Plus Markets Group Share Discussion Threads

[old thumper] 21/3/2013 07:46

risk1,

WRT April, because of the options annoucement on 1st March would this rule out any deals in March because of the 30 day restriction of Director dealings. Hence April becomes the best guess for any deals?

[harry f] 20/3/2013 18:10

risk

I have to step away for a while now, I'll try and get back to you later tonight or early tomorrow.

[risk1] 20/3/2013 17:54

Harry I would expect an update from the company any time now

Is this what you are expecting?

A poster on iii mentioned beginning of April but I don't understand the significance of April

[harry f] 20/3/2013 17:47

Lol, I need to have another look at them, missing things like this.

page 50

"PLUS Derivatives Exchange Ltd
By way of background, on 2 December 2010 the Company had entered into an agreement with Pipeline Capital Inc ("Pipeline") ("Shareholders' Agreement).

The Shareholders' Agreement purported to govern the operation of PLUS-DX and also dealt with the subscription by the Group and Pipeline of
shares in PLUS-DX."


The next available RNS at the time 13/12/2010 stated.

"PLUS Derivatives Exchange

In order to drive forward the PLUS-DX initiative, we are pleased to confirm
that Clive Connors has been appointed Managing Director of PLUS-DX, with effect
from 4 January 2011. Mr Connors is founder of Pipeline Capital Inc and has over
25 years' trading experience in derivatives and fixed income with inter-dealer
brokers. He joins PLUS from Kepler Capital Markets where he set up and manages
the central OTC market place for the USD FTSE MTIRS index."



As such I never knew this occurred (Shareholders agreement), I just thought Connors was coming in to work as a salaried employee?

Did they take 20%? I remember in late 2011 the offer was for 80% of the business? Is this how we're supposed to work it all out?

[harry f] 20/3/2013 17:31

You got me thinking earlier pjw, just been looking at the accounts briefly, will have a deeper look tomorrow.

This on page 38 I can understand in the circumstances at the time but like I said earlier there was no requirement for them to get into this position, all they had to do is conduct the FSP 6 months earlier.


"Practical Application of Intangible Asset Policies to the Group's Internally Generated Intangible Assets Regulatory Licences are valued at their marginal cost of acquisition less provision for any impairment.

On an annual basis, the Group undertakes an impairment review of its intangible assets by comparing their recoverable amounts with their carrying amounts.

Given the current market conditions in which the Group operates and therefore the uncertainty in quantifying and estimating the timing of future revenue flows, the carrying value of the licences and the trading platform have been written down to nil. The value of these intangible fixed assets may, if
considered appropriate, be increased to a revised value in future, provided this is no greater than the value before impairment."

[harry f] 20/3/2013 09:39

pjw

Thanks for 4712, every little helps and it's a good observation.

I don't know what you think but my feelings are as follows:

By the time of that meeting Basing was admittedly still a non-exec but was also the chairman. That leaves the Arab guy (it's not him as they know him already) or Smith. Now I think if it was Basing they would probably have stated "The Chairman" or something to that effect, rather than "Senior Independent Director".

Therefore imo probably 80% chance the "Senior Independent Director" present was Smith.


Overall, and I'm sure your asking yourself the same question and have been doing for a while.... I just don't know how anyone would ever think all this would work.

[harry f] 20/3/2013 08:39

OT

I read over all the RNS' from mid 2011 until the sale recently, they look worse every time I read them.

Just look at it this way, if you had a house worth £200k, didn't have the money to pay for the mortgage then you'd make strides to resolve the situation while you still had "going concern" status and manoeuvrability. You wouldn't wait for the money to run out and then take steps, as the sale price would be greatly diminished i.e through auction or repossession. Now the only way you would do nothing is if you were certain that from somewhere you could resolve your predicament.

Potential "Rabbit's out of the hat" are obviously no good to you, guaranteed revenue is necessary. In PMK's case to forfeit going concern status on the possibility DX or TS would generate revenue in a short space of time when they never had is just reckless. Like Bruce Rowan said at the EGM last year... something along the lines of: "Why would you wait until the last minute to sell, it makes no sense". Quite right.

PMK however isn't just like the house above however, it's a bit more complex than that and going concern status far more valuable.

In Q3 2009 when Amara invested, what was the situation? Well the year end accounts show net assets at £11m. At the time it was burning £8m a year and the placing to inject £5m was made at the end of Q3 lets say for arguments sake. So reconciling it back at the time Amara invested the company had around £8m net assets and was burning £8m a year cash. However the placing price of 7.5p indicated a company valuation of approx. £29m, indicating non balance sheet assets (mainly the RIE) of circa £20m. Personally I'd argue it was valued higher, more like the £29m company valuation after all Amara knew their cash had all but gone when they invested.

