Tolent Share Discussion Threads

[piedro] 03/2/2010 11:47

Nocton - you have been volunteered. Congratulations

[nocton] 03/2/2010 11:06

"I think we should all make an effort to keep in touch after the delisting in case anything untoward does happen."

"Well the question in the title has been answered."

Yes, I think a new thread with a new title would be appropriate. It would indeed be good to have a Tolent thread continuing.

[kimboy2] 02/2/2010 19:25

There is no reason for ADVFN to close this board ?

Well the question in the title has been answered.

[piedro] 02/2/2010 19:19

There is no reason for ADVFN to close this board ? - cf WTV which delisted and has an active bb

[2006stocktaker] 02/2/2010 15:55

Nocton,

I am encouraged by the reply you received. I had already made the decision not to sell, but I may use this price to increase my holding cheaply before requesting a contract out from my nominated account.

I think we should all make an effort to keep in touch after the delisting in case anything untoward does happen. I assume ADVFN will close this board?

[robcoo] 31/1/2010 11:18

Mr T8

My SIPP provider has exercised the voting rights attached to my shares in order to vote against the resolutions. It has also given me a form of proxy to attend the meeting but since I live a considerable distance from Gateshead and since the result is a foregone conclusion I do not intend to do so.

Nocton, I agree entirely with the points that you make

I feel a great lack of enthusiasm about the Company and its shares but the price is so low that I may as well stick in. My best bet is that within two years there will be a reorganization that will result in the minority shareholders being bought out at a price that they will think derisory

[patricia59] 30/1/2010 02:41

Tolent quits AIM to go back into private ownership
Jan 18 2010 by Peter McCusker, The Journal


THE group of North East companies de-listing from the stock market in the last year has another member after construction company Tolent announced its intention to quit.

After 10 years on AIM, the Gateshead company's CEO and founder John Wood said the company was in good financial shape but that he found listing was not an advantage and that fluctuations in its share price made customers unnecessarily nervous in an already difficult market.

Established by Mr Wood 26 years ago, Tolent has been a mainstay of the North construction and civil engineering industry in that time with offices on Tyneside, Teesside, Leeds, Manchester and London.

Like many construction companies Tolent, has suffered during the recession, cutting its workforce from 540 to 300, with annual revenues declining from £150m in 2008 to around £100m last year.

Mr Wood said: "For a company like ours there is no advantage to being on AIM. We have never once used the market to raise money.

"Over the years our share price has fluctuated, rising to £3 at one point.

"But what we found is that even a small trade in shares of say £10,000 could move the share price by 10p and this can sometimes spook our clients.

"When turnover is down and you are listed on AIM then you have to make an announcement, and in the current climate this can make clients twitchy.

"Clients look at these things and wonder what it going on, but as a private company there is no requirement to make announcements such as these.

"We are not a company that is in any kind of trouble. We are strong solid business with a healthy order book of £53m. We have cash reserves of £6.5m. We have no debt and we are very competitive. This year we expect revenues to be flat at £100m, we will break even, but we aim to keep our best staff and will be in a good position for 2011 when we will hopefully see a sustained recovery."

Tolent has been involved in some of the region's major recent construction projects, completing Time Central and Newcastle City Library and is currently completing Wellbar House, next door to Time Central at Gallowgate in Newcastle.

The decision to de-list is likely to be approved at a general meeting on February 8. Over 70% of the shares are owned by Gutenga Investments – a trust owned by the family of Henry Schmil, founder of Amco, from which Tolent demerged on to AIM in 1999.

In May 2009 Prudhoe-based telecoms group BNS delisted from the AIM market, saying it had been "massively" undervalued due to poor market conditions and a lack of understanding among investors of the firm's hi-tech services.

In March last year Killingworth-based property and construction group Metnor quit AIM after a decade, it saying it had been "seriously undervalued" and condemning the City for "perpetual short-termism".

And Newcastle-based Northern Recruitment Group quit the FTSE in December 2008.

Tolent's shares closed down 50% at 18.5p on Friday after it unveiled its plans.

[patricia59] 29/1/2010 22:05

i bought another 10800 yesterday my trade 4 some reason did not show
up this company also has over 11m in assets mainley property they
could afford to pay us a dividend of 20p and we would still have
a very undervalued comp on our hands. the might even decide to sell some
of them assets. Just a hunch but they must have offered the 70% shareholder
some sort of sweetner to agree to delist. Stick with it!

