CPP – Two weeks to near total wipeout: Death postponed

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Once upon a time AIM listed CPP (LSE:CPP) was worth almost £500 million. And then the merde hit the fan. I advised shorting it at 26.75p last autumn and was again saying it was a sell at 4.625p a week ago. The shares are now 3.92p and this one will be resolved within two weeks and the BEST you can hope for is 1p. This remains a slam dunk short.

My original sell note which explains all the background and why this company is 100% kebabbed is HERE

The company’s bank facility was set to expire on Sunday. Its lenders have given CPP a two week extension and so it now expires on Sunday 14th April. If CPP cannot find a refinancing then 0p becomes a sensible target. Given that the company is losing contracts all over the place, has a reputation on a par with the late Jimmy Savile and has zero earnings visibility who would want to refinance it? I’d rather offer finance to Cyprus. If there is any refinancing expect shareholders to take a major haircut. Even the company says as much.

But there may be a saviour. The founder of CPP a Mr Hamish Ogden who made a packet when it floated has said that he may offer a bid at 1p per share. May. Early stage. All that sort of thing.

And so there are three options.

1. CPP goes bust. Target price 0p
2. Ogden buys it – target price 1p
3. There is a refinancing. Shareholders take a major haircut and there is still no earnings visibility/guarantee of survival. Target price sub 1p.

Whatever way you look at it this is a sell or a short. God only knows why the shares have not been suspended.

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Libertarian investment writer Tom Winnifrith writes extensively for a number of US and UK financial websites. All of that material appears on his own blog, which also carries his extensive original non financial material, at TomWinnifrith.com – for alerts on all Tom’s writings (except for that free share tip) follow him on twitter at @tomwinnifrith

 

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