Kinovo Share Discussion Threads

[markwell] 01/9/2023 14:27

I couldn't give a monkeys about your retail fervour nor am I trying to calm it.

[sooty snipes] 01/9/2023 14:25

Oh okay the Mark, I believe you ha ha. Thanks for calming my retail fervour.......

[markwell] 01/9/2023 14:21

I'm not answerable to you sooty snipes but I have an interest based on a small holding here.

[sooty snipes] 01/9/2023 14:15

"So long as one has their risk in check, there's nothing to be overly concerned about, it's just noise and shenanigans. But I guess if one becomes emotional about proceedings, then that risk isn't necessarily in check, and hold too large a position"?
==============================================
You'd best have a word with Tim Scott then mate. He's holding a very large position!

[farnesbarnes] 01/9/2023 14:08

Time will tell whether it's nonsense or not. I'm merely sharing public domain info.

So long as one has their risk in check, there's nothing to be overly concerned about, it's just noise and shenanigans. But I guess if one becomes emotional about proceedings, then that risk isn't necessarily in check, and hold too large a position?

I held a small position in KINO until quite recently. But given the backdrop of the offer and potential legacy contracts, I was happy to take the profit.

I wish all PI's holding well.

[sooty snipes] 01/9/2023 14:06

Hello Mark. I really appreciate you calming my retail fervour but can you tell me why you have suddenly appeared on this Kinovo chat board?

[markwell] 01/9/2023 13:59

Well the above post calling the analysis 'utter nonsense' is a good example of sheer retail fervour that I previously mentioned. The same poster said that Caspian Sunrise was a multi bagger on the cards, post 21200 on the Casp board at the end of January this year, when the price was 7.0 pence and that has since dropped by over 50% to 3.2 pence.

[dope007] 01/9/2023 13:57

Paid for article?

Paid for posters?

[sooty snipes] 01/9/2023 13:49

Yes I was thinking the same myself but thanks for your "balanced" views guys

[aldriglikvid] 01/9/2023 13:45

Utter nonsense and conspiracy theories. Always a bit suspicious when users not active in this ticker, for years, suddenly have something "important to share".

[farnesbarnes] 01/9/2023 13:38

Welcome mark,

They had a piece last week too on KINO thats worth a read. It is good to have balanced views, but should also question why Small Cap Life don't declare if they have a position or not in any stock they write about.


Kinovo (KINO.L) - Potential Offer
Kinovo…today announces that it has received a non-binding indicative offer from Rx3 Holdings Limited ("Rx3") which may or may not lead to an offer being made by Rx3 for the entire issued and to be issued share capital of Kinovo at a price of 56 pence per share, payable in cash. Rx3 and Tipacs2 Limited, (which holds c.29.89% of Kinovo's shares), are both ultimately owned by Mr Tim Scott.

This is at very little premium to the share price prior to this news. Rx3 are keen to point out that the minimum price they can offer is even lower:

Rx3 notes the announcement made yesterday by Kinovo in relation to its possible offer for the Company. It confirms that, ..., if Rx3 makes an offer for Kinovo, Rx3 is required to offer a price of not less than 40 pence per share

So they appear to be setting shareholders up for the reality that it may not even bid at 56p. We suspect that the bid, if it comes, will therefore be somewhere between 40p and 56p and will be followed by them asking the board to recommend it. If they don't, then an EGM to remove the board? We expect lots of gnashing of teeth from shareholders who think the offer undervalues the company, and we have some sympathy with that, given the forward P/E is under 8. However, as Best of The Best showed, a 30% holder can easily force the issue if they really want to, and such companies rarely deserve a premium rating.

If no offer is forthcoming, it is unlikely to be due to the price, but that Rx3 find something material in their due diligence. Given the issues in the past with DCB Kent, then this can’t be ruled out. As such, shareholders may be better off simply taking the current market bid and re-investing it into other cheap UK small caps, rather than risk a low-ball offer being pushed through, or some more contract issues appearing.

[markwell] 01/9/2023 13:30

FarnesBarnes, that's a very interesting and balanced analysis of the situation from SCL in contrast to the fervency from some of the retail posters here. Very strange that there is still no trading update here.

