Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
@ prolee. Show me evidence on that they can do that? I can pull the plug on my bathtub if i like. But i am sure there is no such thing like "i don´t like it i pull the plug".
So what would be the best options on the basis that:
- Cash in the bank of 180-200m
- Strong monthly cash flow of up to 30m
- Loanbook value of 300-400m (if SOA 2 passes)
- Most of lending facility repaid (June 2021)
- 95% voters agreed (incl. FOS) to SOA 1
- BOD knows how to adjust SOA to get it over the line
I trust the opinion of an expert judge in administration from the high court (insolvency department) who stated in paragraph 85 and 86 of the judgement: " the Group does not appear to be facing an imminent or even medium term cashflow crisis. The graph shows that the Group had cash of about £180m in April 2021 and that the cash balance is expected to increase to over £200m, where it will remain until January 2024 when the secured bonds require to be repaid. At that point the cash balance will fall to zero. The bonds have the benefit of a floating charge over the cash, but there is no evidence that the security contains restrictions on the ability of the Group to use the cash in its business." So that means they could use the 180-200m to make a better offer. Maybe sell the loanbook contingent to SOA 2 passes and get another 300-400m cash in the bank. https://www.amigoscheme.co.uk/docs/AllSchemeltdJudgement.pdf
Why is everybody talking about administration. Only the BOD said if there is no SOA, there might be risk for administration. Until Jan. 2024 there is no immanent reason to do this, because AMGO has strong cash flow of up to 30m per month with only approx. 4m operational cost. The lending facility has been paid back by June, according to the financials presented to the judge. https://www.amigoscheme.co.uk/docs/FinancialTimelines.pdf
So why would BOD be so stupid to file administration and not to try SOA 2 or sell the loanbook contingent to have SOA 2 sanctioned. They could get as much as 300-400m for the loanbook, if SOA 2 is sanctioned and AMGO 2.0 enter the post covid market. AMGO has close to 1m customers and if they only get 150.000 new customers at an average of 3.000 GBP new loan, they would create a new loanbook of 450m at 49,9% APR would add another 225m revenue. That would put the share price well above 100p. So you need to ask if the BOD is capable to get SOA 2 over the line. One way would be to pay the redress claims not at a 90% haircut but give them 100% back on valid claims by canceling the 4 year restriction on the 15% pre tax profit payments. Today we know more than in December, when first SOA was announced. We know that +95% will vote for a better SOA and we know what the judge want to see (no 90% haircut while shareholders benefit). The likelyhood of a RNS saying that SOA 2 terms have been negotiated with counsel of creditors will be more likely than any other option im my opinion. As soon as SOA 2 will be announced, this share will go pass 30p (Warning: this could be understood as ramping. Please make your own decisions not on my view).
So loanbok could be valued at 300m. Cash in the bank is 180m. So total assets could be 480m. What is the debt? 234m bonds and maybe 50m credit facility (284m). So the question is? Is there some intrinsic value to creditors or do they need to whipe out shareholders?
Here is some framework.
https://data.gov.uk/data/contracts-finder-archive/download/1305387/a1ee7868-e0af-4023-8130-2006b8e9fa38
I think the aging data of the loanbook is in the financial report.
The current loanbook should be arround 300m at an average of 35% net APR. if AMGO would sell it for 350m we would have approx 550m cash. Repay 234m bonds and 50m credit facilities should leave us with 266m net cash to move forward and settle all claims. We would keep 100m in the bank for operations and rest for the pot.
How can somebody make a claim that he could not afford the loan but he repaid it already? I believe there are strong arguments against the claims who have already been repaid. So from the 927.000 customers, there are only 137.000 under current loans. If you use 8% you get to 10.960 potential claims (sorry for my mistake before) at an average of 3.081 GBP. So it could be 33m if we assume that 100% of those claims are valid.
According to paragraph 13 of the judgement it says: "The Group estimates that ALL has entered into 927,000 individual agreements with 507,144 borrowers and 536,097 guarantors since January 2005 (together “the customers”). There are approximately 137,000 customers under current loans. 74,877 Scheme Creditors present in person or by proxy at the Creditors’ Meeting with claims valued for voting purposes at £230,744,046.00 voted in favour of the Scheme, representing 95.1% by number and 95.7% by value of the Scheme Creditors. This included the FOS’s claim of £12,511,500.
If we apply the 8% who voted from all customers, that would apply to 5.990 from the current customer base. This is more realistic, because if somebody felt he might have a claim, he aready could have gone to FOS or CMC´s. The average claim value is 3.081 GBP (claims value/voters). This could mean, that the total redress claim value could be 18,45m. There might even be the possibility, that many of them have already been accounted for. What are your thoughts on this?
It’s not always about money. Just sitting with your LOVE, thinking about what is more important than money is filling my heart. https://youtu.be/G1FIXHHArXI
AMGO is fair positioned if you read page 18: https://www.amigoplc.com/investors/annual-report-2020
Loan sharks charge in excess of 100% interest.