Member Info for Silverblade

There's likely to be a bit up of upside based on our current price - the cash payout alone could be in the region of 6-7p based on some thoughts here - but as it stands there are still several unknowns at play here which I guess is why the price is where its at. GM meeting will likely be done and dusted by 3.30pm - RNS out shortly thereafter with result - 4 directors attending with company secretary and lawyer also at meeting - all votes will be cast by now. Might see a wee rise on confirmation but don't expect much until a plan for distributing cash (once received) is made available. Still a bit disappointed we don't have the results available - and the benefit of next week's Uni auctions to benchmark our asset price - but its pretty clear the deal will progress as is. SB

I wonder if the company intends to publish its annual report prior to Fridays vote - not that this would change the outcome of the voting but it would seem the right thing to do to provide shareholders with all relevant information in making an informed decision. My only real issue in the sale rationale is the insinuation that our foreseeable growth is in line with the industry and would therefore be in 'low single digit percentages'. Our main peer - Radix - has been posting healthy double digit growth for years. So for me the sale is more reflective of an II opportunity via godaddy to exit and move on from the domains space - if there is life for the company beyond domains it will be linked to trust in TF (and possibly BD) - and for the business to support a genuinely compelling investment opportunity and management team if that is the course we take. SB

davemake/photonic - as I see it - you can only base current decisions on what we know so far and what has been made publicly available. Meeting on Friday 23rd to approve sale; progress approvals thereafter and once secured deal will complete (or be adjusted of certain waivers or agreements cannot be reached) - with the hope the sale will compete in July. During this period the company trades as per business as usual - albeit there will be discussions with shareholders on the next steps in regards to the sale proceeds - with an expectation shareholders will wish to see a majority of the cash received paid out - what that amounts to in $ is subject to confirmation following those conversations and the needs of the business. We know a minimum of $12m goes into an escrow account until March 2022 - the company may elect to retain further funds as it explores options as a cash shell - the referred to Reverse Take Over (RTO) opportunity to assist an existing business secure an AIM listing which has some some available capital. IMO any cash distributions are likely to be by way of a return of capital which has tax benefits; dividends are subject to taxation and are paid from earnings and this is not the case in a sale of assets which is occurring here. I believe any return of capital would be paid into whatever trading account you hold - ISA included - and would be in the form of cash. Please note this is all IMO and is not intended to be investment advice - we will find out more detail in due course. Hope that helps. SB

Thinking the same Sunday. Surely someone at finncap needs to press the ‘stop’ button! I guess there is as an argument that value exists below net asset value - but does seem strange timing given events of the last 36 hours. Did you follow through on your proposal to have a final punt? I added a few myself - s as though that’s what got me in this mess in the first place!!! SB

Cheers Sunday - in a bizarre co-incidence my average here is also 8.4p - highest price about 13p - lowest 5p. More than 30 trades over the last 10 years - managed to sell a few at 13p during the tender offer a few years back - I guess I had hoped we might see that price again here one day. I agree with your feelings on where we are - Norrab said it well when he referred to relief that at least the deal removes some of the historic risk which seemed to follow the business at every turn. Lets get the deal approved, see if we can get it over the line and see what's next - maybe there is opportunity in having a cash shell - we need to lock up $12m to March 2022 anyway - top it up and see what happens!! SB

Picking up on Sundays (BB's) point last night on the deal being at the edge of being acceptable - I would agree. I think where we are likely disappointed is the deal looks good in overall quantum but the final position for shareholders is less than we would like. But to put the deal in context remember we paid just over $30m for ICM (because of the element paid in paper rather than cash) and this was a highly predictable and profitable business which was discounted purely because of the sensitive nature of the domains and the belief of the vendors that being wrapped in a bigger concern would enhance overall value. To some extent it appears a good bit of business that godaddy are purchasing those domains given current public awareness on such matters. We don't know the offer breakdown by individual tld - but even after allowing for a higher value ($40m?) for the adult domains because of their predictability - the implication would be our legacy portfolio is valued at $80m+ - and given current performance that seems reasonable. More info will come to light when our results come out - but we are probably being paid a reasonable multiple on ebitda and PBT - even though that's not necessarily the best measure in our market it is a useful benchmark. When you add in our cash reserves we are nudging $130m in the bank on completion of the deal (assuming it completes of course) - which equates to 10.5+ a share and I think would be much more acceptable to all here - psychologically a double digit price 'feels' better . The sting in the tail is the volume of transactions costs - $20m - which take us back to the 8.8p net asset value. We might not get a full breakdown of those costs - but I imagine some are legacy issues relating to the commercial structures agreed by previous management on certain tlds (think .law) and as such are unavoidable in their impact. If we had not dealt with .london over the last 18 months think of the liability sitting on the balance sheet - that one deal disaster alone cost us $13m. There will be standard costs and bonuses as well, potentially some redundancies.
I guess my point is - if a deal was to be done - the offer was probably as good as we could get in overall value. What's hurts us (IMO) is the conclusion of poorly negotiated contracts which are a symptom of previous regimes.
It will be interesting to see if the price drifts up to 8p+ in the period before the GM - or whether there is still an element of risk priced into the deal. SB

