Assetco Share Discussion Threads

[effortless cool] 01/9/2011 15:33

greedfear re 1999,

Your balance sheet sums treat market cap and shareholders' funds as interchangable - they are not.

Shareholders' funds are almost certainly negative at the moment, and there is material uncertainty about how negative. When you add your 'value creators' onto an unknown negative, rather than a 5m market cap, the value post rescue is a lot more uncertain - but certainly materially lower than 41m.

As to a promise made in March 2011, it's September now and much has changed with this company over the intervening period, including the share price which was over 10p in March.

Why would the new capital bail out the existing capital by buying in at 10p per share? That would be moronic.

[rorrys] 01/9/2011 15:27

Oh dear oh dear............as you wish but you are in for a very cold hard reality check and soon.
You are completely wrong in your understanding of such matters.
Your fantastical dreams of instant riches are not going to happen please trust me on that one.

[greedfear] 01/9/2011 15:25

Rorry- they were talking significant dilution.

Would you call a reorganization that leaves the old shareholders with 60% of their original holding a significant dilution?

No offence, just asking.

[greedfear] 01/9/2011 15:22

Well, I know balance sheets as well and I can count.

Current marketcap is 5 million.
If the preference shareholders agree asto will have got rid of 8 million liabilities.
If the creditors agree another 16 million value is added to the company (5 million final payment for 21 million debt)
If the equity injection takes place an another 12.5 million of value is added.

In theory the company should be worth 41 million once the financial reorganization is a fact.

That leaves us with the number of shares that will be issued.
I have reasons to believe that 125 million shares (or better 12.5 million new shares) will be issued at 10p:

-a 10p placing price was promised in march 2011

-after the reorganization the theoretical value of the shares will be 10p
(41 million / (12.5 million newly issued shares because of equity injection + 25 million shares [reverse split 250 million old shares] + 3.75 million new shares for the preference shareholders)

-it looks like the investorsgroup are taking a -80% hit by taking shares at 10p while current share price is 2p (the same "loss" they're asking their creditors and the preference shareholders to take)

[rorrys] 01/9/2011 15:06

If the recovery package is to work it includes a very dilutive placing .
How do I know that ?
Well AssetCo told me ,they told you as well by the way.

[greedfear] 01/9/2011 15:02

I can understand people being frustrated over this share if you've been in it prices that exceeds the current level, but it's a 2p share now.

It's a risky share, because if creditors do not agree you're going to lose it all.

What are the chances to lose it all?

No one knows. But what we do know, is that creditors have a "choice" between getting nothing if they reject the offer or getting 23%. Furthermore two banks have already stated they're willing to accept (not binding, but they've put it in writing).

If I had the choice between: 0% or 23% and I was acting rational I would go for the 23%.
I think the chances of creditors accepting the offer are far better then not accepting.

[rorrys] 01/9/2011 14:52

I will leave you to work it out .
But think on this one very important point ,very important and pertinent.
The market rarely gets it wrong.
Many many financial analysts have gone over this co with a fine toothcomb recently.
People who understand a balance sheet.
If for one second the markets thought there would be a miraculous placing at 10p and all would be well then the share price would be sitting at circa 9p and it would have done so in a micro second.
If a consolidated placing takes place at 10p then it will value your 2p shares at a fraction of a penny poss as low as .0020
I can absolutely guarantee you that your 2p shares will be worth much less after any successful placing.
There of course remains the fact that they may not get the agreements they need and it will go into recivership
At this moment in time the company is insolvent and my only surprise is that the shares have not been suspended pending clarification of their position.
That could happen yet by the way.

[greedfear] 01/9/2011 14:42

So you're saying the market was incapable of predicting the future and therefore the 60p price wasn't right?
So why should the market be right now? Doesn't make sense.

[rorrys] 01/9/2011 14:37

Yes you do need to learn and it seems you will learn the hard way.
By the way when the shares were at 60p there had not been a vast gaping chasm discovered in the accounts ,a sacked CEO and an emergency placing to keep the co afloat ,which as it turned out was nowhere near enough.
Its along the lines of all is good until it is proven otherwise but you would know that wouldnt you .

[greedfear] 01/9/2011 14:33

Rorry- How come the market was right at 60p a year ago and now we're quoting 2p?
I like to learn. Explain please. Cheers!

[rorrys] 01/9/2011 14:31

Oh I can read sunshine and so can the market , I suggest you take lessons.

[greedfear] 01/9/2011 14:29

We're going to have a good laugh within a week treacle!

This is as close as you can get to "stealing" money the legal way.

[greedfear] 01/9/2011 14:26

Don't know about treacle, but I'm expecting a 10p placing it's all in the documents to read if you have an eye for it.

Markets know nothing, there's no such thing as an efficient market.
Was the market right valuing this at 60p a year ago?
Obviously not as we're 2p today.

So why should the market be right today? It sure did a sh#t job in the past!

[treacle32] 01/9/2011 14:22

Yes I do thanks.

[effortless cool] 01/9/2011 14:00

You're very quiet today, Treacle32.

Still expecting 10p? The market tells a different story.

[treacle32] 31/8/2011 21:19

The preference shareholders could get 10p i.e. 25% of 15 million owed via 3.75 million shares = near 4 million pounds. Also, as a creditor around 23% of what is owed in line with others. They would never accept less than around 4 million pounds imo. Simulatenously, I think the 12 million will be raised at the same price of 10p.

At 2p the preference shareholders would get less than 1 million pounds back from their 15 million investment. I don't think so.

[greedfear] 31/8/2011 16:50

Just to be fair: the preference shareholders are holders of a foreign subsidiary. They are no holders of Asto (the listed company) which only has ordinary shares.

[comedy] 31/8/2011 16:29

at this rate the surplus sold is 1 mill today...and if this continues then by next week they will be out?

[effortless cool] 31/8/2011 16:18

"In short creditors get circa 20-23p in the £, a £12.5 mill placing at some undisclosed level and the preference shareholders get 3.75 mill ord shares for their prefs (circa 5p in the £)".

If creditors and preference shareholders are taking hits like that, I think it is fantasy to imagine there will be any value here for ordinary shareholders.

[treacle32] 31/8/2011 15:41

There will be a large write off on debt. See my article from last friday. For example, if SOA is not agreed then Northen get less than £10,000 or if they agree then £300,000 and rather than the full amount of 1.40 million.

Pay about 23% debt on everything.

[deswalker] 31/8/2011 15:41

Agreed it looks good for Creditors. A tough call for shareholders but a complete finger-in-the-air guess says mildly positive from these levels. I don't have the guts to buy but suspect those that do will do okay. IMO, DYOR.

My interest is through a big holding in North Atlantic who AIUI subscribed for the prefs on the understanding that this couldn't happen as the Abu Dhabi subsid was ring-fenced. Needless to say I'm not too happy with Chris Mills right now but clearly he's trying to engineer some sort of return. IMO he's such a good manager that I'll forgive him this mistake, but part of me wishes he'd just stomach it and walk away. His portfolio is chocked with value right now so he must be seeing something here rather than focusing elsewhere. I just hope it's not beligerence dressed up as investment nouse.

[greedfear] 31/8/2011 15:25

I've read it. Creditors will go for it I'm sure.