Member Info for Silverblade

Hi hucks at al...hope everyone is keeping safe.
Its just a bit of a waiting game at the moment whilst mmx and fincapp finalise the tender return. It was always going to take a bit of time post deal completion to sort out the process - we know the $80m is to be returned in "early autumn" - so now that we are in autumn its likely we will hear soon (next week - is a month enough time to sort out paperwork?) on the return timetable which would allow the proposed capital return to be completed in October. Perhaps there is a link to the 6 month results on 27th Sept but these should be two separate events. The latter should prove interesting as presumably we may get some update on what's next......or not! SB

Absolutely Naoma. I think you are suggesting the company would use the £58m tender offer cash to buy shares at the current NAV of 9.6p - meaning the tender offer would be able to purchase c.600m shares - roughly 2/3 of the current issue. This would leave shareholders with roughly 1/3 of their previous holding. So in that situation for every three shares you own the company would buy two at 9.6p. Each remaining share would have a net asset value of 9.6p.....but you will only have 1/3 of your previous holding. What price that new share trades at would be up to the market. Point being in any circumstance shareholders will receive a pro-rata shareholding in mmx post the pay-out. Does that sound right? SB

All - i think you are overcomplicating matters. For starters we have not seen details of the tender offer so lets not prejudge. However, if you think the II's who effectively agreed to sell the business did so in such a way to make it difficult to extract value then that's unlikely don't you think. Your shares are currently worth c.8.5p each. The tender offer will likely offer you 6.6p for each share you own at the time of the 'initial return' - and if everyone takes up the offer that equates to the total current 876m shares using the $80m cash. IMO (and this is not investment advice but how I see it so please don't rely on this and wait for the details to be posted) - a mechanism will be incorporated in the offer to ensure shareholders remain whole following the conclusion of the offer ie you will retain, pro-rata (possibly less shares if a consolidation takes place) what you currently hold but those shares will trade at a lower price because the companies net assets will be reduced to c.$36m - and there is no certainly on how that money will be used - either a further return or used to capitalise another business looking to list on the LSE. That is different to a tender offer where your shares are cancelled outright - in current circumstances that would make no sense given that would remove any future entitlement to further distributions or ability to trade the shares. Bear in mind the reason a capital return is preferred to a special dividend is all about minimising tax - both company and individual shareholders (esp II's) . The capital return will work in a similar way to a dividend - your shares will trade lower in the same way as dividend stocks do post payout.

Ezzza - as for SJL - I am sure he will update us if he feels he is in a position to do so and I'm pretty sure his input would be welcomed here. He still holds 39m shares. The type of company mmx 'may' reverse into is likely to need access to capital - that's one of the reasons company's list - to secure funding for growth - that's why cash shells are attractive over an IPO which have costs and are often slower to conclude. SB

Hucks - glad I can be of some help - again imo your current % shareholding will remain as is - its just the company net assets which will reduce. That said - i wouldn't be surprised if the company attempts a share consolidation - would avoid a share price in the range 1 - 2p which doesn't look so good.....SB

Hucks - imo we will either get the 3p out in March as a final return if the company is wound up; OR the cash will be used to fund a RTO opportunity and the 'value' would be reflected in an increased share price. Not both. SB

That's a good question hucks. I'm holding 2x your position so very conscious of how I can actually make some money here as a member of the 8.4p club! As I see it - there are two options. 1 - sell now at 8.3p and move on (Not for me). 2 - accept the tender offer of c.6.6p and let the rest ride. We know your shares would be worth a further 3p, but are currently being discounted for 'risk' - and as such the only certainty of securing the additional 3p is if the company winds itself up and pays out the remaining cash. As a cash shell it is likely we will still trade at a discount to net assets; so the only point at which we would get to a total of 9.6p (and beyond) is dependent on the quality of any business we pursue as an RTO. The expectation is we would get a decent 'bump' in such an event - or why would we consider such an action. Not sure if that helps.....FWIW I'm minded to hang around post tender offer - and that is based on the hope we can successfully bring a company to market as a cash shell. ATB SB

Leader - correct - the tender offer is an initial return of capital - if you accept you will receive a payment but your remaining shares will be worth less as a result of the company’s payout. The actual mechanism is not yet available but the company may attempt to consolidate its 876m shares in circulation by offering to buy then cancel shares. All will become clear when the actual offer document is posted. SB

Leader - of course you could sell today and get 8.1p - the reason for holding would be to get the c.6.6p tender offer and the subsequent 3p residual value left in the business at some point taking your return to 9.6p. That said - we don't know if the 3p will be returned as a further return of capital next year or if that cash will be used to promote mmx as a cash shell - in which case there may not be any further return of capital but an increase (or decrease) in the company's share price! Back to micksters gamble comment.....SB

Leader - worth noting that each share post payout is likely to have a 'net' worth of 3p - if the market places a current value on that future value at 1.5p then so be it. And as Mickster notes - if the company completes a RTO then there would be a general expectation that would create some value - adding our cash to a company looking for an AIM listing and some capital to finance development. SB

Nice to hear from you SS - we almost made it into double digits!! I'm in the relief camp......well I will be when I see some cash in hopefully a few weeks. I hope your other investments are working out. Who knows where we go from here - it will be interesting to see what happens post the tender offer - perhaps some investors will take a position in the anticipation of a RTO opportunity - or just looking for a 100% return if the shares trade at 1.5p with a 3p pay-out next year if nothing else materialises. SB