Run the clock forward to Q3 2011 and I think things look even better imo. Approx £3m net assets but the cashburn is now only £2m a year. I must have asked 20+ people this question, i.e. "which looks better? Q3 2009 or Q3 2011". The answers are all the same "On a going concern basis Q3 2011".

As you can see key to valuation is the intangible off balance sheet RIE value, whether you place the value of this at £20m or closer to £30m there's no getting away from the fact this is where most value lies.

Now if what the PMK board said was true and it was not possible to secure funding what they should have done is acted in shareholder interests and put the group up for sale Q2/ Q3 2011, it's just common sense. You wouldn't take the risk to "impair" the value of the RIE with it being so significant. Then Icap could have come along in October/ November time, offered the £1 and all shareholders could have rejected it.

Now we can see why this wasn't done, history and the actions of the board tells us they had other things on their mind. When the TS-Icap contract materialised it was clearly treated as a private contract between related parties and as their own property. This wasn't their property, it was the company's but they didn't treat it as such.

Forget the headline £1 or the extra £500k, the transaction to sell SX was essentially:

Sale of SX proceeds to company = Undisclosed contract via TS between related party and Icap.

...and that's the equation, and quite clearly they treated this as their own personal contract. Imo it's largely irrelevant what terms this was made on and what % went to shareholders.

......i'll carry on with another post shortly....

[old thumper] 20/3/2013 08:27

pjw,

Thanks, I wonder how they feel about the situation today? We still feel cheated and I'd think they still feel the same way.

[old thumper] 20/3/2013 08:26

pjw,

Thanks, I wonder how they feel about the situation today? We still feel cheated and I'd think they still feel the same way.

[pjw1956] 20/3/2013 08:10

Old Thumper, this is the link

[old thumper] 20/3/2013 07:48

pjw,

A damming story, I'm not sure if I've seen this one before when was it dated?

The BoD and their advisors are all in the frame.

[pjw1956] 20/3/2013 06:07

Morning harry & Old Thumper, I wonder who the Senior Independent Director and the Company's representatives were at this meeting

January 2012 Offer of Funding:

"During the third week of December 2011, the Company's CEO and Senior Independent Director met with the Amara board in London. At this meeting, the Company's representatives stated that the Company was in serious need of financing and that an amount of £2 million was required. On that basis, an offer of underwritten funding was prepared for discussion and sent to the Company via our advisors Markab Capital on 3 January 2012. The term sheet was explicit in that such financing was "in conjunction with Amara Dhari Investments Limited."

and who were the advisers here?

"when it became apparent to the Company that the other major shareholders did not wish to participate in such fundraising and that we were the only shareholders offering financing (with a condition of management change), discussions were promptly terminated. Astonishingly, the Company paid their advisers a fee relating to these aborted discussions!"

-----------------------------------------------------------------------------
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This is worth reading for any new investors

Dear Sirs,

Plus Markets Group Plc (the "Company")

As one of the Company's largest shareholders, without whose funding the Company may have already ceased to exist, we are extremely disappointed at the contents of the announcement made on 8 June 2012, which we believe is inaccurate, and is a distraction from the very serious matters to be voted on by shareholders at the upcoming General Meeting and Annual General Meeting.

We do however, consider it necessary to address and respond to the points specifically referencing Amara in the aforementioned announcement.

Strategy and Formal Sale Process:

The assertion made by the Company that we agreed with the sale and overall strategy of the Company, as stated in the announcement, is inaccurate.

By way of background, the rationale for our investment in the Company in 2009, was on the basis that the Company's strategy would be to focus on the stock exchange ("SX") and to enhance its business by using the SX as a platform to promote tie-ups with other exchanges worldwide and to facilitate dual listings. To this end, given our substantial connections in the Middle East, we offered to provide the Company with regional offices, fund business development and marketing in the region, and provide bilingual personnel - all for the nominal sum of £1 per annum.

Following a substantive change of management at Plus, this generous offer was rejected by the Company. Our investment agreement contains specific obligations of the Company to open an office in the Middle East, to facilitate such a strategy.

We were also in discussions with several established stock exchanges located in high growth regions of the world, who were attracted to the idea of promoting dual-listings in London in conjunction with Plus. We brought this to the attention of Plus management, yet nothing was pursued.

As we expressed directly to the management of the Company, and later publicly in the press, we did not believe the strategy of pursing a Derivatives Exchange would bear fruit for Plus investors. We have been proved right.

With respect to our opposition to the proposed sale, our written correspondence to the Company's board and its advisors on 31 January 2012 (only several days before the Formal Sales Process was announced), could not have been more clear. We have included the text for clarity:

"....As we have expressed to both management and your advisors, as significant shareholders, we oppose any attempt to sell the business in whole or part (with the exception of a minority stake in either TS or DX), and will be very vigorous in opposing any such deal, if presented..."

