Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
I am quite worried about the possibility that the 19:1 (current equity holders only get to keep 5% of the business) is being included as a term in the scheme documents sent to the court. In other words, this cannot change once any agreement is considered/ approved.
Based on this, these are my calculations, only my opinion and quite possibly incorrect, but thought I’d share them anyway.
There are two specific elements that AMGO have released information on over the last few RNS announcements.
1 – They will be raising at least £70m from an equity raise.
2 – They are going to be issuing 19 shares for every one current share.
In theory, this means that based on 475,000,000 current shares, then they will be issuing 9,025,000,000 new shares.
Assuming that there is no choice in the number of new shares, to raise the £70m this means each of the new shares will need to be sold for 0.77p. That is significantly less than the current price of circa 2.5p and makes me think if this is set in stone, or can it be changed after an agreement is sanctioned
Only my humble observation.
DYOR
The share offer would not be forced. It would just be an offer to existing shareholders to maintain their % ownership vs just the number of shares. Personally, I probably won’t have any spare cash to at the time. So I'm happy with a 50% dilution. In theory a £1 future price (in the next few years) at the current number of shares would equate to a 50p value if there were 50% more shares issued. That’s still nearly an x10 from current price. But I am not forgetting that there are serious hurdles to jump and a massive risk that this doesn't even survive. So, it's nowhere near a done deal and that’s why it's at 6p now. Only my opinion. DYOR
I'm not sure we want this price to rise until after SOA 2 is implemented. The reality is that at the current market cap, the £15m the company is agreeing to pay from a fund raise, is about 50% of the business. That means the current shareholders would be losing a little over 50% of their value. At the same time, the redress creditors are only getting circa 50% of their money. That’s all looks a fairer offer from both sides. Obviously, we hope the future price will be higher, but I would much prefer the narrative on this to stay the same until April (ish) and everything is signed off. Assuming of course we get to that stage. I understand that to some, it is hard to be patient, and people see the share price go down and think they are losing money. That's not the case. You only lose or gain at the moment you buy or sell. Just my opinion. DYOR
I'm going to base my calculations on this statement from Chief Exec's statement:
"As part of the future business plan, originations are planned to begin shortly after the Scheme is sanctioned and are forecast to increase gradually to reach approximately £300m a year by the beginning of year two, with an annualised rate of growth of 5% targeted from the beginning of year three onwards. Depending on credit losses and early settlement assumptions, a gross loan book of £400m could be achieved by the end of year four. This scale of business will require a combination of debt and equity capital of up to £300m. Monthly collections are expected to be around 5.5% of the gross loan book in the first year, gradually increasing to around 8.5% in year four. With the APR on the new products differing to the current single guarantor product, and including dynamic price reductions, the targeted blended yield is 34%."
If I've got this right then that's revenue of £102M (34% of gross loan book) in year 1. That's about 50% of March 2018 when share price was nearly £3 a share. Just me own thoughts. DYOR
John, yes absolutely, and that is a long way off. I was thinking more along the lines of a scheme update in terms of possible new vote etc. I'm sure I'm wrong but as Blueskyboy says... Happy Thoughts.
I reckon there's a chance the phone lines are closed because the call centre team are all in training (so they can answer questions about a scheme update). This could mean some news soon. Just speculation on my part, DYOR
To me, the only bit of new information in this RNS is that they are not going down the appeal route. The rest we already know. That's great, not burning precious time trying to force the point. I don't want the share price higher at all at the moment. In fact the lower the better for now, therefore helping FCA & Judges see the true value at the moment and how this equates to a scheme options.
Just sharing my opinion.. again!
My opinion on why they went in so hard with the ‘binary choice’ was like any negotiation. Start with your lowest offer, you then have somewhere to go when you need to negotiate. Anyone that has bought a car from a salesman knows you never accept the first p/ex offer. How many times will they tell you they can't do any better, then 10 mins later a better deal is done. It’s basic 101 negotiating rules.
I believe the judge and FCA have called this correctly. They are, in effect, refusing the first offer on behalf of the so called ‘unsophisticated creditors’, It’s their job and they are doing it well. So therefore, I would not be slamming GJ too hard on these tactics as such.
GJ... 10 points for trying but NIL points for results (so far!).
Just sharing my opinion.
The way I see the messaging and optics regarding the SOA vs Insolvency is this. The company said that… without a SOA the likelihood is insolvency. This is because without a SOA the torrent of redress claims both as a cost of redress and cost of admin would be overwhelming and the company could not (at the present time) fund this.
However… and this is a big one!
They have never said that the SOA must be the first one. They have always said without ‘a’ scheme, with ‘a’ being the important word. This could be scheme v1, v2, v3, v4 etc.
Therefore, insolvency is not on the table until there is absolutely zero chance of a scheme being agreed and passed. You can make your own opinion on whether a v2 SOA or alternate is currently off the table. (I know what I’m thinking.).
Vinson, fully agree. Have a quick look at my previous post about an alternate idea along these lines. I actually sent a copy of the post to amigo investor relations and got a nice email back to say it had been noted.
Just read the judgment. In is very clear the judge thinks a restructuring is the best way forwards. So here’s an option.
We issue new shares that are comparable to 15% of the business (71m). These are owned by the Scheme and are issued with a clause that says they are to be sold in the open market in 4 years’ time and the proceeds distributed to the scheme. We all take a 15% dilution in our holdings (for me, this is very preferable to insolvency) and the business moves forwards and starts re-lending.
Any dividends are paid as normal with SchemeCo getting its 15% equivalent as a shareholder. We get back to the highs of circa £2.50 a share as they were in 2018 and the shares are sold. This would be about £177m into the SchemeCo coffers alongside any dividends and values already assigned.
Working on the basis that the 100% redress figure is about £240m that would be 73p in the pound for the creditors (a lot better than the 10p being talked about before). I would be very happy to take a 15% hit in dilution at this moment for this to move forwards.
Remember DYOR – only my opinion.
LongTermLover - I found that was a great video explainer. I'll post the link again for others like me who missed it. https://www.youtube.com/watch?v=DISjoYzCkLQ