Mickster - 887 shares once 7m management options are included - company itself has stated its net assets based on current assumptions (Sale value plus cash less costs) of 8.8p - c.£78m or $107m - so in theory an asset trading below its net asset value is undervalued - more so where that asset value will be cash. IMO. SB

SKK - you would think others (Donuts) were involved in a conversation early on and godaddy provided the clearest and most competitive path to a deal. So I wouldn't rule anything out - but unlikely. Godaddy recently raised $800m for corporate activity - so they have cash - and who knows if they have Uni and Radix also in their sights. The only hiccups may relate to approvals from third parties i.e. where we have shared ownership the JV partner normally retains a pre-emption right to purchase the asset at the offered price - this probably effects a few of our DUM's (Country is a 50/50 JV with Uni for instance - by coincidence Uni's 50% is up for sale at auction later this month!). But this is relatively minor detail. SB

Godaddy are buying all mmx gtlds - including the adult domains. SB

Mickster - the focus will be on getting shareholders approval to do the deal (pretty much guaranteed) then seeking all the regulatory consents and approvals required from third parties (ICANN, JV gtld partners, china etc) - whilst continuing to run the day to day business - bear in mind we probably generate about $600/700K free cash flow each month at present. We have a long stop of 7 august to do the deal - at which point hopefully $120m hits the bank - and we start to pay out the transaction costs - SJL reckons about $20m in total. Leaves £100m plus $10m cash in business? Shareholders will then get an opinion on what to do next - we know $12m is locked up until march 2022 - so c. $100m available for distribution - probably done via a share premium reduction which will return excess cash to shareholders - which is where the 6.5/7p number emanates. At this point the business will probably only have a couple of employees. The company then has six months to do a reverse takeover; or will lose its AIM listing. There is a very similar situation ongoing with Watchstone (WTG - formerly Quindell for those of a nervous disposition) which sold off its businesses and has been returning cash to shareholders whilst retaining its status as a cash shell which could be attractive to businesses seeking a listing. WTG only has a few weeks to make a move or be removed from AIM - it has both cash and potential claims which would bring in additional consideration - so similar to mmx post cash return - I'll update on what happens to WTG for interest. SB

Hi Sunday. I believe we are selling all gtlds including adults and those yet to launch (DDS and Abogada) - and also transferring the majority of staff to GoDaddy. We will be left with some residual company's which will be wound up in due course - including our RSP business which provides services to amongst others .london; the contract for which expires in summer 2021. Like you I had hoped for a bit better on the price - but its clear that the deal will go through with the current shareholder support - 64% - which must include all II's and directors - but possibly not SJL although he must he happy with his recent purchase! I always wanted a champagne moment and this is not it - but its not all bad either and is probably a reasonable exit for most and as noted there may be an opportunity to use the business as a cash shell - although i did note that the company will seek discussions with shareholders on the distribution of cash following the deal and that will impact on what, if any, is left beyond the $12m escrow. SB

$120m offer plus $8m in bank. RNS implies just about $110m distributable - transaction costs seem pretty high for a relatively simple sale - unless this includes the €12m held in escrow. SB

Norrab - i think relief is a good way to describe this. Its an ok outcome given what has happened to to the business in recent years - too many car crashes in public which has impacted on our credibility and market confidence - as evidenced by the share price. Its not over until the deal is signed but you have to think our larger II shareholders have already given this their approval. All with the exception of Hony should come out ok. Interesting day tomorrow! ATB SB

