Bioquell Share Discussion Threads

[cockerhoop] 05/5/2016 09:16

Pavey Ark,

Your comments regards investors awaiting ST's thoughts appear spot on :-)

[18bt] 04/5/2016 12:47

ST has just updated his thoughts to IC subscribers. Broad conclusions are that
after adjusting for the proposed £42.7m cash return, the company will have equity shareholders funds of £22.7m, or 106p a share, including net funds of £4.8m. Based on 21.35m shares in issue post the tender offer, and a share price of 68p, the company will have a market value of £14.5m, or 36 per cent below book value. Then, strip out retained net funds of £4.8m, and in effect a business that has just reported annual cash profits of £3.4m is being attributed an enterprise value of only £9.7m post the tender offer.

He feels shares should be worth closer to NAV of 206 (pre-tender).

[cockerhoop] 04/5/2016 11:21

I think it will be interesting to see what Christopher Mills does with the Harwood holding in the tender. May give some hints as to the valuation of the remaining division.

[pavey ark] 04/5/2016 09:50

Just had a further very close look at the figures and I have to say that the £2 offer is very well placed.
The company in the post buy-back state is certainly worth more than £2 but given the fact that the institutions don't seem to follow any logical buying pattern and most PIs seem to act on emotion the price could go anywhere so it is still tempting to take the £2.
I will probably take the offer but I wouldn't take it if it were an offer on all my holding.
My views are perhaps coloured by the fact that I bought more yesterday with a view to selling half.
As I have said before, I would be happy to sell half and hold the remainder for some time.
I consider BQE, post buy-back, to have very sound prospects but I expect others have seen this so it will probably be sold.
If sold I expect a price north of £2.

Obviously this is just my opinion and my view of the current position.

[bountyhunter] 03/5/2016 20:03

...it seems that unless anything changes then it would be foolish not to take the cash as the remaining 50% seem unlikely to then be worth £2+ immediately after the effective date based on what we and the market know right now?

[pavey ark] 03/5/2016 19:24

If the share price drops back to £1.32 the market cap is then £28m.

I have just deleted a number of figures that suggest that this is a ridiculously low figure.
(DYOR)

The cash return here requires any holder to do some basic number crunching as even if they decide not to buy more they have decisions to make regarding the upcoming offer to buy half their shares at £2.

The bottom line for me is that I will take the cash and happily hold the remaining shares.
I suspect I will not have them for long but if I did I believe they will prove a very sound investment.

[bountyhunter] 03/5/2016 17:06

...why aren't these selling like hot cakes at £1.68 when you will be able to sell 50% at £2/share? ...presumably the market is expecting the remaining 50% to drop back to £1.36 to even things out (and/or has it factored in a risk factor that the tender offer will not go ahead) in which case it would be sensible (imho, no advice intended!) to sell 50% at £2 unless there is any other news to come before settlement

[pavey ark] 03/5/2016 16:33

Having bought a fair few of these last August @ 140p I am obviously very pleased with the current situation.
I am so pleased that I had a top up of 4500 shares this afternoon.

The figures are fairly compelling (in my view) and these figures are certainly available in the recent results.

Each to his own though and it does require a close look at things like current assets (less cash to be paid out), turnover and gross profit.
Any acquiring company, with its own board and admin and its own sales force could do great things with £11.5m gross profit.

I don't think a deal is imminent but the cash return is very nice to be going on with.
The lack of news may be down to the board playing hardball as it's hardly a distressed sale.

[bountyhunter] 03/5/2016 10:15

...so it's a bit of a gamble as to what the 50% of shares remaining after the tender offer are likely to be worth

[18bt] 03/5/2016 10:09

Apart from the fact that it's neat at a £2 tender, we still need the result of the strategic review to know the value of what's left and therefore take a decision on whether to over or under tender. At current sp, remaining businesses need to be worth 31.5p a share for this to be a neutral decision. So we are still sitting on the fence ...

[bountyhunter] 03/5/2016 09:19

Thanks harrogate - if they are definitely cancelling the shares they purchase that makes more sense. If the 50% to be purchased at £2 are to be cancelled (and not held in treasury for future handouts to directors) then they really should say so in the RNS imho.

