Acorn Growth Share Discussion Threads

[hedgehog 100] 09/9/2016 16:17

yogaboy 9 Sep '16 - 10:21 - 334 of 335 0 0
" ... RE conditional agreement - I think we're on the same wavelength here, I'm just trying to keep it real. That conditional agreement can still be scuppered by any one of the participants. To paraphrase my FD, "it's not a deal until ALL the conditions have been satisfied". ... "


YB,

I don't believe that the conditional placing agreement can be scuppered by the placees (even if they wanted to, which is unlikely), because they shouldn't be the ones in control of fulfilling the conditions.
And if the conditions are met, they have a contractual obligation to proceed.

But if the condition are met, why should they not wish to proceed? If they were keen to subscribe at 15p per share when the ACO market price was about 9p, then they should be even keener now that it is above 15p.

And remember that there are only three conditions, i.e.:

"Completion of the Subscriptions is conditional upon:
-- evidence satisfactory to the investors as to the passage of resolutions at a general meeting of the Company to authorise the allotment and issue of the Subscription Shares;
-- evidence satisfactory to the investors of a prospectus relating to the issue of the Subscription Shares having been approved by the FCA; and
-- aggregate subscription monies being received by of not less than GBP2,477,666.70 (such sum having been deposited prior to exchange of the subscription agreements)."


The passing of the AGM resolutions (in just over a fortnight), which is a formality, takes care of the first condition.
The third condition is just a procedural element.
Which just leaves the approval of the prospectus by the FCA.

There will be apparently be a shareholder circular to accompany the prospectus:
"Further details will be provided in due course in a shareholder circular and in the prospectus."

This is indicative of a deal linked to the subscription.

And in my opinion this is in effect a done deal (i.e. terms in principle agreed, and due diligence done), in view of recent news, or we wouldn't have got to this stage.
I.e. the £2.5M. subscription, and imminent resignation of all the existing directors.

[yogaboy] 09/9/2016 15:30

Oh you've got me started now. Okay let's dream of a paper RTO, off the back of the envelope...The new investors put in £2.5million, added to the (approx) £1million net assets, so £3.5 million after the issue. That was their price of entry to the cash shell. Paper swap ensues, bringing a £50million business onto the balance sheet. Net assets now £53.5million. Round it down to £50million after costs, once the dust settles.Net assets of £50million over issued share capital of 114.5 million shares makes 44p per share.With my 10p entry point that's nearly a five-bagger for Christmas. "Smiley face"

[yogaboy] 09/9/2016 10:21

Hedge,Hedgehog 100 - 08 Sep 2016 - 20:45 - 331 of 333RE conditional agreement - I think we're on the same wavelength here, I'm just trying to keep it real. That conditional agreement can still be scuppered by any one of the participants. To paraphrase my FD, "it's not a deal until ALL the conditions have been satisfied".Very unlikely, I concede, especially given its insertion into the AGM agenda, but possible nevertheless.RE pure RTO or acquisition - I'm still not sure. For a pure RTO the target company goes out and finds a shell, as a short cut to a listing. This was a shell seeking an acquisition target, and it's doing so with some rhetoric about expanding its range. Maybe they were introduced to one another and realised the deal would be to their mutual advantage. Who knows? If there is to be a paper transaction after the injection of the £2.5m new capital, that would make sense - so that we, the original shareholders, end up with 12.5% of a £15m (or would it be £17.5m? or £19m?) company, with gains to be made when the other 87.5% floats.We'll know by the end of the month...

[hedgehog 100] 08/9/2016 20:45

yogaboy 7 Sep '16 - 00:34 - 321 of 330 0 0
"... In my corporate past life, my FD always used to say "it's not a deal until we've signed"."


YB,

Very true, but the share subscription agreement is signed, as a conditional agreement, so provided the conditions are met it will go ahead.

The AGM resolutions indicate that it is going ahead as planned, and with no timetable slippage.


yogaboy 7 Sep '16 - 14:49 - 325 of 330 0 0
" ... The cash shell ACO has conditionally agreed to raise £2.5m for an acquisition, which it has spent some considerable time seeking. It is reasonable to assume that that £2.5m will be the current value of what is being acquired. ..."


