London Capital Hldgs Share Discussion Threads

[topvest] 23/6/2014 20:57

Yes, pure greed!

[g8ta] 22/6/2014 23:12

The price is set by net current assets at 31 August and that's it. The interest on the loans can also be converted.

The company assets, or pretty much the cash, can be squandered on promotion, advertising, etc, once the conversion loans have been voted for, so Sabet and the BOD can manipulate the conversion price to whatever they like between 3 July and 31 August. Seems very nasty.

[topvest] 22/6/2014 17:33

Does the conversion price change over the 7 years though or is it capped at net current assets at 31 Aug 2014? The circular is really too complex, probably for a reason.

[g8ta] 21/6/2014 21:56

So the conversion price is to be determined by net current assets on 31 August 2014.

It is stated that cash per share at 31st March was 28.84 pence, so down to £16m from £17205m at year end.

Jan and Feb were okay with March poor (Ashby quite happy to remind everyone the company is bleeding money), and with IG reporting soft markets in May, I willing to bet that Q2 is worse. If it continues through July and August then ... Who is willing to take a stab. I'd say the conversion price is going to be pretty much where the share price is now.

Also, we are informed that Sabet will be made Executive Chairman with £260K, some bonus and 40 days holiday while he sits on the fence, privy to all inside information and deciding whether to take over the company or walk away leaving LCG bankrupt.

I hope someone is approaching the major share holders this weekend ready to make a hostile bid.

[topvest] 21/6/2014 18:42

One of the resolutions needs a simple majority, the other needing 75%. Just voted no and no!

Only Kevin Ashby and Frank Chapman have unanimously recommended. They have 13%. It can easily be voted down by:

Legal & General - 18%
Simon Denham - 11%
Artemis - 9%
Rachel Woodford - 8%
Miton - 5%
Hargreave Hale - 5%

Quite frankly, I despair if these all think this is a good deal for existing holders. It is only a good deal for those at the trough!

I notice that Sabet is looking to licence some software to LCG, no doubt at some excessive licence fee to strip cash out of LCG - see page 14. This sort of related parted transaction through Algoweb SARL is the sign of things to come. There will no doubt be lots more of this. Net result is that LCG won't be cash positive and the concert party will be able to convert at 10p. Beware!

Buffet - "you can't do a good deal with a bad person". I would suggest this phrase is very relevant here. Actually, there is good evidence over a sustained period that this company is poisonous (i.e. legal claims, management musical chairs, own goal after own goal etc. etc.).

[checkers2] 20/6/2014 22:17

Yes I agree topvest. A real disappointment for me too and am left too a little sour.

I have made a couple of other "deep crud" investments this years - LCG, Cupid and BLZ and had found LCG to be attractive, but it looks like we are being screwed here. If it was just a convertible loan, with a well defined conversion price, I could support it. But why they have to be awarded also with warrents is beyond me.

It is a pity that there is not a little more shame in presenting such non-equitable deals, particularly with all these non-execs and highly paid directors that are supposed to be during their duties in the interest of all shareholders.

Best thing we can do is vote this down. And hope a white knight appears.

I assume they will need more than 75% acceptance for such a proposal?

[topvest] 20/6/2014 21:08

The circular is very complex and the whole deal leaves a very very sour taste. The underlying message though is that we are being shafted by the incoming investor party....the risk / reward balance is very firmly set in their favour.

There is a chance that this could flush out another bidder as 30p+ in cash now would look highly attractive to all holders.

This deal looks to me like the first step to taking this company private. I cannot see it staying on AIM once the deal is done. Anyone else agree?

[iomarbarrett] 19/6/2014 08:39

Just to add, further to conversation with mmgt in December, I would not be surprised if Denham and Woodfords stake have been reduced considerably (and bought by the interested parties behind GLIO), as it was mentioned at the time that they were looking to exit. The 2.5mm converts would placate the Institutions + Chapman and Ashby, I would think they have this sown up.

[g8ta] 18/6/2014 23:08

I was still holding because funds exceeded mkt cap and didn't think it could go much lower. Boll*cks!

The loan notes were proposed before the agm and Ashby was reelected, so does this mean the IIs are for this?

Main Holders from the annual report.

L & G - 18.4%
Denham - 10.53%
Artemis - 8.96%
Chapman - 8.06%
Woodford - 7.82%
Miton Group - 5.13%
Hargreave Hale - 5.11%
Ashby - 4.93%
Axa Fram - 4.48%
Church Hse - 3.49%
Slater 3%

Chapman and Ashby are voting for, so they start with 12.99% (Clever of Ashby to get the voting rights on those shares he is yet to benefit from. Smells of pre-planning for this occasion.)

£18m = 32p a share

"From time to time the Company is in discussions with third parties (including competitors) with regard to possible mergers and acquisitions transactions. The Company, as at the date of the Circular, has no current intention to pursue any such mergers or acquisitions or similar transactions (other than as disclosed in the Circular). Should the position change, an appropriate announcement will be made."