We did not believe, as stated, that a sale of the Company, or its main asset, in whole or part, would generate adequate returns for shareholders.

Offers to Finance:

Following our initial investment, we made it apparent to the board in both verbal and written communication that we were willing and able to provide further financing should it be required. In fact, we made specific provision for future fundraisings within the Amara corporate structure.

We also wish to make the point that our initial financing was completed without the incurrence of exorbitant advisors fees in contrast to those fees which have been incurred by the Company more recently and in particular, in relation to the current proposed transaction.

Please also note that at the time of our initial investment, our directors and shareholders went through the full FSA regulatory process without complication.

Summer 2011 Offer of Funding:

We were approached by the Company's advisors in the summer of 2011, with a view to providing additional financing to the Company via either an underwritten private placement or an underwritten rights issue, whereby the underwriter(s) would cover any shortfall if other shareholders did not take up their entitlement. We expressed our willingness to provide finance, however, explained that any such financing was conditional on a change of management of the Company as we did not believe that such management had the capability to take the Company forward and make it a success.

When it became apparent to the Company that the other major shareholders did not wish to participate in such fundraising and that we were the only shareholders offering financing (with a condition of management change), discussions were promptly terminated. Astonishingly, the Company paid their advisers a fee relating to these aborted discussions!

Amara's shareholders, who were willing to participate in such further funding of Plus, include some of the most prominent and wealthiest names in the Middle East. There is not, nor was there ever, an issue with proof of funds either during our most recent discussions with the Company or when we provided the Company with the initial £5 million. We would have welcomed discussions and negotiations with the Company to have reached the point where the amount required by the Company specified, terms agreed and confirmation of funds was required.

January 2012 Offer of Funding:

During the third week of December 2011, the Company's CEO and Senior Independent Director met with the Amara board in London. At this meeting, the Company's representatives stated that the Company was in serious need of financing and that an amount of £2 million was required. On that basis, an offer of underwritten funding was prepared for discussion and sent to the Company via our advisors Markab Capital on 3 January 2012. The term sheet was explicit in that such financing was "in conjunction with Amara Dhari Investments Limited".

On 13 January 2012, we chased the Company as we had heard nothing from them since our term sheet was submitted. We have included the text for clarity:

"....I remind the board that our offer is not open indefinitely and we have had no substantive discussions with the Company to advance the financing since our offer has been tabled, despite the Company's critical funding requirements....."

On 20 January 2012, the Company finally responded in writing, suggesting a telephone call to discuss the matter further, stating inter alia, that their initial assessment of the capital requirements had been too low and that the pricing of our private placement offer was not high enough. The Company, however, did not specify any amounts that it believed it would require, nor did they suggest a price at which financing would be acceptable.

Thus, on 24 January 2012, a call was arranged between Amara and members of the Plus executive board and its advisors to discuss our offer of funding. During this call the general principles of a financing were discussed, including changes we believed necessary to ensure the Company's success. During this call management neither suggested a pricing level that it deemed acceptable nor outlined the specific quantum it required. We mutually agreed to continue these discussions the following day, with a telephone call being arranged by management and its advisors. No-one got back to us, so on 31 January 2012, we again chased the Company. We have included the text for clarity:

"...It has been almost one week since we last spoke, after having agreed on our call to continue the conversation the next day and begin to more fully discuss the terms of a transaction.

We have yet to have a meaningful discussion on terms and have not once had any sort of negotiation, despite our term sheet now being with you for almost a month.

For a company that is weeks away from potentially being put in the situation of an orderly wind-down by the regulator due to lack of capital, where all shareholder value will be destroyed, I find it astonishing that management have not engaged in substantive discussions with us.

It is quite clear that you have no interest in proceeding with a financing provided by us...."

Several days later, having failed to respond to our offer, the Company announced the Formal Sales Process.

Continued Offers of Financial Support:

On 5 March 2012, in written correspondence to the Company's advisors, upon electing not to participate in the formal sale process, we reiterated our offer of financial support. For clarity we have included the text:

"...We remind you and the management that we remain open to financing the Company, as an existing shareholder, through a placing. We would welcome a serious dialogue with the management of the Company to further such a transaction.

Further, as we have previously stated, we would be against any non-existing shareholder financing, particularly in light of several offers over the past two years to refinance the Company at much higher prices, which the Company had rejected. After rejecting these offers, we would take a negative view of any attempt to refinance the Company with outside shareholders, given the shares are at or near an all time low, as we believe the result would be a punitive dilution to existing shareholders, who have stuck with the business through this difficult period.

We are available at any time to discuss this matter and look forward to working together with the Company. Please bring this position to the attention of the Company's board...."