YB,

I'm sceptical that an acquisition at that level is what's planned here, unless it's a real bargain that's worth far more, e.g. assets bought from administration.

I think that the company is after a big fish to fry:
"It is envisaged that the company or project acquired for the acquisition will have an enterprise value up to £50 million."

With ACO's existing monies it will have cash of about £3.6M, which a good amount for a shell, and of course the ability to issue shares in exchange for shares in an acquisition.

Either way though, the fact that all 3 existing directors are stepping aside suggests that their job is done, and that something new is going to be injected here.

[hedgehog 100] 08/9/2016 20:03

The 15p placing price should be seen in the context of the share price of just below 9p at the time, making it a 71% premium.
Because it's an indication of much greater value here than 15p.

It could be that the company wanted to raise funds at 20p, the IPO price, but were advised that a premium of nearly 130% would be challenging.
Resulting in a compromise at 15p.

But it will still give ACO nearly 12p per share of cash, after fundraisings at 20p and 15p.
And you'd expect the share price to trade at a premium to the price paid by large investors, as they're funding the company, and have less liquidity.

With the main market listing (which is worth far more than AIM), the years of work, the financial and dealmaking power of the insiders here, and the indications of a near-term deal, then the current share price of 17.75p looks great value.

[hedgehog 100] 08/9/2016 17:42

polly65 7 Sep '16 - 11:32 - 322 of 328 0 0
" ... Hedgehog,
Whats your take on all the selling off today?"


Polly,

Sorry about the delay in replying.
YB gave a very good answer, but I'll just add a few thoughts myself.

On Wednesday morning there was a large £20K. ACO buy:
"07-Sep-16 09:57:03 19.925 100,000 Buy* 18.75 20.00 19.93k O Trade Type: Ordinary"

There were also two £10K. buys yesterday.

In general buying is more significant than selling, because people sell for many reasons, but generally only buy because they believe that it's a good investment, and have thousands of shares to choose from.

There is usually some profit-taking after a strong rise, as YB has observed, which is why rises are often staggered, and that can create buying opportunities, as at 13.5-14p recently.

So what is more significant: ACO raising £2.5M. at a 71% premium from large investors who know what's going on; or some moderate selling from retail investors who have no idea what's going on.

Added to big buys in the market, which supports the view that behind the scenes activity is good.

Follow the money!

[hedgehog 100] 08/9/2016 17:10

Thanks Polly for your Orion research on LSE, which certainly supports the view that ACO may be moving into property.

Orion are ACO's fourth largest shareholder:

"Orion Capital Partners Ltd 625,000 4.4%"

"Orion Capital Managers

Orion Capital Managers LLP ("Orion") is a European real estate investment firm. Orion's business is commercial real estate investment management on behalf of major investors from around the world. The firm is dedicated to consistently deliver performance to its investor partners.

Orion is wholly owned by its Founding Partners and has offices in London, Madrid, Milan and Paris. Orion Capital Managers' local presence and experience in European markets creates a platform which responds rapidly to a broad range of transactions."

[hedgehog 100] 08/9/2016 16:36

Polly,

That's a very short-term timeframe now: the AGM is just two weeks on Monday.
I think that the AGM and its resolutions are the next thing on the agenda here, and I can't believe that ACO will be suspended in the interim.

Further out it's less clear cut, but I still don't have the impression that there will be a suspension here in the short-term, so if there is one, it will probably be very brief.

But a RTO suspension is usually a very positive event if the RTO goes through, as it generally adds significant value.

A recent example is VLOX, which returned to the market as VLTY at the end of June after a RTO priced at five times the suspension price: which was a real gain, not just down to a share price consolidation.

In fact buying in just ahead of a suspension can be a good strategy if you expect a positive outcome, as the share price can be depressed beforehand by investors who don't want to be locked in, and/or are unsure of the outcome, creating a buying opportunity.

Only yesterday for example the biggest riser was OPP (Origo Partners), up over 800% on its first day back from suspension.

And just the potential of a suspension can create such an opportunity, even if the suspension doesn't actually happen.

E.g. in May 2014 ONE was suspended for a RTO, and returned a month later as BOOM at double the price.

[polly65] 07/9/2016 22:49

RE: Potential Suspension

Is it safe to say that the share, having come this far without a suspension, will continue to trade through the AGM with no suspension?