[farnesbarnes] 01/9/2023 13:02

You lot are just unsavvy, over-exuberant PI's according to the following piece from Small Caps Life (Don't shoot the messenger):



Kinovo (KINO.L) - Possible Offer
Potential bidder for Kinovo, Rx3, fill shareholders on their thinking about the pricing of any potential offer. On DCB Kent, they say:

The exposure is therefore not a contract relating to £4.3 million but contracts equating to £18 million and until these have all been successfully completed and the £14 million expected receipts from DCB's clients actually collected, it will not be known whether the provision of £4.3 million is adequate. Indeed, this figure has already been increased from £4.3 million in the 2022 statutory accounts to £5.3 million in the 2023 statutory accounts, with this figure offset by a yet to be agreed claim against DCB's structural engineers of £1.0 million.

On the market value of the shares versus the minimum offer of 40p:

Despite Tipacs2's significant support in the placing of Western Selection's holding, Rx3 understands it was a protracted sale process, taking several weeks to place the remaining shares. Tipacs2 was prepared to pay a premium to what it regarded as the real market value at the time in order to maximise its strategic holding at 29.89%. The difficulty that Western Selection had in selling down its c.12.0% stake, even with Tipacs2 taking the maximum amount of the order that it was able to accept, clearly demonstrates that the current share price does not reflect the true market value for a significant seller of the Company's shares.

Basically, they are telling other shareholders that they have bid the value of the shares up too high, given the major contract risks that remain, and the illiquidity of the shares. The point they are making is potentially valid: that they chose to overpay for the shares at 40p to obtain control, that no one was particularly keen to take the rest at 40p in July this year, and that the only thing that has changed since then is a certain amount of private investor exuberance for the company developing on Twitter/advfn. For example, there were results in July and a couple of framework announcements, but these didn't really seem to move the price.

However, this misses that the overhang itself seemed to cause the drop down to the low 40s, and the share price was approaching the current level prior to that. So, although 40p may be the clearing price for a large stake, the clearing price for the smaller investors that they want to vote for their deal is around 50p.

Individual investors like us can often be the least savvy investors, especially when it comes to assessing risks within a business. However, if Rx3 don't want to bear the risks of DCB Kent's contract guarantees, then they don't have to make an offer for the whole company. But likewise, if the largely PI shareholder base is happy bearing these risks, then they don't have to accept the offer.

Presumably, the 56p mooted price was calculated as a 40% premium to the 40p price they bought at last month, which may be reduced as they do their due diligence on the current state of the DCB Kent contracts. So despite the partial logic of the Rx3 position, this bid as a scheme of arrangement looks doomed to failure. Rightly or wrongly, smaller investors simply value this company more highly than Rx3 does.

Rx3 probably realise by now that they won't get the 75% for a scheme of arrangement too and will have to make a normal offer if they want to proceed as they also said the following in their announcement:

Rx3 has not determined whether any offer, if one is made, will be made via a scheme of arrangement or a contractual offer, and Rx3 is considering all options available to it. In the event any offer is made via a contractual offer and is successful, any remaining minority shareholder should be aware of the implications of being a minority shareholder of a company under majority control and the control such a majority shareholder would have.

This is obviously the stick part of their attempt to get shareholder compliance. If they get more than 50% either from those accepting the offer or by buying in the market at or below the offer price, then they could make some aggressive moves. The first is probably to remove the board and put in their own representatives. There is no dividend to cancel here, so that is unnecessary. But they could have a large rights issue, thus forcing the holdouts to put in a lot of extra cash so as to not to be diluted out of their position. If they get to 75% acceptance, then they will delist, of course.

They will also have to bid without the current board’s consent, as on Friday, the company announced that:

The Directors have concluded that if the Possible Offer of 56 pence per share was made by Rx3 they will not be recommending it to shareholders. The Directors have undertaken a process of consultation with certain key shareholders and considered direct shareholder feedback in reaching this conclusion.

Larger shareholders that can easily put in a few million pounds more to back their position, and are willing and able to hold a delisted stock for as long as it takes, may then be able to find out whether their assertion that this is worth much more than the mooted offer price is correct. Everyone else may just end up capitulating to a hostile offer eventually.

The other thing to consider is what Rx3 may do if they don’t choose to bid or a bid fails to get 50%. They may just keep holding, but with the price still above what they consider fair value for a non-strategic stake, they may just flip the shares they bought at 40p for a nice turn. Especially since their DD on DCB appears to have yielded a worse situation than they initially thought. If they choose that route, it is unlikely that the non-institutional shareholder base could absorb all the selling and still see the price rise, and with the share price becalmed in the 40s for a couple of years, most will have got bored and moved on. They may even be able to buy back more sub-40p at various points when equity markets are weak. Come 2025, the risks of DCB Kent's contracts will have been resolved, and they may be able to make the offer again at the same price with lower risk. All in all, this doesn’t seem to be a great situation for anyone.

