Member Info for TL82

It’s mandatory process

I received a corporate action asking ti vote for the company to be wound up voluntarily a nd for Begbies Traynor to be appointed to handle the process. I have voted against this as the liquidator is awful and will seek to extract all the value for themselves rather than shareholders. I have suggested they appoint a different company and suggest others do the same.

It does look like a stitch up unfortunately as it is clear that the business is still trading while the shares have been suspended.

The board manoeuvred the narrative to acquire the power to issue as many shares as they want, effectively allowing whoever is in control to water down the existing shareholder base infinitely, given where the shares were trading. They kept saying they were near profitability and investigating new capital channels, but not once have they asked the shareholder base for more capital, so they 100% haven’t exhausted all options. Hence, what they have done by delisting is not a last resort.

INL has then immediately sought an effective takeover by calling in their loan, knowing that they will be able to acquire the CEO’s shares outright in August and be able to water down the remaining 25% of minority holders with a cash injection subsequently. Essentially, they’ve managed a takeover for 2m.

These board decisions in order are suspicious, particularly given what they have been saying about “supportive shareholders”, “nearing profitability”, “ongoing working capital”, etc. Maybe the CEO’s assertion that funding channels effectively broke down after the INL reception request news is genuine and that he has lost control by accident - I can see how this could be the case. However, he a) has since downed tools in the hope of securing a better deal for himself from INL; and b) suspended the shares. Neither of which are in the interests of the existing shareholder base. The board’sdecision to suspend the shares also plays directly into INL’s hands, so if the outcome isn’t in the interests of the minority shareholders, but the CEO and INL itself then I will be raising this with the FCA who hold regulatory authority over the company.

Either way, in the near term it appears that we are now at INL’s mercy about what they want to do once they gain control in August. Let’s see what happens before making conclusions, although I suspect they will seek to dilute the minority shareholders significantly by a capital injection at a very low share price. I am aware of the balance sheet and value of the shares as an ongoing concern given the boards previous statements, so if that isn’t reflected in any capital raise pricing then it will be actionable legally.

I’m watching this closely and will make it known via online forums if I’m raising with the FCA so that other shareholders can register their interest or support if they so choose.

I am a very experienced professional investor so am aware of what is and isn’t allowed.

I said it is possible that there is manipulation - and it is. If you think it’s not possible then you’re ignorant. I have nothing to substantiate, but those kinds of things are quite common - it happens all the time in micro caps.

It makes no sense to raise such a small amount if they will need more in two months. Even if they couldn’t get more straight up from one investor, they haven’t even asked the existing shareholder base for support on the basis that profitability is en route. Why not ask the existing shareholders before destroying the share price (which was 4x this level a month ago). The fact that the FD has left simply adds to this suspicion.

Maybe they have trade receivables incoming that will allow the 325k to see them through - which would make recent chat about issuing new shares misleading (and the mystery new investor will make a great return). Maybe they have no cash and low sales, which makes the CEO’s recent statement that profitability will come in summer misleading. Either way, there is someone not telling the truth - but this doesn’t matter a it is easy to just justify such lies with statements like “our forecasts were too optimistic”.

in any case, ask why we have a new mystery shareholder that just dropped £325k into a company that is being portrayed as going bankrupt at the end of this quarter in the form of shares that they will have known would plummet after the announcement? Something doesn’t add up.

The key question here is why Aviva has decided to put up 350k at a 1.1 share price. This is a professional investment company, so they wouldn’t give the money if they thought it would go bust next month. This is in context of sizeable investment from the established Chinese supplier last year - a partner that has both financial and operational interest in the company strengthening. Both businesses will have done due diligence. At this company size, they would want a “multiple of” return to justify investment.

These investments make sense in context of what the CEO was saying just a few months ago - that the business has made overseas expansion investments that are starting to bear fruit and that the domestic operation has bounced back.

Throw in the fact that the finance director has just quit and it is possible that this is some sort of manipulation of the share price to flush out weak holders ahead of a very positive update that will see the shares rocket.

Another option is that the CEO is a total moron/liar, but why would he continue to be able to raise funds from professional investors if that is true? This company has been in operation for a decade, so I doubt this is the case, despite the obvious red flags. I would say it is more likely that he would be taking Machiavellian actions at the expense of common stockholders for his own gains.