[harrogate] 03/5/2016 09:15

Yes they will. At present you can buy for £1.70, knowing that you can sell 50% for £2. So the other 50% is valued at £1.40 in effect. So the market thinks that the shares post buyback are worth £1.40 - that looks to me after adjusting for cash to be about £25m for the remaining business - Not sure that is undervaluing it and we might be about right here at this price.

[bountyhunter] 03/5/2016 09:03

Will they cancel the shares they buy back? (the RNS does not state this).
Unless this is definitely the case buying 50% of the shares in circulation at £2 a share only returns around 30p per share as far as I can see. I must be missing something but it's not obvious to me!

[effortless cool] 02/5/2016 19:05

They are returning £42.7m and there are 42.7m shares in issue, therefore they are returning exactly £1 per share. The current share price is not relevant to this calculation.

[bountyhunter] 02/5/2016 18:25

I don't understand this bit...

"It has become clear from our discussions that having such a large amount of cash on our balance sheet is unhelpful within the context of the Strategic Review and accordingly we have concluded that we should proceed with returning the equivalent of a GBP1 per Share in cash to Bioquell shareholders via a tender offer."



How can they say that a tender offer at £2 for 50% of the shares will equate to a return of £1/share when the shares are already at around £1.70? Is the £1 some kind of rough estimate taking into account possible cancellation of those purchased? I still can't see how it adds up with a tender offer of £2 for 50% of the issued shares. How can they be returning £42.7m with the current market cap at £73m. I'm sure I must be missing something - maybe someone with a better knowledge of this process can clarify the maths here!

[cockerhoop] 29/4/2016 13:14

The directors intentions should be included in the tender document.

[galles] 29/4/2016 13:09

And what's everyone going to do here? I'm thinking of tendering 50% of my shares

[cockerhoop] 29/4/2016 10:45

Galles,

It normally works that investors will be invited to tender at £2 per share. The investor will then through their broker specify the % of their holding they wish to tender 0-100%. if everyone tendered 100% then 50% of all investors holdings would be purchased and cancelled. Often though not everyone tenders.

PaveyArk for example may see £2 as undervaluing his holding and not tender, waiting for the possible £2.20 paid once the rump of the company is sold. These shares would then be offered to other investors so it's quite possible that greater than 50% tender occurs for individual investors.

It's always worth looking at what the execs do with their holdings in the tender as I imagine they have a pretty good idea of the value of the remaining business or likely return.

[galles] 29/4/2016 09:49

I'm not familiar with the process. Are they effectively purchasing half of everyone's holdings (doesn't sound likely) or they will buy whomever chooses to sell at £2 until the cash they have allocated for returning back to shareholders is used up?

[pavey ark] 29/4/2016 09:18

It looks like that everyone here is waiting for Simon Thompson at IC to tell them what to make of today's events.

Here's a little head start.

As far as I can see the cash level is now £5m and the Current Ratio is getting on for a practically "bomb proof" 2.7.

In doing any calculations remember the number of shares is now halved so this cash is worth at least 23p/share.

Ran some other figures and all look good but heading out and the supreme commander is getting nasty so must go.

Still looking for north £2.20 for remaining shares and my calculations certainly back this up but best if people get the calculator out themselves.
NB shares used in subsequent predictions/calculations 21.5m

[pavey ark] 29/4/2016 08:08

Looks like a return of cash with the prospect of a sale further on.

Not sure why cash should be a barrier to a sale but I suppose there could be accounting/tax problems for the acquiring company.

More to this than simply returning cash and moving on with the remaining business or they wouldn't have waited to the last possible date to publish the results.

Anyway the return of cash makes it very easy to simply wait and see what happens to the remaining business which could obviously be run more profitably by a larger company with existing sales teams and admin also in place.

[effortless cool] 29/4/2016 07:15

This is going to go well today!

[pavey ark] 27/4/2016 20:58

The results must be tomorrow or Friday.
I can only assume that the results have been delayed due to takeover talks.
It would be rather incredible if these results didn't contain some information on the talks but must admit I've no idea as to what they will say.
If there is no progress on the sale I suspect there could be a 20/30p drop but no sale should trigger a return of cash so not much downside.
I originally expected/ hoped for a £2+ takeout but the long delay in announcing any progress makes me wonder.