The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Anyone care to speculate what might be happening here? Did RM2 fleece its' shareholders again with the offering and do the same to Woodford, or is there a viable business here? That £18M will be running out soon at the monthly burn rate and the 2nd tranche will not be issued unless key business KPI's are reached, but there is not a shred of evidence of anything happening - either their being extremely discreet - or ... ?
Chrs Shatter - so not time to panic given the £4M wasn't fully subscribed ?
Any opinions on the amount subscribed ( £ 1.4M ) ? Certainly nowhere near the £ 4M expected so why is the RNS comment so positive?
Chrs ... agree, the more one reads, the worse it looks - it's astoundingly bad. Am viewing the OO as a way to essentially average way down on the basis of (a) Woodford majority holding and ability to control board, (b) the circular states that the company must have closed PO to get 2nd half of funding and meet other KPIs, and (c) they have enough potential positives in sales to bump the share price up a bit. With 99% losses in the equity no matter when one got in, there may be a chance to exit with something rather than losing everything --- still not convinced the OO offers an advantage to buying in the open market as and when, but compared to today's buy price of �.015 at least there's some margin. Would be great to know what the potential take up is on the OO but liek you say - in for a penny and all that - GLA.
In the May 21 RNS a $400k 'loan' to Mazula has now been turned into a bonus for arranging the funding - not exactly holding back on exec compensation even now, are they ... Retention bonus On 30 July 2017, the Company agreed to extend a loan to Kevin Mazula, which would automatically convert to a bonus in the amount of USD 400,000 once the Company issue at least GBP 10m of new equity. The 13 April 2018 completion of the Placing fulfilled the condition of converting the loan to a bonus.
Yes, while wanting to subscribe to the OO (Open Offer) it's hard to see a compelling reason to do so --- the OO price of .01p values the company at over �40MM (essentially the cash raised + the OO, if subscribed). --- So each day that goes by that cash disappears -- There's no indication other than references from RM2 that the cash is directly linked to PO'd sales -- and if it were (a) they could have borrowed money, not diluted ownership so much and (b) if the PO is closed, then why are their NO revenue or volume projections and NO customer details? --- Sure, confidentiality is at play, but still ---- and --- The circular says RM2 holds NO patents, btw, so again - not sure what the incentive is to participate in the OO other than to average WAY down -- and it's basically possible to do that now on the open market with a price of � 1.50 with the difference only being relevant purchasing Million(s) of share. All very difficult to figure and looking for good reasons to do the OO, but struggling ....
Thinking the same but the way it looks now, the Open Offer price may be about the same as the market trading price, so not sure anyone's going to take it up -
Coming soon - anyone going to subscribe?
Agree, though the RNS mentions one new contract win (no details of course, presumably small, but who knows). Good point to average down with a bit more info on the company and financing. The problem is the dilution - not sure why it was so HUGE - or why Woodford would want to dilute his own stake while participating, even if he is gaining majority control of the equity. At �.10 a share (roughly 600% increase from today) the market cap would be � 600M! What kind of valuation forms the basis for investing in RM2, assuming they can hold on and stay in business? No debt is great, but the CAPEX needed to grow could be enormous, so valuation here is really difficult - and hard to understand WHY the dilution had to be so severe, especially when the financiers (Woodford, Verlinvest) are also the majority shareholders? All a bit hard to figure ...
No debt and financing means they've got a runway and enough of a story to get investment. OTOH, dilution and terms are a bit ludicrous -- and Woodford now owns 2/3rds of the company. IF there were big PO's around the corner then the RNS would reflect this --- there would be new investors involved (but there aren't) and the dilution would not need to be so high (again, another clue). So the takeaway is there is a bit muddled and am surprised at the levels of dilution and lack of new participating investors if a major turn around was just behind the next corner.
The dilution is beyond belief and reflects the reality that RM2 going into liquidation was the only other option --- Woodford now has control but has proven to be strangely incompetent at valuing companies, as his own holdings consistently reflect across companies of all sizes from FTSE 100 down to start ups. Maybe the company will survive, maybe it won't, but current equity holders can hardly expect much return given the share count and the fact that scaled expansion would require further funding, etc. But better than nothing, which was the only other option by mid-April.
Despite the positive sounding RNS, the share price is tanking as we enter April -- does someone know something we don't? It seems if they were so close on either a big PO win or financing they would just announce it by now, especially if they are weeks away from collapse for the third time.
RM2 said it had enough cash through the 1st third of March - so basically another 5 days. Will they admit defeat , announce a funding or PO solution - or have found more cash by selling assets/cutting costs to drift on a few more weeks ? No clues anywhere, so guess we just wait and see -
I interpret Woodford's comments as a slight positive in tone, though imagine he has gotten more than a few inquires from shareholders in general curious for his thoughts. RM2 is a very small position for the fund, but they hold a huge % of RM2 so Woodford matters. They may not throw any more cash at RM2 indefinitely, but if RM2 do get a large PO (and one is all they would need) then that might do it for Woodford to decide to help. Nothing to do but wait and see-
As of the latest statement, the company will go into administration this month unless they get a sudden funding or asset sale windfall - bit tight timing-wise to assume funding will suddenly materialize after no progress since the summer. Companies always release statements about imminent POs, sales wins and positive customer feedback right before they go under, so no reason to put any stock into that (no pun intended). That said Christmas could still come late around here - anyone have an opinion about what's next and the odds ?
There is always funding for good ideas and good businesses - especially with Woodford and the Board behind the scenes - the fact RM2 are having so much difficulty getting it in place speaks volumes. Again, these clues are all too late to save investors unfortunately.
Last time they said they were within a 'few weeks' of news on funding due to positive ongoing discussion. Months later, nothing and now declarations of 'confidence' in getting the funding and potential client trials going well. What what they do - not what they say ... though unfortunately this advice is all too late.
In the *non-audited* RNS results from Sept 27th we were told news on financing was within "a few weeks away". A few weeks has certainly passed and the stock has lost another 33% so it is fair to guess the talks aren't going well. For a company in so much trouble, very little seems to be happening behind the scenes.
Financing talks must not be going very well - as always the share price knows it first.
Maybe but the market clearly doesn't believe Rm2 will get the funding - or if it does, not on anything near acceptable terms. Not sure how a decision can be 'weeks away' as of the release date. One would've thought they either had a deal or didn't by now.