[yogaboy] 07/9/2016 14:49

Polly, I'm not entirely convinced this is an truly an RTO.The cash shell ACO has conditionally agreed to raise £2.5m for an acquisition, which it has spent some considerable time seeking. It is reasonable to assume that that £2.5m will be the current value of what is being acquired. Independent investors are putting in capital at 15p per share, so there is currently a 4-5p expectation value in the share price, on the grounds that the deal might turn out to be worth more once they get their hands on it. That's an investment, not an RTO.Further share capital is also being authorised for future acquisitions or for additional working capital. Given the admirably cautious approach by the company to date, that might just be the end of the story for now and the share price might still be around the 18-20p mark in a year's time. Or two, or three...No director has sold "yet". That might just be because the deal hasn't yet been completed.You're right to note that other, more attractive possibilities might also be the case, but it would be unwise to assume anything is certain from here.

[polly65] 07/9/2016 14:21

YB,

I totally understand that part of the equation. The market is open for those who want to cash out. What is tripping me up is that a £2.5M subscription announcement is due in days, no director has sold, the companies acquisition horizon has broadened, an RTO is clearly in place yet the share price isn't rocketing... I suppose there are two more weeks.

[yogaboy] 07/9/2016 13:23

Polly, today's selling is not unexpected. Anyone who bought sub-10p is sitting on 100% and who's to say that's not a good time to get out?The only reason to hold now is if you think there's still an upside from here that is preferable to all the other potential upsides out there...Not everyone will agree that's the case. It's all down to judgement of risk and reward - or cashing in what you've made and walking away :)

[polly65] 07/9/2016 11:32

YB,

If only it existed!!

Hedgehog,

Whats your take on all the selling off today?

[yogaboy] 07/9/2016 00:34

Polly, if we had crystal balls of that quality we'd all be made up :) Happy to be back in anyway!

Hedgehog, I appreciate your comparison notes with other RTOs, but I'm sure you will agree that such comparisons can also be beguiling and deceptive. I did exit at 100% profit today, but the temptation was just too much when the price fell back. It's never wrong to take a profit, as the saying goes, so I hope I don't live to regret watching this puppy fall back to sub-10p if the deal falls through. In my corporate past life, my FD always used to say "it's not a deal until we've signed".

[polly65] 06/9/2016 21:53

Hedgehog,

I do hope so!!! Well done, I must say you've had the foresight and i suppose a speck of good fortune too.

YB,

Congratulations on your takings! Good to know that you are back on board.

Anyone reading,

Well done to all those who have had the patience to see the current levels.

As I'm not much of a day trader myself, I've seen on another forum mention of a 32p target. Is there any basis to this or is it merely day trader talk? Can anyone envisage a return to the announced allocation price of 15p as an opportunity to buy or are them days long gone?

[hedgehog 100] 06/9/2016 21:51

Thank YB,

A very good lunch indeed!!

I'm tempted to suggest ACO's AGM at the end of this month, but I don't think I can make it.

So I'll get back to you on the subject ...

I'm confident that this ACO rise has a lot further to run, as there seems to be a powerful momentum building here now, backed by very positive newsflow.

And there are also further comparisons to CHA when it was taking off, including a link with Peterhouse:

From the thread "Concha Plc - A new thread for 2014":

baxter992 Mar '14 - 21:49 - 520 of 4687 2 0

"Having bought in to the former and predictably disappointing Hot Tuna, I now have a warm feeling about this company - I bought my third tranche last week.

What I liked was the RNS on 12 Feb... "pleased to announce the appointment of Zeus Capital Limited as the Company's Joint Broker, alongside PeterHouse Corporate Finance, with immediate effect."

Two days later a follow-up RNS stated "The proposed authority to issue ordinary shares for cash on a non-pre-emptive basis would allow the Company the flexibility to undertake a future fundraising without recourse to shareholders, should the opportunity present itself. The Board also believes that such an enlarged fundraising capacity should make the Company more attractive to parties interested in obtaining a listing. In conjunction with this, the Company continues to actively seek out and evaluate additional investments in line with its investing policy, which could include reverse takeovers."

The company name is too much of a coincidence.

Combined with CEO's track record (founded Sports Internet Group which was sold for £300m), it all looks rather promising."