[nocton] 29/1/2010 19:04

I wrote to the chairman, Peter Hems, complaining about this, along the lines of many comments on this thread. In reply, ne explained the rationale more or less along the lines of the announcement, but in answer to some of my specific questions he said:
"The directors intend to operate the company exactly as before, the board have an obligation to act in what they perceive to be in the best interest of the company as a whole and by implication all shareholders, the company will continue to pay dividends when it is considered prudent to do so."
"You make a number of comments concerning the collapse in the share price, including a suggestion that the company should have made an offer to buy in shares alongside the delisting announcement. The cash flow requirements of the business at the current time with the reduced levels of workload, downsizing and reorganisation costs are such that it would have been imprudent for us to do so. It may be appropriate for such an arrangement to be introduced at a later date, when cash flow permits, but it would not be appropriate to commit to such a course of action at this point in time. I am conscious that a number of shareholders have decided to sell in the period since the announcement, but I also note that there have been a number of purchases, which I am assured is not any of the major shareholders referred to in the circular."
"I would reiterate that the fundamentals of the business with or without the AIM listing are the same. The number of actual share transactions in normal circumstances in the past has been minimal and as such many of our investors may be considered to be long term investors. The basis on which the quoted price is calculated is reflective of supply and demand and as such the low levels of activity have reflected in the quoted price of the shares, which has had the impact of undervaluing the business as a whole. The matched bargain trading facility will provide a limited opportunity for share transactions in the future."

Perhaps reassuring? I certainly think there is little point in selling now at this price.

[robcoo] 29/1/2010 08:05

Very brave

[patricia59] 25/1/2010 20:10

im in 4 25k order book stands at 55m. no debt. revenues expected to
flat at 100m this year and break even. with sustained recovery in 2011
with cash reserves of 6.5m and a market cap of 2.44m. i decided 2 go
against the grain and buy.

[robcoo] 19/1/2010 16:45

I hold shares in a SIPP and I've emailed the SIPP provider to direct them to exercise the voting rights and vote against the resolution. It will be interesting to see whether or not they do.

I too can see little point in selling at the current price, but the difficulty will probably be that when the company is delisted there is likely to be only one purchaser which can offer whatever it wants. There will be no true market.

I believe this proposal to be a breach of faith on the minority shareholders. At the least, arrangements should have been made to buy us out at the price current before the announcement.

[mrt8] 19/1/2010 16:18

Hi Robcoo. I am not sure if it's possible to vote whilst the shares are held in a nominee account. I have only just received the notification from my broker, iDealing, and they only offer a default situation for the tyransfer of the shares into my name i.e. either sell now or they will convert the shares to certificates in my name on the 16 February. I have contacted the broker, but there doesn't seem to be any other mechanism to allow me to vote. I have lost a considerable amount of money (currently on paper), having bought quite a few shares, initially at over 300, but I have always believed this company to be a long term winner and, as such, see no point in realising that loss by selling now. Maybe it will end in a total loss, but that isn't a lot different to a 90% loss anyway. m8

[robcoo] 18/1/2010 11:54

I do hope that all minority shareholders will ensure that their voting rights are used to vote agains the proposal. It won't do much practical good but it will make the point.

[westcountryboy] 15/1/2010 22:36

Des and others

Thanks for the replies. The sheares lost half their value today so my rump is worth even less. I also discovered that you can't transfer shares out a SIPP into your own name; it's like taking an early pension. I will leave them be. I will be curious to see if I ever get anything from them again, and I can certainly afford not to, but I don't entirely lose hope. It's worth remembering that Tolent have always disliked paying the costs associated with stock market admission. For years they've been one of the few companies that doesn't pay to have the stock price listed in the FT.

I remember years ago davidosh warning against these on TMF owing to some aspect of corporate management - a very wise stance. Fortunately I didn't overload on them.

[joan of arc] 15/1/2010 19:59

Des, most unfortunate if you got hit on these as well as the one you are pursuing (you can see me on that board). I would be interested to know how you get on re the TO. You can let me know here or on the other board.

[moathunter] 15/1/2010 16:37

Cheers, Des.
Personally run a 7-stock focused portfolio; each holding starts with 14% of total capital. And if a holding falls 50% yet has no fundamental change to value, buy another 7% to make c.20% of portfolio- not for widows or orphans.

Trouble is, we're drawn to small to tiny companies that seemingly have large margins of safety... but the poor liquidity, numerous buys needed to take up a position and the potential "de-listing risk" can ruin what could be a good investment.

