Ceres Power Share Discussion Threads

[typo56] 12/12/2012 16:32

buyemcheap, I think you may be confusing the ordinary shares with the deferred shares. As I've tried to explain, the deferred shares are worthless. They are simply part of the standard administrative procedure to change the nominal value of the ordinary shares from 5p to 1p.

So if you short an existing ordinary share now in theory after the reorganistion you will be short a new ordinary share and a worthless deferred share. However, given that the deferred share is valueless, you really don't have to have sleepless nights over them!

Note the company RNS - "The New Ordinary Shares will have the same rights and benefits as the Existing Ordinary Shares. The Deferred Shares will not be listed, will be effectively valueless and it is intended that all the Deferred Shares will be surrendered for no value and/or cancelled in due course."

I really hope that clears it up now.

[buyemcheap] 12/12/2012 12:40

Typo, From what I can gather the offer shares are different and don't hold the same voting rights, so I still can't see how you could close a short with them?

Also I have read that offer shares are supposed to be repurchased by the company in due course?

[buyemcheap] 11/12/2012 22:55

Sue sue, what utter rubbish. A shares value is determined in the free market by the percieved net present value of future dividend streams. I am fully aware of the open offer and placing terms and they do not determine a value of 1p. There is a cash injection into the business, with the offer take up, it is not a straightforward dilution. Im wasting my time trying to explain.

[smokey 1o3] 11/12/2012 22:10

I believe everyone that looks or browses here can tell Sou You is not a fan of CWR! But why does he keep banging the same old drum! Tedious repetition is a sad trait. Especially when not in full knowledge of all the facts. Why keep hammering on about CWR? Are you a disgruntled ex employee by any chance or just want to knock another British company. Let it go! We all get the picture. You are not a supporter of CWR. Why not go do something positive it might take the sour bitter taste away.

[sueyou1] 11/12/2012 21:12

Typo56,

For each old share the holder will get one new share, they are not getting any more or less shares than they had before because the 4 deferred shares go in the bin. It's not a consolidation of 5 old shares into 1 new one.

The stock, ALL of the stock after the placing and offer is only worth 1p per share because that is the price that CWR have declared each share to be worth. It is the price the placees will pay for that stock. It is the price that those taking up the offer will pay for the stock.

Therefore, because each old share is replaced by one new share, then each old share is worth no more or less than each new share, that being 1p.

It is lunacy to pay 3p for the same stock when everyone else is paying 1p for it.

[tara7] 11/12/2012 21:01

No. I do not have shares or a short here.

I just want to make a point that shares like this can and often do 10 bag even if all looks lost.

Might like to look at my super share for 2013 PTO;[2012 WSG up 250%]

That stock is down 98% and in my view could 10 bag in the next 18 months.

[typo56] 11/12/2012 20:57

Sue, you clearly do not understand the meaning of 'nominal value' of shares. Perhaps you understand equations.

1 new ord + 1 worthless share = 1 old ord

ie

1 new ord + zero = 1 old ord

So why should a new ord be worth less than an old ord? Where's the value gone?

The capital reorganisation is simply a procedure to change the nominal value from 5p to 1p. I think you're smart in other respects, so somehow I suspect you know this, don't you!

[tara7] 11/12/2012 20:53

Dear me,looks like a recent closing High.!!

In any event 3p is not 1P is it.?

[sueyou1] 11/12/2012 20:52

Typo56, it states clearly in the capital reorganisation that:

"In order to effect the Fundraise, the Company proposes to implement the Capital Reorganisation. This will involve each Existing Ordinary Share being subdivided into and redesignated as 1 New Ordinary Share of 1 pence and 1 Deferred Share of 4 pence. The New Ordinary Shares will have the same rights and benefits as the Existing Ordinary Shares. The Deferred Shares will not be listed, will be effectively valueless and it is intended that all the Deferred Shares will be surrendered for no value and/or cancelled in due course."

So each new share is worth ONE PENNY, not THREE. That is not nonsense at all, it is what the company is DECLARING each share is worth and it is in-line with the value of the placing/offer stock at ONE PENNY. You cannot tell me that buyer 'A' can buy stock at 1p, yet everyone else has to pay 3p for the same stock, that is truly the biggest nonsense valuation ever.

The MCAP at £4m with the new stock in place at 1p per share is about right for a high risk company that is only going to burn the cash injected and then come back for more. IMVHO it will be worth £2m or 0.5p per share by the time it comes back for more money in 6 months time.

