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Allow me to disagree by virtue of a demonstrated example. It's merely introducing myself and how i view position and probability as a concept.
My vet comes and says to me on 19feb:
Your kitten mike will be pregnant by may 1st.
Then she publishes an rns on 30 mar and resonates:
Your kitten mike will be pregnant by may 1st.
There is a change in position to me.
The what's not being said is that we lost 40 days of trying. Hence the probability of that pregnancy happening is reduced by virtue of less time now available for that chancy event.
That is how I see our position worsened.
Genuinely my view.
I am seeing a vast change in position.
Between 19Feb and now, 40 whole days have passed, with no deal found.
The change in position, is the time lost for not founding a deal.
And if one is a subscriber to the narrative:
You still can go into admin accidentally by virtue of not being able to find a deal, instead of outrightly intentionally, then time lost is a hell of a change of position.
It matters the world to me.
The key evolution between RNS is simply this.
Whats not being said: solution not found.
I think you are picking too much signal in the noise mate... :)
Do not get me wrong, I am bullish as hell, but we cannot pick up any signal from a handful of trades, at a gross of 20k$
We really hang by the lip of the BoD, and what news they may have to publish for us...
I am thinking in terms of 1-2 bil new shares at 20p, 50-150 new debt, dependent on how you want to split the equity - debt bill.
2bil dilutes us 8 times. Takes the 48% residual market share (any non cornerstone owned) down to 7-8%.
I feel relatively secure in the thought that the price cannot be lower in that, not all moneys might be reachable by all cornerstones. If one backs down then the dilution effect is much more pronounced to then compared to the rest pi. It really is extremely bad to be a cornerstone here and not partake in new equity with a heavy dilution. You lose a lot! So pressure for price to be higher.
On the contrary scenario, if new equity is solely going to come from existing cornerstones, there are two flavours:
Either you do it completely apportioned to
your pre equity raise share, or it is disproportionate.
The latter scenarios has troubles being low price for the low participating cornerstones, they will resist heavy dilution.
For the former there is actually no point for an even worse than nominal price.
With nominal you need 2bil shares. Means you take your 51% collective ownership to 90%. 1bil takes you to 75-80%. You give your former equity a chance to recover something.
With higher dilution, yes you make more than 90%, but completely write off your previous investment to nill.
There is no guarantee whatsoever that this wont go to admin. But what I am convinced here is that if this gets saved, the idiosyncrasies dictate that the low raise price is highly non sensible.
And the idiosyncrasies here, is them existing cornerstones trying to save it for themselves.
And is not one to screw us all, its a collective that have to agree between them. Puts the pressure again for a higher raise price.
And to complete the triplet of posts:
Not being able to contribute, may very well mean you cannot accept a low placement price.
Further meaning they cannot accept between them what to do with the majority vote they currently hold as a collective.
And you lose time not making progress... you run out of options, you go into a consequential admin.
Now if you see the cliff, you may just find, that doing a raise at a higher price might be ok..
So don't just comment "usually this cannot be done above prevailing market price"
I insist that that is just irrelevant.
we traded under 50k today... to bring the stock down by 20%...
We need 450 mil
enough about correlating current share price, with potential placement price, in the face of admin.
Just do any math, of how badly an existing cs gets diluted, if they cannot contribute their attributed share to the new raise, IF the dilution multiple is extreme. They simply get equally wiped out as the rest of the small pi's.
I think this is really the trouble: not all are willing to put the equity needed.
There may be conflicting elements between the dilution factor, and the amounts needed for placing.
In fact I might think this is the reason why we have a delay and lack of agreement.
To explain:
It is all the possible that not all existing cornerstones can contribute to the new equity raise that it is needed, by their relative proportionns of their existing pre-raise equity share.
let's say [and here I make numbers up different to pronounce the point] we have 3 cornerstones [cs1,cs2,cs3] with current equity: 16% 20% and 24% respectively. And further lets assume that the total amount that needs to be raised by new equity is a round 100million.
Now the only way each of the 3 existing cornerstones preserves the same dilution with the new raise, is by preserving contribution as per their current shareholding.
For instance if ALL 100mil need to come from the existing CS's then they need to put:
32mil, 40mil,48mil respectively and indeed agree between them ANY placement price.
same principle applies, if let's say there is a 4th CS to come onboard, and say, they do it 50:50 with them.
Now in this exercise in order to preserve the same relative dilution between them, they have to aportion their 50mil tranche as:
16mil, 20mil, 24mil, at a price they agree with the 4th CS to bring in the rest of the 50.
There are the following troubles:
It may be that the monies that need to be raised are 150-200mil, and that one or more of the cornerstones might not find as easy as the rest of them to put what portion is for them to amount to the same dilution.
AS SUCH: this actually puts pressure and conflict between them to really agree on an extreme dilution multiple if at least one of the three cannot come up with the monies needed.
50mil say for glencore might not be as valuable as 40mil is for La Mancha.
It's all relative and specific to them.