Leader - as I see it - each share currently has a net asset 'value' of 9.6p based on $116m - or £84m at 1.38 exchange rate - total cash after deal costs and a bit put aside for working capital. If the company pays out 6.6p per share in the tender offer (the $80m); it leaves $36m - equivalent to 3p per share based on current shares in circulation (876m). The tender offer may cancel shares - we don't know the exact details yet - but the principle would remain based on the $36m left in the business divided by the shares in circulation. What price the shares will trade at post the $80m pay out remains to be seen - based on todays price they would be about 1.5p (8.1p - 6.6p) - which would be a 50% discount to net assets which seems pretty high imo. Hope that helps. SB

I wouldn't say you lose shares kitkat - the company will offer to buy them and you have the choice to sell - but given the companies net assets per share will decline post capital return its highly likely taking up the offer will be in your favour! That said - nothing wrong with selling at the current price rather than waiting for the 1.5p difference to the net asset valuation - or the hope the company pursues a RTO and increases its net asset position as a result - although I guess there are risks to this strategy and given historic performance shareholders may not be overly confident we could execute such a move. That said - the quality of the RTO team and business would be the primary value driver. SB

Deal is done. We have more cash than previously anticipated - 9.6p net assets per share after costs and an allowance for the next six months. As per the RNS mmx intend to return $80m capital via a tender offer (i.e. it will offer to buy your shares) - the company will still have about $35m (Escrow and cash) after the 'initial' return - the wording of which implies the company may be considering a further return post March 22 - or as we know there has been earlier reference to proceeding as a cash shell although no news on that so far. What will be interesting is the price used to calculate the tender offer price - usually a tender offer would be in excess of current share price to make it attractive - but more likely here it will be fixed at a lower level - 6.6p looking likely based on amount being discussed - leaving 3p per share net assets following distribution. A tender offer can proceed pretty quickly - I suspect money could be distributed in next 4-6 weeks. SB

Hi Hucks - I think GD saw an opportunity given the state of the company and did what any business does to make money - good on them - we on the the other hand….a real failure to deliver for shareholders. SB

….how little effort our management team made to max the price for mmx just look at the deal GD did to purchase the dot club and dot design extensions - $77m for both - plus a potential $12m earn out for one of them - probably club. Rips the michael out of the mmx deal don’t you think and I’m sure makes for some rather uncomfortable reading for our larger shareholders.SB

I hear you hucks.....and yes there is no doubt we have underperformed ......but whilst I am clearly very disappointed with the current return here (i think a number of us have an average around 8.4p...!), i do remember agreeing with you when the deal was announced that in some ways it brought some relief that GD was prepared to shell out $120m. Its not what we expected - but its not sweeties either. I've had my share of complete wipe outs in the past.....! Without the legacy partner payments we might have been nudging 11p but alas! The key issue which needs to asked - do shareholders just want 8p now, 1p in April '22 and shut the doors; or do we have confidence that our BOD can genuinely follow through and complete a successful RTO and add another couple of pence to the value retained in the business. SB

Doing just fine thanks Hucks - although its pretty quiet around here as the great wait continues! Hope all good with you too. I liked the bravery of SS to sell up and use the money elsewhere - I bought a few shares in CNIC a few weeks ago and they are up 10%+ - the problem with having capital tied up here are the missed opportunities in a decent market. I remember CNIC at 40p when I decided to invest in mmx - on reflection not my smartest move!! There's been no update here from SJL for some time - he obviously knows TF well and has no doubt been in touch - possibly with some thoughts on mmx2 - and as such probably wants to make sure there are no conflicts of interest from any postings which may or may not effect those conversations. Certainly moving forward I would like to think as a major shareholder the company consults with him on what is next - and hopefully that is sooner rather than later! ATB. SB

That's a good question 007. Assuming we complete this month as hinted in the last RNS, the company will have c. $130m in its coffers - about £94m. However, we know $20m is being used for transaction costs, leaving c. $110m - or about £79m. Based on fully diluted shares this equates to 8.9p net assets per share - a 20% premium to the current share price. The only certainty is the $12m (about £8.5m) locked up in the escrow until March 2022. So in theory they could distribute up to c. 8p per share as long as its remaining overheads are covered in the transition period by GD. However - we do know that they intend to use the company's status as a cash shell to explore reverse takeover opportunities - and this will likely require cash seed funding to be be retained in the business - how much is the key question and will directly impact on what can be distributed to shareholders in the meantime.

None of this actually answers your question! I think the gap between distributable net assets of 8.9p and the current share price of 7.3p will close once money is in the bank; and I expect a reasonably high % to be paid out as a capital distribution - SJL previously noted 6.5p - and that would leave about $30m sitting in the business (including the $12m escrow) for an RTO. The company has stated it will consult with II's and smaller shareholders following completion of the sale before it makes any final decision on its cash reserves so its unlikely anything will happen quickly that's for sure! SB

Nice one both - ISA's are definitely a good place to be. Pity we wont be able to benefit from the capital gain we once thought might come through here - but it is what it is, and the story isn't fully over yet! SB

rgm - i would be extremely surprised if they opt for a dividend. Cash should be returned to shareholders in the form of a capital repayment likely to involve a reduction of the company's share premium account which would require court approval to allow excess cash within the business to be distributed. This is the most tax efficient method of distribution for all parties. Bear in mind the scale of the distribution is way beyond our trading profits i.e. those monies which are capable of being distributed as a dividend. Generally - a capital repayment is not classed as an income distribution for taxation purposes. Dependent on your personal mmx position there may be CGT tax implications. Pretty sure if we go down this route the company will provide some guidance from HMRC - i have seen this before but am no expert on tax matters and as such DYOR. As for the scale of the payout - it depends on what's next for mmx and whether there is a genuine appetite to use our status as a cash shell and if so what level of cash is retained in the business beyond the $12m escrow and ongoing working capital. SB