Just passing this on. Explains rise4 Aug 2017 21:54
Two days ago Entu (ENTU) issued a statement which essentially said that its shares were worthless. Yet today the shares have rocketed by 230% to 4.3p. This is the classic dead cat bounce.
A dead cat bounce refers to a share price spike enjoyed by a company on its knees which is certain to die. Such a bounce happens in the last few days and weeks as mug punters, encouraged by cynical rampers on Bulletin Boards, suggest that if the shares are now c but once were 100x surely they must be worth at least 2x so can double or that a bid is looming or some such crap.
We have seen it so many times before. Look at the chart of the last couple of months of Afren or Jessops if you want clear case studies. The Entu statement was explicit - I underline two phrases:
Entu (UK) plc, ("Entu" or the "Company" or the "Group"), the home improvement group providing energy efficiency products and services to homeowners and businesses in the UK, announces an update on its strategic review which commenced on 6 July 2017.
Following receipt of several approaches, the Group is proceeding, with the support of its existing lenders,with a small number of interested parties in relation to a potential refinancing of the Group. If one of the currently preferred proposals is successful, the Board expects the Group to see a further increase in its level of indebtedness as creditors are brought back into line with normal payment terms.
The Board notes that all of the proposals received attribute little value to the equity in the Company. There is no certainty that any of these proposals, or any alternatives, will be ultimately successful.
Ends.
In other words if the banks pull the plug as they are entitled to it is a wipeout. That is one scenario. The best case scenario is that there is a refinancing but that will see equity holders diluted to buggery.
So the current equity should be trading at bugger all. Instead it is valuing Entu at £2.8 million. that is about £2.7 million too high.
Do not buy into this dead cat bounce. If you are a holder use it to sell.
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