Member Info for Piltick

Interesting post, Augusta. I have a non-plug-in hybrid, a Toyota RAV4. On average I get between 35-40 mpg, much better in town driving where I'm not going above 40 mph, but not so good on country roads travelling at 60mph. Still, it probably gives me a better mileage overall than a straight petrol car the same size. My car is 2 years old, and I believe that the new RAV4 hybrids are more efficient.

A Toyota dealer told me that many companies were buying plug-in hybrids as company cars for their managers, mainly because of the tax advantages I suspect. But he said that most of the drivers didn't bother to charge them up at home and just used them as normal petrol cars, so it wasn't really achieving anything.

PS: And anyway, at the moment it's W2T that is seeking the funding for the DMG unit, not PHE.

I was really thinking of any type of serious investor being asked to put in whatever is required to get the first DMG unit up and running.

Surely it's perfectly clear that under the present structure both PHE and W2T are stuck in a rut. Institutional investors appear to be reluctant to invest serious funds in either company, probably because of the lack of clarity about their contractual relationship and respective roles. Potential customers may have similar concerns. The solution must be to undertake a take-over or merger of the two organisations. I imagine that most PHE shareholders will agree with that, but the question is what respective values should be given to the two companies. To get a better understanding of that point we must wait for further details from PHE BoD regarding the proposed re-structuring.

Merry Christmas to everyone on this BB. I don't intend to post anything tomorrow!!

This is a link to the RNS dated 18 January 2017 which gave details of the original agreement between PHE and W2T.

https://www.lse.co.uk/rns/PHE/agreement-with-project-development-consultant-qfl45jrdp5hyxp9.html

Actually, rather than say "has no bearing..." I should have said "will have little bearing..."

Stokey, as I pointed out in my previous post this afternoon, the figure in W2T's balance sheet has no bearing on the "valuation" that will be agreed between the two parties for the merger or takeover. I imagine one of the main reasons that PHE want to take over W2T is to basically buy back the rights to marketing and development of the DMG technology that was given to W2T in the past. That is something that is not (and cannot be) included In the balance sheet of W2T and therefore is not included in your figure of £1.3M.

That's really what I was trying to say, in a nutshell: "The two companies are worth more together than the sum of the two individual parts."

There is no right or wrong valuation, no magic figure. At the end of the day the valuation is whatever price the current owners are prepared to sell for, and whatever price the buyers are prepared to pay. The valuation will not be found in the balance sheet of the target company.

Right now both W2T and PHE are in a rut. W2T do not own the DMG technology, they do not hold the IP rights, but they do have the rights (from PHE) to market and develop the DMG units. W2T are trying to promote the first DMG system and raise funds to develop it, but I suspect that financial institutions and investors may be reluctant to provide the required funding because they see that W2T are not in complete control as they do not own the IP.

PHE are also in a bit of a hole. They are not geared up to market the DMG technology on a large scale, and they don't have the funds to develop the first unit. Potential investors may be confused about the roles and responsibilities between W2T and PHE. No doubt this will make them reluctant to invest in PHE.

To add to the confusion, W2T have lately made announcements about the development of "their" DMG technology and have not always acknowledged PHE's involvement.

So it must have become clear to both parties that in order to move forward they must eliminate the confusion between them which can be achieved by combing the two companies, either by take-over or merger. In which case the "valuation" will depend upon what each party believes they will gain by such combination, making the overall business more attractive to potential customers and investors, and thus enabling the business to move forward. The "valuation" will then depend upon negotiation between the two parties.

Newboy, my belief, FWIW, is that the reason this news has not been welcomed by the market as much as might have been expected is because of what has not been said in the RNS, i.e. because it is not entirely clear exactly what the final structure will be. I think that when all of the detail is clarified, this will be seen as a much more beneficial transaction than it seems at the moment.

stokey, ref your post 19:40 yesterday, despite the wording of the RNS I believe that a merger is more likely than a take-over. The RNS is really just a simplified (and not very good) version of the intended deal, so I wouldn't pay too much attention to the precise wording.

If the existing company PHE issues shares to take over W2T, then W2T becomes a 100% subsidiary of PHE, and the two companies continue to exist and may also have their own management.

However, much cleaner to merge the two together by creating a new top company which would then take over the shareholdings of both companies. Then there would only be one company and one BoD, much neater and no more ambiguous agreements between the two companies.

That was a different arrangement, Kenny.

When this deal is complete, there will be no need for payment of 20% fees between the two companies, because it will all be one company.

Wolves, I think we can be fairly sure that Peel are well aware of the structural changes, and that they are quite happy with it. Otherwise, they wouldn't be doing it!

I would have thought that the simple way to merge these two companies would be to create a new top Holding Company (let's call it Powerhouse W2E for now) which would then issue new shares to replace the shares of both PHE and W2T. Then both PHE and W2E would become 100% subsidiaries of the new Holding Company, and all shareholders of both PHE and W2T would own shares in the new Holding company.

All contracts and business transactions would then be transferred up to the new top Holding Company, and both PHE and W2T could be dissolved.

Seemples!

The RNS is unclear, ambiguous, clearly written by lawyers who don't understand numbers. I'm sure the actual documentation for the deal will be clear, it's just that the person wring the RNS is not very good at putting together a simple statement.

This will resolve the confusion regarding the roll of each company. PHE gave away too much marketing and development rights to W2T in the past, but when this deal goes through that problem will be no more.

Isn't there an old saying that the market is always right?

That's the best way to find out these things! Actually there isn't very much between them because the January planning meeting is being held towards the end of the month.