Member Info for Maxi19

NicName, a fundamental like - how much is the Axial Flux IP worth? That's potentially where all of the value is.

If only one party would buy the IP it may be worth £100k. If 10 parties are interested it may be worth £10m.

You assume there's only one potential buyer and that potential buyer knows that it's the only potential buyer.

That's not how these processes work. A dataroom is set up where interested parties can review confidential documents after signing an NDA. There is then usually a timetable for indicative offers, probably today or tomorrow. If a buyer really wants the assets then it will probably be prepared to make an offer for the company to avoid the risk of another party getting the assets. If no party is that fussed about the assets but would buy them for heavily discounted prices then yes you may see a pre-pack sale.

Yes cash burn could mean that the company has no enterprise value. But if trading stops are the assets worth more than the debt?

Also, high cash burn doesn't prevent a takeover if there's a buyer willing to capitalize the business.

Ha Bag of the Week, that's a good title to have. And I don't know why I set my opinion at Strong Buy.

In seriousness though, you and others must strongly disagree with my post. If you can point out where I'm wrong I'd be grateful. Sorry if this has been done to death but I haven't seen many posts dealing with the fundamentals here, just a lot of noose.

Firstly I'm sorry for all LTHs here and I don't want this post to com across as know it all when I only heard about this company last week.

My view here is that this is a really interesting situation which obviously has a material risk of 100% loss but also has massive upside if you're able to buy at these prices.

The risk factors are obviously the cash crunch and the expedited sales process. I looked at all formal sales processes launched by companies in the last 10 years and the quickest launch to firm offer gap was nearly 2 months. Achieving the same in less than a month would be impressive, but private M&A can happen at breakneck speed so no reason it can't be done.

The reward factors are: (1) if you believe the board, Saietta VNA full production could start from April which would mitigate the cash burn (2) the pipeline for orders, ignoring the steering wheel failure, looks good, again if you believe the board (3) the company has no debt finance, just trade creditors (as far as I'm aware, correct me if I'm wrong) and (4) the technology does seem to be impressive given it was the basis for a successful IPO.

The share price has either collapsed monumentally because there really is no hope for a solvent escape/return of value to shareholders or the IIs have been forced to abandon their holdings as they can't hold unlisted shares which they can't trade. I'm not sure about this but the second reason does seem plausible, which would create a big disconnect between the actual value and risk.

There's also the question of whether the liquidation of the company could return value to shareholders. This is a big unknown but I think there's a possibility that it could. Suppose a higher end estimate of settling all debts of £7m. The group has (1) plant and machinery (2) patented IP, some of which is licensed to ConMet which could generate royalties and (3) a 49% stake in Saietta VNA. All of those have value. How much I don't know. However, I don't think it's implausible that a competitor would buy the Axial Flux motor IP for £5-10m or even more given it was valued so highly at IPO.

Regarding what happens tomorrow, I doubt the company will enter administration at this point. The company has no secured creditors (as far as I'm aware) so if takeover talks aren't going well I reckon the company can borrow a few million from a special sits lender secured over the assets which would give the company a few months breathing room. Perhaps though things are worse than they appear.

GLA. Please no-one invest as a result of this post.

If Brian had managed expectations properly then the share price would be well over 37p now. But he didn't so it isn't.

Anyway, have a good weekend everyone.

It's quite a big deal though to spend thousands of pounds shipping a VP across from America. It would be very price sensitive and frankly I don't see why they wouldn't be required to disclose the fact that they were doing a teardown. Even if they didn't, buying shares in January knowing that they would do a VP teardown imminently would be completely unacceptable and clear insider trading.

The delay goes on.

But thinking about it some more, I highly doubt the company are currently doing a VP teardown or are on the cusp of a new license or development agreement. That would make their January share purchases an obvious case of insider trading.

Obviously in January the VP hadn't been released but even an intention to do a teardown based on a belief it may contain our dots would have been highly price sensitive.

So I don't think there is a special reason for the delay. They're probably just enjoying the interest which is doubling revenues. If there does turn out to be a special reason then the FCA will get involved very quickly.

Yes I don't see any reason not to distribute the whole £40m. I think they gave themselves £7m of headroom in case of adverse exchange rates, higher inflation and something unexpected occuring. But they got a good hedge, inflation is coming down and everything seems to be going ok.

Deary me, so if anyone has any criticism of the directors they should sell up?

If you look at my posts they're actually measured when it comes to praise and criticism of the board. In this case though I think they're letting themselves down. Even if there's a good reason for the delay they should communicate that to shareholders. Incompetence and/or bad comms again.

Your post was on 19 December. On 8 January you also posted a link about LG potentially using Nanoco's tech, thinking it was recent when it was about 10 years old 😂

As I said, absolutely clueless.

BT and LG are executive directors. The others are non-execs.

Your knowledge about basic things has some amazing gaps NGR. For instance you thought Sony's new SWIR sensor used quantum dots or was somehow competing with STMicro. Absolutely clueless.

Yes Ginodog. If there is a near term opportunity for a new development agreement or license, mention that in the trading update. It doesn't have to be explicit "there's a chance we might sign a new agreement in the next month" but it could go something like "we are continuing our activities in X and are exploring near- and medium-term opportunities for new customers/agreements".

Ginodog, I agree it could be 2. If they want to buy back shares in some form then waiting for clarity on a commercial development is wise. It could be either a new development agreement or a new license agreement.

That said, there has to be a way of communicating this to shareholders. They can't carry on with this amateurish approach to comms.

Seriously.

It's a complete show. There must be a reason why they've haven't announced the plans yet but all we get is radio silence. They replaced their PR reps this year but clearly that hasn't helped.

Do BT and LG simply not understand how shareholders feel or do they just not care?

"I'm coming, will be with you shortly!"

(4 weeks later) *Door opens*

"Hi I'm Brian how can I help you?"

Oh sorry, I posted under my Maxi username, should have been my Daz or NGR username. ;-)

So what Tornadotony, why should the directors care about small shareholders like you? Why does it matter that they had a whole year to prepare the capital return? Even if they wait another month and do a special dividend to be distributed on 31 March, that's absolutely fine because they said in one recent RNS that they would do the return in Q1.

Do you really expect the directors to be more proactive, especially when they're being paid so little and have done wonders for the share price over the last few years? Seriously get a grip.

I think what Brian Tenner's problem might be is that he is unable to put himself in the shoes of shareholders and understand how they might perceive things.

His reaction to criticism of the settlement is a case in point. It was very defensive and included strange arguments like the damages models being discussed on this board. It's as if he thought he was in court being required to prepare his defence. The reality though is that those arguments were counterproductive. That type of legalistic approach (btw, he studied law at uni unsurprisingly) just peed off shareholders and convinced no-one.

Now we have this delay and I'm sure if challenged he will point to the RNSs and say we said Q1, but the point is that we shareholders have to wait while he pulls his thumb out.

Why can't we have a proper comms strategy which actually speaks to us like adults? That's what decent PR firms do. They don't try to explain away issues with reasons which will satisfy no-one.

Anyway rant over. Brian Tenner Out if Dieter or Jamal know anyone better.

I'm sure that with their post-settlement desire to improve shareholder comms we'll get an explanation of why it took so long.

Not.