As you advise, it can get 'hairy' buying very low mkt caps.
Bye.

[2006stocktaker] 15/1/2010 16:10

Good advice Des,

One thing that initially gave me hope that small holders would not be stuffed was the existance of the empoyee shareholders.

However, looking at the RNS todaym, the trustee for this holding is apparently Gutenga Holdings Limited, which is controlled by these same mysterious majority shareholders.

Does anyone else find this very strange, or am I miss reading it?

[deswalker] 15/1/2010 15:41

Moathunter,

Good post.

Obviously you need to make up you own mind and I do not wish to influence it too much. But these sort of cold rational difficult decisions will stand you in very good stead for the future. Just consider whether you want to play these games with the odds stacked as they are or move on and try and make the money back elsewhere in a less skewed more fun situation. I suspect you wouldn't be a buyer now at 15p with new money if you weren't holding so why stay in at that level just because you are ? The situation has changed ...

It's very tough to accept these things - I'm still smarting from being outflanked before Christmas and am still in dialogue with the TO Panel about it. But I've learned (fortunately only to the tune of 1% of my net worth) that playing these games with these AIM listed microcaps is not wise irrespective of the fundamentals.

I tend to invest on deep value fundamentals and so end up looking at companies like this because they are the only ones which meet my criteria. However I have also learned when to leave the fundamentals aside if the smell isn't right. Smell is more important than NTAV when the market cap is less than £10-12 mill IMO.

My advice would be to avoid very low mkt caps with very weak registers dominated by management or a single shareholder that nobody has ever heard of. Look for slightly bigger smallcaps with registers containing at least a couple of well-known institutions. Dodgey management or shareholders won't try and outflank the big boys so they offer protection for you as a small shareholder.

Rgds,

Des

[moathunter] 15/1/2010 15:05

Moathunter- "My little opinion is to hold TLT if already owning and not to buy if considering."
DesWalker- "I see your logic but I don't agree with it...."

You're absolutely right, Des. My comment is mistaken (and yet am mindful 'mental accounting' risk!).
Meant to say "personally not buying TLT due to its tiny size and having too much in construction-related companies already. As a result, I haven't researched it sufficiently to honestly suggest whether someone with a little capital should or should not buy... but it looks interesting."

Also agree about director trustworthiness; the sheer voting power and the information asymmetry (directors and majority know what we don't know etc.) means that a private investor who is buying is at the mercy of these guys.


DesWalker- "why risk playing these games?".

Quite. If you've been briefly studying them at £5m, there's psychological pressure to remain consistent and purchase when at £2.5m.
After all, the intrinsic value of TLT's business hasn't changed (may even improve with the c.£200k cost saving). *But* if there are no share buyers, potential tricks by the majority or very delayed catalyst dragging down the annual rate of return, then the seemingly significant margin of safety counts for little.
And if you spend more hours in actively trying to realise value, then Return on Investment + hourly rate could be negligible.

Frankly, I'm naive to this situation- outside the little circle of competence, so TLT goes in the "too hard" bin (simple company, lots of 'important unknowables').

[2006stocktaker] 15/1/2010 13:05

Jonwig,

Yes there is more than one way to skin a cat. I will certainly not be selling, unless there is a very much better offer. I had a similar situation with SGL who decided to delist. Although in their case at least, an offer was made at about 20% above market price and I reluctantly accepted even though management decided to hold on and share were undervalued IMO.

We have no evidence that there is any ill intention with this move, but I would like to be assured that there is the intention to continue paying dividends for example.

[deswalker] 15/1/2010 12:58

2006stocktaker,

What is to stop a shareholder just being stubborn and holding on, refusing any low offers etc. Surely that shareholder would be a thorn in the side of any potential manipulators?

Could potential manipulators just issue more stock and dilute the small holder into oblivion? I just don't know what could possibly happen.

Your questions are very valid and up until a few months back I would have considered them too. But the last few months have taught me some very valuable lessons.

IF a majority wishes to squash a minority then it can and will. Lawyers know how to achieve this and the TO Panel will not protect you IMO. I am currently speaking to them about one such squashing mechanism but wish to say no more here.

It all hinges on the honorability of the majority and this is unknowable. Do not be seduced by the charitable status of the foundation. Maybe it is more tax efficient that way ?

Ofcourse it would be a sickener to sell and then to discover that the majority is genuine. Equally it would be a sickener not to sell and to discover that they are not and end up throwing your entire mark-to-market value away. Remember the cash value now and what you could do with it. Do not focus on what your holding was once worth.

