after the fundraising is completed.?
"As per the Company's announcement of 1 March 2023, various lenders who hold £6.4 million of secured convertible loan notes will have the option to convert their secured convertible loan notes into Ordinary Shares at a price that is equivalent to a 20% discount to the Issue Price."
So lenders are being offered the chance to convert their loan notes into shares at a price of 20p per share (ten times more than the closing sp before suspension).
Shares in lieu of fees
"In addition, subject to obtaining the necessary shareholder approvals and reaching agreement with the various counterparties summarised below, the Company intends to satisfy amounts owed to various parties as follows through the issue of new Ordinary Shares at the Issue Price:
· the Company is hopeful that £0.5-£2.0 million of payables to certain suppliers will be settled in new Ordinary Shares at the Issue Price (the "Supplier Fee Shares"). Negotiations with selected suppliers are ongoing;"
And suppliers are being asked to settle their outstanding bills with the issue of new 25p shares. (At current sp of 2p, they would be getting 8p in the pound to settle the bills).
The Company is hopeful, they say. I bet they are!
"Nothing is certain in the world"
Benjamin Franklin would seem to disagree wit you Stumpy.
He is credited with saying 'Nothing is certain but death and taxes'.
It really does not matter if it is 5% or 10% of a shareholding needed to call a General Meeting.
Like me, almost everybody on this board is holding their shares in a nominee account with a major broker, such as Hargreaves, AJBell, HBOS, Barclay's etc.
The registered shareholder therefore is Hargreaves, AJBell etc - not you!
To call a meeting, it would require these brokers to organise and collate their holdings to reach the required threshold. However, I suspect that not all AJBell, Barclay's etc nominee shareholders would consent to this. And I'm damn sure that these brokerages do not want to be bothered with this, after all they are not the ones losing money here.
The example quoted by Jackbal is an exception as it was led by Hargreaves (a registered shareholder), not posters on a bulletin board.
I think that, that would be a very foolish and dangerous thing to do AParky.
The forced selling by a major shareholder will adversely affect the share price, but not half as much as the shares being suspended by the company.
Thanks for the vote of confidence iWantThatOne.
However, it takes time to call to call an EGM, and time, like money is something that the company is very short of.
You have to go back more than a year to when the sp was above 25p (it was 26p on Mar 16th 2022)). That is the last time that they could have offered to sell new shares via a Placing or Rights Issue, to new or existing shareholders. For over a year the Board have known that they cannot issue new shares to their own supporters, yet they have done nothing to address this issue.
A share reorganisation to 1p will not harm or dilute existing shareholders as they would then hold 25 times more shares than they do now. Then the company could offer new shares at say 1.75p, a discount to the prevailing 2p sp. They were advised to do this years ago by a previous lender, Bracknor. They chose not to heed this advice then, and I doubt they will now.
Instead they have criticised investment on the LSE and invited investment, or a partial take-over from companies listed on the American market, but have so far drawn a blank. The one funding option that the company was pursuing has collapsed, and their shares are now suspended as the company faces running out of money.
To answer a previous question - I first invested in AVO in 2013, but disappointed by "treatment of first patient dates" constantly being pushed forward, sold out some years back. LIGHT looks to be a great product. It is a shame that it is in the hands of these clowns.
I think that it is quite clear, if you follow the links Vanilla.
RNS 19 June 2023
Advanced Oncotherapy (AIM: AVO), the developer of next-generation proton therapy systems for cancer treatment, announces that it has received a conversion notice for a portion of the convertible notes, which were issued to a French counterparty, as announced on 1 March 2023, into new ordinary shares of 25p each in the share capital of the Company ("Ordinary Shares").
RNS 1 Mar 2023
Advanced Oncotherapy (AIM:AVO), the developer of LIGHT, the next-generation proton therapy system for cancer treatment, announces that is has entered into secured convertible loan note agreements to raise £4.975 million from new and existing investors, as well as certain Directors (together, the "Lenders") of the Company (the "Secured Convertible Note"). Total funds of £3.828 million have been received from investors under the Secured Convertible Loan Note as at the date of this announcement. The balance of funds are due to be received shortly save for £500,000 from Michael Sinclair (Executive Chairman) due to be received by mid March 2023.