London Capital Hldgs Share Discussion Threads

[iomarbarrett] 03/6/2014 21:38

Hi checkers. Why bad? If it was a rights issue I wouldn't mind, the nil rights have a value after all, and all shareholders rank pari passu. This however is an entirely different animal altogether...it is a back door method to have a change of control, diluting current holders in the process, in a deal that has been structured to exclude (read expropriate) existing shareholders. It may have made sense if the company had a weak balance sheet (it doesn't), was burning cash (it isn't) or had an exceptional need for regulatory capital (my understanding is there is an excess of £6mm over and above current capital requirements). The capital being used for international expansion is incredibly dubious...why leverage your balance sheet at extortionate interest rates to enter an uncertain opportunity in an unknown market, especially given the strategy 18 months ago was to focus on your core market (sensible in my view), and you have subsequently even failed at that? It is like trying to run a 100m sprint against Usain Bolt before learning how to walk*
*All comments on this forum reflect a personal opinion only and is not in any way representative of my past or present employers. It is not meant as advice but subjective commentary. I and/or other I advise may hold an investment long or short in the above stock, and do not currently hold a position of employment, directorship or consultancy with the issuer.

[checkers2] 03/6/2014 19:06

Iomarbarrett - thanks for the comment, and much appreciated on this thread which has been quiet of late

The most recent rns refers to convertable loan notes not a right issues, the terms of which are yet to be defined.

What makes you think it will be such a bad deal for us shareholders?

Anyone make it to the agm ?

[iomarbarrett] 03/6/2014 11:29

I spoke with Ashby recently. The funds being used to expand internationally, which is comical given the explicit business plan, less than 18 months ago, to refocus on core activity (sale of Aus business and Prospreads) and the surplus capital on the LCG balance sheet over and above regulatory needs. It needs to do many things, but doing a 15mm dilutive rights issue is certainly not one of them. To a previous point, yes it looks like a nil premium takeover, and a desperate throw of the dice for Ashby to potentially make money from his options by risking and diluting current shareholders (I presume there are very generous terms presented for him in the placing). Obviously no shareholder in their right mind would accept these terms, unless that is, they are involved in the GLIO holding vehicle, which I presume they are. I met with management last Summer, and saw many warning signs which I unfortunately only partly heeded. Buffets old adage of 'good company meets bad management' comes to mind. It also reminds me of another company Timeweave, which did a similar move a few years back. I have wasted enough financial and emotional capital on this name, and for that reason have now moved on. Best of luck to those who remain. Lessons learned...

[mister md] 21/5/2014 08:04

seems I had a lucky escape selling on the spike over 32p. Want to understand what is going on here before re-investing.

[davidosh] 18/5/2014 00:26

I do hope one of you is going to the Agm ? I have been the last two years but need to be at another one the same morning and I do think shareholders need some answers here.

[masurenguy] 16/5/2014 16:14

Looks like LCG could close below it's ATL of 27.5p in March last year. :-(

[trikon60dollars] 15/5/2014 09:26

the ex management shareholders, Denham and Woodward, are unlikely to want to subscribe for the convert - it would cost them £2.85 million - so they are going to see dilution if things go well and large amounts of debt ahead of them if things go badly - in consequence, I find it very difficult to believe they are in favour. Meanwhile, the institutions are going to have to really believe in the proposed use of cash to want to subscribe. So, on the one hand, I doubt this will get shareholder support; on the other, it seems very strange that management would announce this without getting tacit agreement from six shareholders who between them can block the issue. I'm very confused, but perhaps we'll hear more at the AGM next week. Anyone going?

[g8ta] 14/5/2014 18:43

I agree. Are they hedging their position? If it's good they convert (depending as you say on the convert price), otherwise they get their loan money back. Were any of the major holders consulted before the announcement, I wonder? What do LCG want with the extra money? They've just got rid of two businesses. Maybe looking for UK acquisitions.

Time to wrap it up and sell it, it doesn't seem to be going anywhere.

[trikon60dollars] 13/5/2014 17:08

wonder what the existing large shareholders think of the proposed dilution. Since the top six shareholders (including two former members of senior management) own 56% between them, clearly the convert will need their support. Depending on the convert price, this looks like a no premium takeover which one would have thought unattractive

[trikon60dollars] 06/5/2014 11:54

though not without his controversial aspects: hxxp://forextrues.blogspot.co.uk/
(though he seems to have come out on top as far a Saxo are concerned
and this is his business partner:

[masurenguy] 03/5/2014 16:25

Transcript of the content from the above link.

Charles-Henri Sabet pursued his brilliant and original career path since a young age. Strongly influenced by his Egyptian-Lebanese origins, he discovered early on a taste for bargaining, trading and strategic games. Sabet took on responsibility early and, thanks to his multiple talents, strong curiosity and focused mindset, began winning at everything he set his hands upon. In 1985, at the age of 24, he received the world championship title in backgammon. Immediately afterwards, Sabet began his career in the financial world. Thanks to strong leadership skills, he occupied senior positions in trading rooms at Crédit Agricole then at Swiss Bank Corporation (now UBS) where he managed the foreign-exchange and treasury desk.

Charles-Henri Sabet is an entrepreneur and an excellent strategist: he established his own business, when he turned 30. TCC was a trading company specialized in foreign-exchange, options and interest rates. Its rapid expansion led TCC to be positioned among the largest stakeholders in the foreign exchange market. Charles-Henri's superior intuition, excellent risk management and focus on market intelligence brought him widespread respect and recognition in the financial world.