Need to wait until the morning kitkateat for timescales etc - assuming the deal gets its approvals we end up with a wad of cash in the bank but no trading business - a cash shell. My understanding is the company then has 6 months to reverse itself into another business or leave AIM. In the meantime you would expect shareholder approvals to include a cash return to investors - on what scale we will find out soon enough. SB

I reckon there's about 900m fully diluted shares - and there must be about $11m+ of cash in the business. So 10p plus valuation would seem in the right ball park. TLD assets were on the balance sheet at $80m - so its a decent premium paid. Maybe not what we thought might be achieved - but not a disaster either. Wonder who sold 70m at 4.6p last month......and well done to SJL for his purchases - timing eh! Interesting RNS tomorrow and decisions to be made....its been quite a journey - to those who stayed the course and will be ok with deal - congrats. SB

SJL - thanks for your contact details - and for your insight into the current Uni sale .

To some extent this is all a bit of guesswork on values/valuations - although appreciate you know Frank so will have a better understanding of the bottom line dollar return here.

Uni sold cars/car/auto - $1.75m recurring revenue (c.1000 DUMS @ $2k each) to its JV partner xyx - they used the same auction business as the sale later this month. But i guess nether FS nor xyz would share the price paid. Based on a double digit multiple of net revenue/EBITDA that's a healthy number - although I guess xyz only had to pay 50%. FS also sold his 375k names portfolio to godaddy last year - and we know they paid $90m for that - $235 per name - they appear to be pre-registered names as part of an investment portfolio.

I guess key to the disposal is the level of revenue flowing through Uni's domain portfolio - and again we have no visibility on that - although looking at radix and mmx - our 'average' is c.$5/6 per domain - so IF Uni have 300+K @$6 a pop - revenue would be $1.8m - but based on higher pricing for cars etc that number could be way out.

Looks like end of month could be interesting either way - we might even hear from mmx by then.....SB

Hi Sunday - I agree the Uni thinking was a bit out there......large selling, no update to web site to include SJL's notifiable interest, and no communication yet on results - just trying to find some justification for current events. It will be interesting to see what prices get paid for Uni's 23 domain assets - much less DUM's than mmx - but SJL thought previously their revenue was similar. Also - it has been reported that donuts are increasing the price of 29 extensions by 7-27% (.company and .business both 27% hikes with 75K and 30K DUM's respectively) under the banner of optimisation. Donuts now owned by Ethos Capital - Donuts also took out afilias late last year to secure (amongst others) the $20m pa .org registry services prize - which Ethos had tried to buy outright from PIR but got bombed by California legislators I think. You have to think Ethos are building a domain beast to a point where they go for an IPO in the next 2/3 years. Who knows if they would consider mmx, radix or Uni as part of that consolidation piece in addition to prove hikes. The Uni question will likely be answered by the end of the month. SB

I hope Dr K's accounting observations are wide of the mark - I can't see it personally with the level of diligence that disher would have undertaken and then put his name to after the revenue problems.
There may be other reasons for a 'delay' a) historically results don't appear until April anyway; b) we are looking closely at the upcoming Uniregistry sale - our COO used to work for Uni and probably has a good insight into the business model and whether there are any synergies - although there's likely a big price tag attached - might explain why one of our investors sold 70m shares recently; c) the results appear easter monday and all is fine!
SJL - if you pick this up - I have attempted to hook up elsewhere if you got a strange request....SB

Overall management of the Marlborough SS Fund is outsourced to Hargreave Hale, who are in turn owned by Canaccord. So Marlborough's 37m holding sits within the overall 99.5m held by Canaccord. Confirms what SJL thought was the case. Back to sleep.....SB

SJL / I have bern wondering if Canacord are the mystery seller. Lombard or L&C would have declared as they are linked to company via Turcan and Elliott i believe. No one else had 70m+ to sell - oryx are close but again they would have declared. Perhaps it’s all something and nothing. Last years results were a bit earlier than usual so again perhaps there is nothing in the current timing - protocol would be for the business to confirm the actual date it releases its results - didn’t happen last year but most other years there was advance warning. I see you’ve not made it to the major shareholders list on the web site yet, probably due to the fact that would cause a rather large irregularity in the number of shares listed v the actual position. Maybe someone will let us know what’s going on soon enough...SB