I'm so hoping that someone comes along with an offer and pis-, sorry I mean rains, on their party.

[topvest] 18/6/2014 21:27

The concern on these proposals to me is not the 27p MAX convertible price, but the 10p minimum. Risk reward relationship is set to the new investors and not existing ones. The new Executive Chairman may be very good. Time will tell. LCG is worth 40p or so in my view and so we are being fleeced.

[chmith] 18/6/2014 19:30

If I was still in the company I'd start by contacting Rachel Woodford and Simon Denham who retain large stakes to hear their take. I'd also try to talk to the institutional holders, but expect them to be more difficult to get a hold of. As I said there might also be a legal case here.

As iomarbarrett mentioned, a cynical person would assume that the 2,5mm of potential 'institutional investor' convertibles will be offered to significant holders to secure their votes.

C

[topvest] 18/6/2014 18:28

A disgraceful move by this company to destroy shareholder value...even further!

International expansion...you must be joking...that's what they have just stopped. Are the Board incompetent?

Why didn't they just accept an offer 12m ago. Surely that was in excess of where we are now at?

It all looks a very greedy ploy to take this company out on the cheap. I'm surprised that the existing shareholders see any merit in this scam. Lets vote it down. Their must be some very disgruntled large holders on this.

[topdoc] 18/6/2014 13:18

thanks boys as long as my spd account is ok i feel better now.sorry for the shareholders though but why this sudden need for cash is it all truly for expansion only

[loverat] 18/6/2014 12:09

In my experience the most realistic way to fight this is through publicity. There have been a few situations where investors have been at least partially successful when faced with a management acting against the interests of smaller shareholders. PLUS Markets was one and there have been other situations. I would contact some financial journalists and see where it leads.

[chmith] 18/6/2014 12:03

Having another quick look at this I think I underestimated the amount of additional shares from the PIK element. 35% * 17.5/.27 = 22mm shares per year. Even worse than my initial post then..

I don't know if there is a way to attack this from a legal point of view, but even if there is it might not be worth the effort as there may be no money left to pay you with at the end.

[iomarbarrett] 18/6/2014 11:39

Chsmith: Yes, your only hope is that it is rejected by shareholders. However, there is a sweetener convertible for institutional investors, which answers my previous question about how on earth shareholders would approve such an appropriation of their capital. (Answer: make the deal sweet for institutions, ensure that your option package is structured as a JSOP so you have voting rights, and assume that most others will hold their interest via a nominee account and as auch will not vote). Yet another example of how you get burned on small caps despite doing the valuation and due diligence work, very similar to Joe Lewis and the Timeweave debacle of a few years back. "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact" In this case you have a bad business and bad managment!

[topdoc] 18/6/2014 09:55

Could this company be in any financial difficulty with all this fund raising.any ideas anybody I spread bet through them and therefore the question

[checkers2] 07/6/2014 23:17

And regarding Tier 1 equity capital it was worth in december 2013 18.6M.

Its current market cap is around 16M, you are therefore talking about a negative EV.

The fact that the Tier 1 capital has some restrictions on it doesn't mean it isn't shareholders cash.

And what about the capitalised leases? They are fairly insignificant at less than 1M.

Are we talking facts here or trying to scaremonger?

[checkers2] 07/6/2014 23:06

"Ashby owns no stock"?!, looking at the most recent annual report, december 2013:

He holds stock:
2,749,352 (4.93%)

plus

Options at a strike price of 49 p:
2,615,000

Where are you getting your info from?

This is skin in the game.

[the terminater] 06/6/2014 22:05

Ashby owns no stock. He only has an interest in the company through very generous 50p strike options package which were granted when the previous CEO abdicated after an 'interesting' 5 months at the helm. Ashby has never bough stock PA. This completely misaligns his incentives with that of shareholders. The previous management and founders all had and still have very considerable stakes in the business.
'Capital Spreads' Agree its a good product, not as good as IG index but still very capable. No arguments there

[checkers2] 04/6/2014 07:34

I appreciate your concerns iomarbarrett, but I can't help thinking it is premature to judge right now if the the deal is a good one or not, given that we don't know the terms (conversion price and reason behind it).

Given that the equity in the business is effectively priced at zero, it is of less concern the dilutive aspect of the deal. The real issue will be realising the fuller potential of the business going forward through expansion of the platform. I also don't see excessive conflicts of interest on the shareholder register that you seemed to be concerned about or exesscive share options that would influence the BOD, many have resigned and presumably the options would no longer be accessible. The Non-execs seem a straight bunch.

I have been activly using the Capital Spreads platform, and can confirm that the service works well, the management do need some fire under their seats to get this business growing.

I am sitting on the fence for now, ready to add at these levels if the deal looks like a good one for shareholders.

[iomarbarrett] 03/6/2014 21:42

Just to add, obviously given the recent move, much of the above negative news is in the price. This, and the lack of further detail on the Convert, makes the current decision somewhat more complicated. I would also be very interested to hear any feedback from the AGM.