Trafalgar Capital Management: concerns and grievances13 Aug 2020 05:43
In the last 3 days, Trafalgar Capital Management (HK) have probably disposed at least 20 million BPC shares. They started to do so within hours of getting the BPC shares for the £2.1m Lind loan replacement, thus allowing the new merged company to be debt free. Its actions contributed to the share price plummeting from 3.2p to 2.2p in 3 days. Although we are not party to the actual agreement, the key points were disclosed in the RNS I quote from below. I am deeply troubled for the following reasons:
1. Trafalgar appear to be fully indemnified if they sell at a loss.
2. How do we know whether they indirectly took out a CFD derivative to profit from the SP fall, to earn even more?
3. I allege it breaks the spirit of the agreement which implied a controlled disposal (if any) during a 4 month window and NOT share dumping in a few days.
4. Have they done this before? Will they do so again to another public company they lend to?
Source from 11/6/20 merger RNS section 11. My caps and my commentary in [ ].:……………..
…..‘As part of the Replacement Funding Agreement, if the average volume weighted average prices of BPC Shares in the FOUR MONTH period following the Effective Date [c10/8/20] is such that, had Trafalgar sold the BPC Shares held (but whether or not Trafalgar has in fact done so), insufficient to deliver to Trafalgar a 10 per cent. return on invested capital, BPC will also be required to make a "top-up" issue of BPC Shares to Trafalgar or pay an equivalent amount to Trafalgar in cash as BPC may in its sole discretion elect.’ ……
Opinions:
(a) I will be surprised if the BoD has not complained. If it has, Trafalgar will likely sell its remaining shares in a more controlled fashion. If I was the BoD, I wouldn’t pay the indemnity under the circumstances. Does Trafalgar wish to risk reputational damage by suing BPC for £200-300k under the circumstances?!
(b) Although I am not a day trader, the golden rule of day trading during high volatility/momentum is buy as a share is rising and sell when it is falling. This contributed to events over the last few days and the permanent loss of some of our fellow LTHs. If Trafalgar and/or Lind sell in a more controlled fashion, OR after their remaining holdings of +/- 160m shares run out……SP should surge, especially with expected new flow being imminent and return to a market cap of well over £100m.
All IMHO. DYOR. I am not suggesting Trafalgar has or are doing anything illegal. Have a great day.
Starchild
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