I can't wait to see how much cash has been spent on redundancies, outgoing BoD payoffs, write downs on mCHP production lines and parts, etc. By the time the new cash is in the bag a load more will have been written off.

[typo56] 11/12/2012 20:45

Sue, I do see what buyemcheap may be trying to get at.

Just because new shares are being issued at 1p it doesn't mean to say they should trade at that level, although if it were to go ahead I do think the current level of 3p is very generous (hence why I'd sell my holding and short my entitlement if possible).

However, your stuff about the capital reorganisation is nonsense. The capital reorganisation is simply an administrative procedure so that the company can legally issue shares below the current nominal value of 5p. That's company law. Following the reorganisation existing ordinary shareholders will hold the same number of ordinary shares as they did before and therefore the same pecentage of the company and therefore they should have the same value as before.

Whilst the capital reorganisation shouldn't affect the share price the placing will dilute existing shareholders and therefore probably will.

[typo56] 11/12/2012 14:29

Sorry, I typed from memory and the existing ordinary shares have a nominal value of 5p not 4p, not that it's really relevant.

If you held 65k shares at close on 29th November you can sell those shares and (if you can find someone to do it through) sell short another 49k at, say, 3p per share. Following the capital reorganisation this will become a short of 49k in the new ordinary shares (nominal value 1p). You can then close with the 49k you take up in the entitlement at 1p per share.

It's probably too complicated for the vast majority people to consider doing with real shares. I've done this sort of thing several times in the past via CFD but it's not often you see a mismatch like this, partly because open offers are usually announced before open on the morning they go ex. Suppose you bought at 3p on 29th Nov (I reckon you could have paid less). You could now sell them for 3p and pre-bank 2p profit on the 49/65 open offer. Overall a profit before expenses of about 50%.

I hope that explains it. I'm not sure I'll have the energy to reply again!

[buyemcheap] 11/12/2012 13:44

Typo I still don't know what you are on about. The existing shares are 5p if you short them and close with the open offer shares it will be at a ratio of 65 to 49?

I still dont see how you could be quids in if the offer goes ahead,

"I might also apply to take up my open offer entitlement and try to short some or all of the entitlement now. That way if the open offer does go ahead you'll have pre-banked a profit."

sorry to keep quoting you but its necessary

[marben100] 11/12/2012 11:05

Re AFC - unlike Ceres (who presented a clear plan, which they failed to deliver on), AFC has been giving the impression that they're pretty much ready to roll for the last several years... yet never an actual delivery of working product.

October 2009:

"Following the installation of the Company's fuel cell system at AkzoNobel's Bitterfeld plant in Germany, the Company is pleased to announce that it has completed an important field test of its first generation, lower cost, non-platinum electrodes in its fuel cell system. In addition to generating electricity this field test included exporting electricity to the customer's on-site grid and automated operation of the fuel cell and remote monitoring of the fuel cell performance was demonstrated."


December 2009, order announced:

[but no commercial product has yet been shipped, 3 years later]



October 2011:

"AFC Energy (AIM: AFC), a leading developer of alkaline fuel cells, is pleased to inform investors that it has completed the commissioning of two commercial-scale fuel cell systems (the "Beta System") without electrodes at AkzoNobel's chlor-alkali plant in Bitterfeld, Germany. This follows the completion of the HAZOP study that the Company announced on 8 August 2011 and the commissioning of the first Beta System in the UK that the Company announced on 11 August 2011. Over the next months these Beta Systems will be equipped with electrodes and used for trials using industrially produced hydrogen."



July 2012:

"In late 2011 we installed two Beta Systems at our partner AkzoNobel's chlor-alkali production facility in Bitterfeld, Germany and began to produce electricity from them as part of a rigorous trial programme. In addition, we were able to obtain detailed data about the performance of our electrodes and systems to understand what design improvements would need to be incorporated into the commercial iteration of our system."


So, 3 years on, still in trials & no indication of when real, commercial system sales might commence.

AFC's lack of transparency (just how much electricity are these "beta" untis delivering?, how many more "iterations" will there be?) and failure to deliver a real product means I have no interest in investing in them.

Having visited AFC's operation a while ago, it appeared to me considerably less advanced than Ceres' was some 3-4 years previously (i.e. very much at the "lab" stage).

[typo56] 11/12/2012 09:25

buyemcheap, are you suggesting there will be separate ordinary share classes for the open offer shares and the new shares for existing ordinary shareholders? Surely not!

A short in the existing 4p ordinary shares will be reorganised to become a short in the 1p new ordinary shares (plus the worthless deferred shares) and they will rank 'pari passu' with the open offer new ordinary shares.