It's a binary bet on trustworthiness.

Finally, I would say that you should check out the minority shareholderrights website. There they talk about applying huge discounts to the value of minority stakes in private companies to reflect the lack of control. In principle the courts can force the majority to pay a fair value but I've never heard of a precedent for this happening. Far more likely to take the Panel's position and agree with the majority and the status-quo for a quiet life.

Good luck with whatever you decide.

Moathunter,

My little opinion is to hold if already owning and not to buy if considering.

I see your logic but I don't agree with it. Ask yourself the question "would I buy my current holding with fresh money at 15p (or whatever the current Bid price is) if I didn't hold any shares ?" I bet you say No and that tells you what you should do IMO. Money is money and it all spends the same. Forget what your holding was once worth and adjust to the new situation. As Keynes once said ...

"when the situation changes I change my mind, what do you do ?"

Why risk playing these games ? I have and I know people who have for many years and in large size, sometimes controlling 10% of the company in situations like this, and their conclusions are that it's simply not worth the risk. As Buffet says, investing in cigars is more fun than cigar butts.

Des

[jonwig] 15/1/2010 12:46

2006st... the controlling shareholders set up NewCo.

NewCo offers consulancy services and leasing services to OldCo at rates which are - ahem - attractive to the owners of NewCo. Eventually the assets of OldCo are transferred in bits to NewCo. For some reason, OldCo can't pay its bills and goes into receivership.

All hypothetical, and I'm sure not applicable here at all!

That's just one of many possibilities.

[davidosh] 15/1/2010 12:42

When TSE delisted recently they made an offer to shareholders to be able to exit with a cash purchase for their shares. That meant the share price did not collapse and in fact they left the market at a price that was higher than when they made the announcement.

Why do management not consider utilising some cash available here and allowing an exit at say 35p so that the rest can continue with the company and have a greater share of the remaining assets ??

Am I being far too rational and reasonable or is the real agenda just to get off the market and not care about the shareholders having a reasonable chance to exit at a fair price...

[moathunter] 15/1/2010 12:32

Hmmph! I was considering buying these at £5m cap and fully listed but not now at £2.5m and v. likely de-listed.
Positive thoughts:
# Tolent is very cheap at £2.3m- it has net cash of c.£5m so shares buyers at £2.3m today gets both £2.5m non-operating cash and a profitable operating business worth roughly £10m = £12.5m of assets for £2.5m.
# The same 70% major shareholders of Tolent also own 70% of Billington Holdings plc.- the steel construction frames company that used to own TLT until 1999. So that aids revenue stability (as both companies can lower total costs and hence win contracts) and is likely leading to Billington buying TLT back = potential catalyst for TLT holders to realise true value of the company.
# Some of the major shareholders appear ethical and honest: Tarom Foundation owns 20% of TLT and it's a public welfare foundation, domiciled in Liechtenstein (tax haven) with its object being the pursuit of charitable, humanitarian and social goals.


Negative thoughts (irrational guys might want to stop here than consider disconfirming views):
# Google "matched bargain arrangement" and visit other recently de-listed companies besides WTV and REF (cheers, gogeneko); others are Top ten bingo TTH and Itis Holdings ITH. The minority shareholders posting are dissatisfied for various reasons.
# 73.91% of TLT is not in public hands, so the de-listing of TLT is a very high probability event as 75% vote is needed. Once on the matched bargain arrangement, shareholders should ask the next logical question- "who will buy shares off me?"- TLT or Billington could, but the big paradox with 'off-AIM matched bargain situations' is that only expert investors would know where to look for such companies as TLT and yet such experts will have too much capital to be able to invest a meaningful amount in TLT. Inversely, little investors lack the expertise although they have sufficiently small funds to consider micro-caps.
So the real buyers of current shareholders are TLT/ Billington and no-one else (posters of de-listed companies using matched arrangement all talk about selling on advfn, but don't have buyers or balk at the commission rate).
(Just read DesWalker and wholly agree).
This liquidity risk (nil spread but virtually nil buyers too!) with a possible catalyst that may be years away is not attractive at all.
# The potentially big returns are on a tiny investment opportunity (limited share float available to buy and a tiny company) with the potential cost of having to study the issue of selling and reduced TLT transparency. Surely the next best alternative investment- the opportunity cost- is better than TLT?

My little opinion is to hold if already owning and not to buy if considering.