With such business growth, Charles-Henri decided to apply for the Swiss banking lisence in 1999. During this period, Sabet gained a vast knowledge in banking regulations and financial law, internal controlling and risk management. He made a deep study of financial and banking law this time. In 2000 TCC changed its name to Synthesis Bank. Synthesis Bank was an internet bank active in all financial markets : foreign-exchange,, stocks, futures, derivatives, funds, options and other products. Charles Henri Sabet was the Founder & Chairman until the end of 2007, then he sold Synthesis Bank to its IT provider Saxo Bank. In 2009 he became Chairman of GIO – Global Investment Opportunities Management Ltd (an Investment Management company incorporated in the Cayman Islands).

Sabet is now the Chairman of Jiffix Markets Ltd, known as JFX.com. Together with The Rowland Family, they have increased the capital of Jiffix Markets Ltd, making the company one of the strongest capitalized online forex companies in Cyprus. His goal is to democratize the trading world by also bringing financial education and support to clients. Charles-Henri is deeply involved with new trading technologies, online marketing and Internet-based business. Sabet is an expert in risk management and navigating the volatile nature of the trading environment. He developed fully automated risk optimization programs based on behavioral studies of clients in their way of trading.

[topvest] 02/5/2014 21:14

Interesting investor:
hxxp://www.charleshenrisabet.com/
starting to think this could actually be very good news.

[dangersimpson2] 02/5/2014 11:29

Excellent, good work as always David.

They need a compelling reason why this is better for shareholders than cutting all their costs to a bare minimum, running the business for cash and returning capital to shareholders as the business winds down and the regulatory cash is no longer needed.

[davidosh] 02/5/2014 10:38

The Agm will come before the EGM so I will be asking plenty of awkward questions at that one !

[dangersimpson2] 02/5/2014 09:34

I would imagine they mean that Jan & Feb were higher compared to average Q4 2013 months not compared to Q1 2013 but agree it's badly worded.

Re: convertible - it definitely seems a change in strategy since Sabet is definitely a strategic investor given his history in developing trading platforms not someone to just tap for cash (which they have plenty of.) At the end of the day it will come down to what that strategy is and how the convertible is priced. Neither of which we know yet - given that shareholders need to vote on this I hope they put plenty of detail in the EGM notice.

[topvest] 02/5/2014 09:14

Yes, rather puzzling. I suppose at least there is interest in putting £15m in, presumably to support aggressive growth plans. Why do they need it if the platform has already been luanched though?

Not sure how Jan and Feb can be higher and March muted and you end the quarter at £4.7m versus £7.6m last year - the maths don't work!

[horndean eagle] 02/5/2014 08:52

All a bit puzzling really. Why would they need so much additional capital. Can hardly accuse the company of being under capitalised.

[masurenguy] 02/5/2014 08:26

A fairly negative and rather terse Trading Update this morning followed by a proposed convertible loan placing which could potentially dilute existing shareholders in due course.

RNS Number : 1305G
02 May 2014
London Capital Group Holdings plc

Trading update

London Capital Group is pleased to confirm that the migration of Capital Spreads and all white label partners to the new core trading platform has now been successfully completed. The Group will now focus on the delivering new trading tools and applications for its clients, the first of which is scheduled for release in May 2014.

Whilst the Company experienced an increase in trading activity in January & February 2014, activity in March was muted resulting in trading revenue for Q1 2014 being £4.7m (2013 continuing operations: £7.6m). Average daily spread betting and CFD trades in the quarter were down 11% on the prior year, moving from 24,298 to 21,586.

The loss before tax for Q1 2014 was £0.4m (2013 continuing operations: £0.7m profit). The Group's net cash resources (including amounts due from brokers) were £18.1m at 31 March 2014. Following the payment of settled claims in Q1 2014, the FOS claims provision at 31 March 2014 was £1.5m.

......................................................................


RNS Number : 1336G
02 May 2014
London Capital Group Holdings plc

Placing of Convertible Loan Notes

London Capital Group today announces that it is planning a placing of convertible loan notes of approximately £15m. This placing will be subscribed for in full or in large part by GLIO Holdings Limited ("GLIO"). GLIO is an investment company led by Charles-Henri Sabet who is, and has previously been, a significant and successful investor in online trading platforms. The placing is subject to a number of conditions including the approval of LCG shareholders, receipt of the appropriate regulatory consents and confirmatory due diligence. A further announcement will be made in due course.

[welsheagle] 24/4/2014 20:50

20th May is not a Thursday?

[davidosh] 21/4/2014 01:56

When is the Agm ? Anyone attending ?

[masurenguy] 19/4/2014 11:19

Yes, around two-thirds but that still represents a company cash asset.

"The Group continues to have head room over our capital resource requirements. The following table summarises the Group's capital adequacy. The Group continues to have head room over our capital resource requirements

Total tier 1 capital resources (CR) £18,602
Capital resource requirement (CRR) (£11,880)
Capital resource requirement surplus £6,722

CR expressed as a percentage of CRR 157%"

From the results issued on 01/04/14

[aishah] 19/4/2014 10:39

But isn't much of the cash required to be held under FCA rules?

[masurenguy] 19/4/2014 08:35

Effectively at an ATL on Thursdays close @29.75p. The market cap of £16.6m is probably now slightly below their net cash reserves. Still waiting for the final resolution of FOS to clear the decks but once this anchor has been lifted, and at just a modest PER of only 8 plus net cash, they should be worth at least £35m or 63p a share. That provides an upside of around 100%.

[dangersimpson2] 09/4/2014 16:34

Trades must be on another exchange or a dark pool because I picked up a few today @30p. Volatility seems to be increasing and barring any more mistakes the company should be able to generate positive cashflow. Since they are trading at a market cap close to cash + NWC (including all provisions) the market is valuing the business at zero. This is much too harsh imo.