[buyemcheap] 10/12/2012 22:39

SueYou. You talk carp. If the stock is worth 1p according to you WHY IS IT NOW 3p?

It could easily go to 4.5p in a week, it is not in the least 'ridiculous' it was 13p a few weeks back with the same fundamentals.

[buyemcheap] 10/12/2012 22:36

Typo; You don't short the new issue. You short the current stock at the current price (about 3p) and close with the stock you take up in the open offer (1p).

The new issue shares are not the same as current issue shares, how can you close a short with them?

[sueyou1] 10/12/2012 21:23

Typo56, I can't imagine any broker accepting a guaranteed stop on CWR due to the risk level of the stock. I can't even get a guaranteed stop with IG Index on any of my other stocks and they are much less risky, much higher priced and not particularly volatile either, so no chance for CWR.

I can get a guaranteed stop in FOREX or commodities, it just costs via a bigger opening spread.

[typo56] 10/12/2012 21:20

You'd better discuss with your broker how they execute stops. It may be that you can pay a premium for a stop that will be guaranteed to be executed at your stop price. Otherwise the stop may be executed at the best price your broker can get for your stock once it has hit your stop price and they get around to trying to sell it for you - in other words quite possibly the low of the day!

You don't short the new issue. You short the current stock at the current price (about 3p) and close with the stock you take up in the open offer (1p). Of course, you risk that you might be able to sell for more than 3p if and when you receive your open offer shares. You think that's likely? It's probably a bit academic because if you don't know how it works you probably don't have the means to do it! In my case I'd be holding and shorting via CFD, rather than dealing in the physical stock.

[sueyou1] 10/12/2012 21:14

buyemcheap, your case for the stock going up, let alone to 4.5p is baseless and ridiculous.


The company have already stated:
"In order to finance the implementation of this new strategy and the continued development and commercialisation of the technology, the Board is proposing to raise £3.30 million (before expenses) through the issue of 265,000,000 New Ordinary Shares through a Firm Placing and 65,000,000 New Ordinary Shares through a Placing and Open Offer, all at 1 pence per New Ordinary Share"


I have already stated:
Currently there are 86,215,662 shares in issue. After the fund raising, if it goes through:
265,000,000 + 65,000,000 + 86,215,662 = 416,215,662 x 1p per share = £4,162,156.62 MCap


The stock is worth 1p because that is the price of the new stock. If the stock was worth any more than that then the placing and offer would have been done at a higher price, it was not because IP2IPO would not pay more than 1p for the stock, that dictates the true value of the stock, get it??


No way is CWR worth 4.5p or £18,729,704.79 after the new stock is issued. It is at max worth the £4.16m that IP2IPO think it is worth, in other words 1p per share.

Buying the stock now at 3p will not entitle the buyer to any new shares at 1p, yet existing holders on the offer date and the placees will all be able to buy exactly the same shares for 1p, DOH!

Tom Winnifreth states:
Meanwhile the valuation on a proforma basis is £12.5 million. In effect you are paying £10 million for technology which is commercially unproven owned by a company that could well be out of cash again by Easter. The shares remain a strong sell. The target price is clearly not 0p yet as there is now cash in the bank but I cannot see why this stock should trade at a mammoth premium to net cash until we get a handle on its true net cash & trade payables position, ongoing monthly cashburn rate and any sense that revenues are on the way. As such I'd say about 1p a share was fair value pro tem.


With 50 staff still on the books (I was expecting to see 25-30 like AFC have done fine with for 5 years) I can see Toms' point that CWR will be back for more cash by Easter. At a stretch mid-2013 for the begging bowl to come out again because cash burn with 50 staff will still be far too high for this R&D company.

[buyemcheap] 10/12/2012 20:50

Typo I asked several questions and you didn't quite answer em all. If I place a stop loss under my current holding and the open offer doesn't go ahead, will I still get the stop price?

I think the current price will go up a bit towards next tuesday maybe 4.5p.

You prompted a new question though, how would you go about shorting the new issue?

Geoff

[sueyou1] 10/12/2012 18:24

Typo56, well explained and a good plan. I too, if I were a holder and still bullish about CWR, would have sold my current stock at this price and just bagged the 1p stock if the vote goes through.

When the new stock is in the market the prevailing price should be 1p, as that is the price of all the stock according to the offer and placing. I really don't think it is worth any more and as it heads towards the next placing it's unlikely it will have any products by then, so it will be cheaper again or taken out 100% by IP2IPO.