If we are in such a situation, where they cannot come up with the figures asked, then they will be pushing back on crazy dilution multiples suggested, they will want a higher placement price, to avoid this.
think for instance if any of the three cannot come with say half of the moneys asked, and then theres chatter about doing this at 3p. think how much they will be geting diluted over amounts of 20-30mil if the chat is to do the placement at a price of sub-3p.
They can only super dilute this, if they can all move in unison with the moneys needed. If any cannot, then those won't take easy a super low price.
It might be exactly why this takes so long, and this is the true risk in my opinion for actually going to admin unintentionally: not on purpose but because they cannot agree.
ps: if one can put twice as much money now, at 1/10th of say the nominal share price, will not sit well with the other who cannot put this money and see there relative ration from 15%:20% dropping to 7%:30% exactly because of the skewness of the dilution to those not participating in the equity raise.
Occam's razor. It's a lot simpler in my view.
When there is some corporate action/news company has to make announcements.
The reason for this recent RNS putting the pressure is the court order on the injunction.
The reason for the previous RNS was the further interest deferrals.
These two events really force the company to publish RNS's.
The wording is always subtle, and subject to any person's interpretation to see a demon, or angel behind it.
What I particularly do not like is actually the arbitration I see from the market makers.
Who is to say for instance that last nights news had to have necessarily been interpreted as bad/good by the market maker, and therefore THEM to take a market move and open lower/higher?
sp closed at 3.63 last night, why did the market maker offer a spread this morning of 2.5/3.5? -- where is this specifically coming from?
The rest of it is actually a distorted effect of illiquidity again. you can always find a desperate mike to sell and a punty john to buy on on that LOWER open spread, and therefore set a lower price by consequence, and therefore IMPOSE the view on the news as being bad.
look at the trades: 15 trades as of this moment, no sale tally above 2k GBP, and some marginal buys on that spread.
And the price crystallizing at a 20% loss.
Mind this fact! 20% down on just 2k GBP sale.
It's a distorted market.
Had the mm opened at a 3.6/4 spread, I bet you we would have still have had similar liquidity and maybe the price now would be above the close of yesterday.
This truly means absolutely nothing.
What matters is the negotiating table, and where the millions sit.
It is what you need to do, I get that...
But that's the equivalent of almost having to give kudos to someone for dressing up and wearing clothes after they had a shower. When actually you have to take that for granted.
The important things here are what are not said.
Another fortnight has passed, with a caveat to no guarantee there will be a solution, therefore nothing can be announced as progress.
Furthermore they resonate on the point that it is not certain that a good solution will be found to existing investors, creditors etc etc..
In the fashion of "let us say it a few times so that you start getting used it".
Not a break or make...
Not a fat lady song yet...
But feels closer to a break.
My narrative the past few days was based on a 2:1:1:1 new raise, new corner getting 2 parts for every new part each existing investor takes.
And again the sweet spot is in the vicinity of 20p not 3p.
Having said that and I believe Rovers exercise exactly pronounces that, I do not think the solution will be on equal parts.
It's more the likely that each cornerstone will be asked to contribute to new equity at an exact proportion to their existing equity share.
I.e not to split this 33%:33%:33% but rather do it against their current relative holdings.
That preserves the exact same dilution to all 3 of them and can then decide what to offer to the forth.
Again though the fourth cannot really take on a super low price, as that eats into the previous investment by the 3 corners and their initial 250.
You have to keep the dilution at some balance if ypu are bringing a fourth else just see if three existing does it!
Now if it just them 3 putting the 200. Then its simple to engineer the price that again serves them best at being closer to 20-30 as oposed 3.
This is truly in the math.
The one true big big big ask:
Is it 200mil? Do they really have an appetide to do it?
The answer to that, is not what the stupid johns and mikes did on that thin market
Irrelevant irrelevant irrelevant.
All magic is what goes in those rooms they all chat between them and the banks.
That is my whole case folks. The whole of it.
Rover do one more exercise:
What is the differential ownership in equity per each cornerstone, and at what wipeoff cost from the minimal raise price: that discovers a paper value of 20+ million to own just a couple of percentages more.
So not worth it.
The price wont be peanuts.
All bets are on whether there will be a price or bust.
Also on this:
''Equally, the 3 cornerstones would be buying hand over fist knowing that their 3p purchases would triple to 10p on any announcement re placing at 10p. ''
With what exact mechanism?
I went on HL earlier asking for a quote on 1mil shares, I got no quote. That would have been say 35,000GBP.
How would the cornerstones buy in this market in the millions?
It really is essential in my own narrative: with this distortion of the price, and illiquitidy, the market is irrelevant to what those big guys may decide to do with new equity, and if there would be some, at what placing price.
Really irrelevant.
Rob, it is priced to fail. full stop. that is what this price is telling you. that alone.
It tells nothing on an equity raise price. It tells you loads on the probability of failure.
It might be subtle, but I make the distinction between the two.
Hazbeen and Wasa,
It actually settles for nearly the same thing.