[dyor2] 01/9/2023 12:58

So IMV it’s now down to negotiations between Tim Scott and certain key shareholders to see whether they can agree on a price above 56p. The reason the Board has rejected 56p is that having consulted widely with both institutional and private shareholders, the vast majority have told the Board that they won’t accept 56p. So it seems clear that even if TS went hostile at 56p, he wouldn’t succeed. But if TS and certain key shareholders can now agree a higher price I think the Board will recommend it and the bid will go through. If they can’t agree, Tim Scott will either walk away or go hostile - if he goes hostile it will be at a higher price than 56p but less than some key shareholders say they want. If I were in his position I’d want a Board recommendation and certainty, rather than the uncertainty of a hostile bid, and it’s worth paying up for that. After all, he’d be getting a bargain anywhere near this price! But I’m not him and it’s his choice.

Personally, I rather hope he walks away because I think the business is worth a lot more than he’s presently likely to bid, and we’d get a lot more next year. But I suspect that they’ll agree a price (above 56p but well below what I think the business is really worth). Anyway we’ll see, I think fairly soon.

[fft] 01/9/2023 12:32

Scenario 3. Until he gets 50%, he won't be able to do that unless he gets others to support him. In which case he may as well go hostile on the bid and try to get 50% which gives him way more powers - but not enough to get rid of us. If he goes hostile he can buy in the market - but may need to pay more.mqThe scheme of arrangement that he wants is far cheaper for him, but needs 75% backing - and he isn't allowed to buy any more. Trashing the company in his last RNS should not have made him popular amongst shareholders who work for the company and they hold a few.

[nickcarr1] 01/9/2023 12:15

So I'm guessing:

Scenario 1: TS ups a potential bid to 70p-ish with the hope that goes through.

Scenario 2: TS walks away from the bid and is content to remain at current shareholding

Scenario 3: TS goes extra hostile and tries to get the board replaced or similar.

With a few tail cases like competing bidder coming in etc.

Any thoughts?

[qs99] 01/9/2023 11:16

Not passing disapplication of pre-emption rights, helps us I think as it means directors can't issue up to 9.99% of shares for options / deals / whatever, which may be a deciding % with this ridiculous offer IMO/DYOR etc.

So instis have blocked this IMO to help ensure no games are played.

RNS is great to extent it says "try harder" but it really isn't a "defence" document type RNS?

Where is the trading update? Rebuttal of Rx3 RNS?

C'mon KINOVO board you can do better than this. Minimum 70p and us PIs may consider....!

DYOR

[someuwin] 01/9/2023 11:14

So now Tim Scott will have to come up with a higher offer. Or walk away - yes?

[nickcarr1] 01/9/2023 11:10

Very interesting. So what happens now?!

[aldriglikvid] 01/9/2023 11:04

"The Directors have concluded that if the Possible Offer of 56 pence per share was made by Rx3 they will not be recommending it to shareholders. The Directors have undertaken a process of consultation with certain key shareholders and considered direct shareholder feedback in reaching this conclusion."


YES!!!

[barnesian] 01/9/2023 09:40

In the AGM statement, "the Board notes that resolutions 7 and 8, in respect of authorising the directors to disapply pre-emption rights, were not passed and that a significant proportion (more than 20%) had voted against these resolutions. The Board will continue to engage in discussions with shareholders to better understand their views."

In fact 62% voted against authorising the Board to disapply pre-emption rights, i.e. to issue shares without the authority of shareholders. It indicates a possible lack of shareholder trust in the Board to act in shareholders' interests.

However in the face of a potential bid for the company, why would the Company wish to issue a significant amount of shares? To raise cash - why? To bid for another company to bulk up - possibly. To dilute the major shareholder - possibly.

[nico115] 01/9/2023 09:04

Which part ...?Yes I told him what I thought Whether he smiled can be argued ..but I think he looked at me with a smile ! Come on a buyer of the co who is trying to take it over at the completely wrong price isn't going to say 7m ebitda is worth 10x so we are worth over 100p is he ?!! He's going to talk us down ! Luckily retail holders here are very shrewd and know what we are worth .

[sooty snipes] 01/9/2023 08:52

Is that true Nico

[nico115] 01/9/2023 08:29

I told him he was deramping (via rns)so he could buy the co at the wrong price ..he smiled !

[cermrew] 01/9/2023 08:23

When Tim says two significant contracts are up for renewal in 2024, that means that they will add to visible revenues at that time.

This along with the possible contract wins under the frameworks will lead to significant growth.