RE: Valuation of the deal23 Feb 2018 19:24
Sorry, Pearls, but your 18.75p figure is definitely wrong. This may (unintentially I'm sure) mislead other investors, so it has to be challenged.
Firstly, even if Phoenix were "paying �19.45m for 58.09% of the shares", this would only value the SP at 7.8p, because you have to divide the new market cap (�33.5m) by the new total number of shares (427m).
But Phoenix are not just buying shares, they're getting 3 things for their money:
(1) 248m shares, which will amount to 58% of the new total shares (179m+248m=427m)
(2) The Guernsey intercompany indebtedness, for which they're paying �2.75m
(3) An IOU for �10.5m
Regarding (2), it's not clear what this will eventually really be worth, but we know Phoenix have been talking to the Guernsey administrators, because the RNS mentions they're proposing to buy other stuff from them in a separate deal. So one can only guess that it's worth roughly what they're paying.
Regarding (3), the IOU is 'soft' in the sense that it doesn't have to be repaid for 5 years, and at 'only' 5% interest, but it's still probably worth something like the �10.5m. Also, it's been suggested elsewhere that they may not even have paid that much for it, given that SGF is only paying �2.75m to buy the other �7m component of the RBS loan (using the �2.75m from (2), which has probably added to the confusion!).
So it does seem that they have actually paid �6.2m (at most) for the shares, i.e. 2.5p per share.
Of course Phoenix wouldn't be doing all this unless they thought they were getting something worth a lot more than what they're paying - possibly even more than twice as much, which is what Mr Market seems to be saying today.
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