Also note that CHA raised £4M. after it had 20-bagged, multiples higher than its previous fundraisings:

22/10/2014 07:01 UK Regulatory (RNS & others) Concha plc FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2014
" ... Concha is pleased to announce the placing of 100,000,000 ordinary shares of 0.1p each in the Company ("Ordinary Shares") at 4p per share, representing 7.3% of the current issued share capital, with new shareholders to raise GBP4m. ... "

[yogaboy] 06/9/2016 21:31

Hedgehog,

"YB,

Well done on your trading profit, and thanks for updating us.

Such short-term trading isn't the type of activity I'm engaged in..."


Nor me, my friend, nor me.

I took nearly 100% profit then fell for the siren voice of temptation when the price fell back. Only £500 cash generated from a first dabble into "day trading" but (as I'm only here because of your excellent RTO thread) I guess that will stand us both a good lunch - whenever it suits you!

[hedgehog 100] 06/9/2016 20:14

Clearly a very busy start to September, with 183 ACO trades (over 2.6 million shares traded) already in just 4 trading days, an average of over 45 a day.

In comparison, in the eight months of October 2015 - May 2016 there were just 43 ACO trades in total!
I.e. a daily trades average of under one hundredth of that at present.

Such a hundred-fold increase is similar to Peterhouse shell Concha (CHA) when it was taking off:

swizz5 Jun '14 - 15:09 - 1630 of 4687 0 0
"Paying over for 1M, circa £20k, I remember paying less than £2k for a similar amount back in December, staggering!.....GL S"

jjcamargo5 Jun '14 - 16:31 - 1633 of 4687 0 0
"swizz do you also remember the days when the daily volume was 2m at 0.2p (£4k)?
average volume on google finance currently is 18m, ca. £300k"





CHA 40-bagged during 2014 from its January low to its November peak, reaching a market cap. of over £100M. from a similar level to ACO now.

And although it's now down about 90% from its high, due to its planned acquisition eventually being aborted, holders did at least have about a year to take profits on CHA as a 20-bagger or more.

[hedgehog 100] 06/9/2016 18:14

"In addition, it is proposed that the directors now be granted greater flexibility to allot and issue Ordinary Shares whether for working capital purposes, as consideration for any acquisition made by the Company, or otherwise.
Accordingly, pursuant to Resolutions 5 and 8 as set out in the Notice of AGM, it is proposed that the directors of the Company be given authority to allot and issue a total of £2,000,000 in nominal value of Ordinary Shares, including the Ordinary Shares to be issued pursuant to the Subscription Agreements, and pre-emption be disapplied in respect of the same amount in nominal value of Ordinary Shares, representing, assuming all such shares are issued, and taking into account the 14,288,005 Ordinary Shares in the capital of the Company currently in issue, 87.5% of the issued share capital of the Company."


Polly,

The share authority being applied for can allow ACO to issue shares in exchange for shares of a company being acquired, i.e. a reverse takeover, as well as for cash.

It's further indication that a RTO is lined up here in the near-term, and a big one at that.


YB,

Well done on your trading profit, and thanks for updating us.

Such short-term trading isn't the type of activity I'm engaged in, but good luck to anyone willing to risk missing out on a rise here.


P.S. Polly, I think that you will be getting that new kitchen you're after!!

[yogaboy] 06/9/2016 17:38

Well I decided to take profit this morning and sold nearly all my 100k shares. Bought them back this afternoon... It would have been rude not to!

[kvt123] 05/9/2016 20:52

It's an interesting situation isn't it. The obvious question that springs to my mind is,why now? The BoD have been searching for all these yesrs and only now, on the cusp of hopefully fulfiling their quest, they decide it may be useful to have the authority to issue shares.
I think this a necessary part of the completion process and don't think it will hurt the share price at this level (mcap still <£3m)...if anything, I think it will add to the excitement and speculation...gla

[yogaboy] 05/9/2016 17:26

Hi Polly

The announcement says that the 16.518million are included in the 100million, but gives no hint about issue price beyond the 16.518million.

My guess would be that this will authorise the directors to issue further shares at their discretion when the need arises. I put it down as a sensible forward planning measure.

But it is hard not to believe that they already have a reason for it...

[polly65] 05/9/2016 16:54

Hedgehog whats your take on that post?