Toying up the numbers you can completely exclude any scenario where any new equity, comes in solely from a new investor. Because you cannot find a price for this. The competing requirements is that (a) you have to keep the dilution ratio low enough so that the existing cornerstones are not wiped out, yet the dilution ratio high enough to attract the new investor with a low enough price for the monies put in. It cannot happen. even say with just 50mil coming from new investor, and say you only issue 100m new shares [minding that the existing investors currently hold about 50mil shares each] you end up with a price of 50p. Price is too high, dilution is too high ALREADY on that petty 50mil needed [in the grand scheme of things].
Thus we are only left with the following scenario: existing cornerstones HAVE TO put monies in themselves.
If we accepted the above assumption by consequence, then they can cook the placement price on similar arguments to what's been conversed the previous days. You cannot do at 3p , UNLESS the cornerstones completely wipe out the previous investment, and take bets that the price will triple+ from that placement such that it can overcompensate for their initial investment wipe out AND at the same time expect this multibag of return to happen post such dilution with NO market. Just them 3-4 playing backgammon between them.
Do this at 20p, 30p leaves more of a residual market... your previous investment returns a bit of a kick THE MOMENT you announce it is 20-30 and not 3p [therefore subsidizing a good 20-30% of the new investment by the paper recovery on the old investment] and you have better outlook to recover fully and make a profit on the WHOLE investment.
It really does depend here what sort of strategy an existing investor may have.
Do I go more averse or play more safe at this juncture?
You may find that it might be logical to 'lets completely wipe off the previous 250m and go on more aggressive multibag strategy" it's the glen-the-apex narrative.
I think they will simply play safer. Why write-off off 250m, and play on my own.
Let me bet on a higher placement price, that SPONTANEOUSLY recovers 20-30% of that 250mil.
[a full placement of ay 200mil done at 20p, with a full finance solution in place, will probably start trading the share at 25-30p, hence they make back 50 of those 250mil on the old money by the announcement].
They also all average down to about 50-70p [dependent on how much money they put in for those new 20p shares] or about 40-60% away from breaking even after the announcement.
Let's do the exercise at 3p.
FORGET about the 250mil.
So whatever moneys they put in it's all that money.
If it's 250mil, then need to double up.
If its 150mil, then need to triple up.
and they have to do this without a market. by themselves.
find the middle ground....
It won't be 3p, it may not be 20-30p. but I gamble it w
There were 17 trades today, grossing below 10k.
There are 42 posts today on this forum.
The price distortion on this super illiquid piece of gem is so absurd that we actually believe there is any validity in this 4ss of a price to be a material function of the talks.
Here's how I expect these sharks talking it about:
Corner1 I put more than 100mil
Corner 2 I put more than 100mil
Corner 3 I pur more than 100mil
Right we need to put another 100 each.
Corner1 at what price?
Corner2 maybe 2p because little john f4cked us up in the market?
Corner3 hang on a sec corner2, if we pump 300 at 2p we effectively convert the whole of the market cap into the cash we put in. So how would we make any money?
How in the heck would the market cap get to 1 or 2 bil to make money if its just us 3 playing backamon between us?
Corner1 how does 10p look or 20p?
Corner2 a lot better
Corner1 why not do that?
Corner2 we cant do that, little mike and little john f4cked us up in the market?
Corner3 wtf!
......
We will be told a price...
Or we will be told admin...
But you have to be an utter idiot to expect the corners to shoot themselves on the foot with a price at 3p if (and it might be a big if here) they are here for the money... and they want this to be trading...
Yes rover, exactly my point this afternoon.
I as a cornerstone put there 100+ mil.
Now I need to put say another 50-80 whatever.
Why the heck do it at 3p and wipe off my first 100?
1.
Do at 20, i recover 25-30 cents to the dollar on first day of announcement.
2.
Do at 30 I recover 40-50.
3.
Do at 3 I don't even buy toilet paper to save my 4ss.
In 1 I get to own 31% of the shares.
In 2 I get to own 30% of the shares.
In 3 I get to own 33% of the shares.
What is my objective?
To make a return. Not to own the max possible percentage of toilet paper.
The price is not dictated by the little mikes and the little johns.
This is not going to be decided on the pennies that distorted the price.
It's bound to be the millions doing the talking.
All fair and square Wasarunner and I fully agree.
But this now the good pass your giving me to say this.
The fact that the sp had dropped to these levels is indeed an indication how severe the situation, how likely it will not survive and all that nasty stuff.
However, looking at the current price, given all above, is not at all an indicator as to what price any new equity might be raised. I am even arguing that the key players here deciding on dilution ratios will want to do precisely NOTHING about what the little mikes and johns have pushed the sp at. NOTHING.
It will not be an input to their calculation when they do that.
And I say this with full conviction and protest to anyone who may say or think otherwise here.
A stupid mike here, talking about myself, who may have decided with literally pennies to push the price to 4p will hold no cornerstone or bank hostage as to how they might want to engineer a dilution ratio...
...should we all find ourselves in the happy scenario that this will be funded.
4p, 10p, 20p or wherever it ranged in various instances after some bad rns's dictate absolutely nothing as to what raise price they might decide here.
I am basically calling this on the idiosyncrasies of the very asset we trade on in liquid markets.
It's just vastly extremely thin volumes for the price to mean anything for a deal.
I think I really exhausted the matter for myself at least.