On 9 March 2012, having received no response to the above correspondence, we sent further correspondence to the Company's advisors. For clarity we have included the text:

"...It has been one business week since we sent you our invitation to discuss a funding solution for PLUS and we have heard nothing.

Given the precarious nature of the Company's financial position and our belief that it is not in the best interest of shareholders for management to sell or refinance the business with outside parties while the share price is near all time lows, we find it disturbing that yourself as advisor and management have not initiated any discussions with us.

The fact that management have not held any substantive dialogue with us as long term shareholders to discuss a financing when a firm term sheet was put forward by us in January (was on the table for a month and not once were terms even discussed), and further declined to engage in discussions with us after yet another invitation was put forward to do so, raises serious questions. These concerns arise particularly in light of the Company's desperate need for funding.

If management have a solution that they believe will satisfy shareholders and the business concerns of PLUS, it should put them to shareholders for discussion immediately. Absent that, it at the very least indicates uncertainty. Uncertainty creates risk. In case of PLUS, an RIE, risk should be minimised by the directors, acting prudently, by pursuing all avenues available to it to ensure the Company survives. We know management is not doing this, by failing to engage any dialogue with us regarding funding.

We cannot believe that other shareholders do not share similar views to ourselves. It is time that the management of the Company listen to its shareholder base.

As always, we are available to speak at any time and expect a timely response. Please bring this position to the attention of the Company's board....."

The assertion therefore that the Company was "not aware" of an offer of funding from us is untrue, as it is very clear that offers of funding were presented both verbally and in writing to the Company and its advisors.

It is also evident that the level of co-operation required from management to assist us in the production of a business plan (as required by the FSA and relating to a change in control should we have provided funding), was not forthcoming.

Management

As we have stated both privately and publicly, we believe that the actions of this board have directly led to the destruction of shareholder value, witnessed by the substantial decline in the value of our holdings since we have made our investment.

Accordingly, we have initiated steps to reconstitute the board, starting with our nominated director Ahmad Al Asfour (given this is a replacement procedure which is less complex than that under the Companies Act 2006). As the Company is aware, we put into motion Al Asfour's replacement on the board in early May, using the procedures under our investment agreement with Plus. The board is now in possession of a legal opinion noting that we, the board of Amara, have the authority to manage the business and have acted pursuant to that authority to remove Al Asfour. Amara's directors, Ahmad Al-Omani and Spencer Wilson, constitute the board of Amara, and have been the sole directors since its investment in Plus.

Conclusion

We would like to reiterate our view that the management of the Company should be focusing all of its efforts on the substantial task of creating and preserving shareholder value, rather than releasing press statements which are derogatory to the very shareholders who have historically provided much needed financing, without which the Company may not exist today.

We are appalled that executive management have agreed to take "enhanced" payouts of £423,000, for selling shareholders' business for £1 and call on management to waive those payouts.

Moreover, we consider the expenditure of £960,000 of shareholder funds on professional and advisory fees to sell the business for £1 as incompetent, particularly in light of the fact that the main reason for the forced sale of the business is lack of capital.

Very truly yours,

Spencer Wilson

[old thumper] 20/3/2013 05:02

harry,

Wyvern knew the Plus situation ie. lots of valuable assets but low of cash and BoD ablities (we all knew that), so perhaps they encouraged their mate to split Plus up and make a couple of quid in fee's. It's human nature other people always have idea's when they know someone has a problem and Plus had one.

[harry f] 19/3/2013 17:55

OT

My answer was going to be how could Wyvern ask Plus if they didn't know it was for sale, after all none of us did. However I suppose that may not be the case. Either way I don't believe it makes a lot of difference.

Imo what does make a difference are the 8 questions from last week. The answers to them, whatever they may be, tell the story.

[harry f] 19/3/2013 14:21

Thanks pjw. I stopped looking when I found the link and moved onto the next thing, you'd expect that there was a relationship before the partnership and it's good to see a "firm" one.

OT - You already know the answer to #4708.

[old thumper] 19/3/2013 08:08

Did Plus ask Wyvern or was it the other way round?

[old thumper] 19/3/2013 08:02

Small World indeed!

[pjw1956] 19/3/2013 07:42

Anthony Joseph Gahan


ROBERT FLEMING INTERNATIONAL LIMITED

Appointment Date: 15/04/1998
Resignation Date: 05/06/2000
Position: Director
Company Status: Dissolved

Address:
10 ALDERMANBURY
LONDON
EC2V 7RF
GB



Appointment Date: 15/04/1998
same day as..........

Nicholas Michael Norman Smith

ROBERT FLEMING INTERNATIONAL LIMITED

Appointment Date: 15/04/1998
Resignation Date: 28/02/2001
Position: Director
Company Status: Dissolved

Address:
10 ALDERMANBURY
LONDON
EC2V 7RF
GB



Small world

[harry f] 18/3/2013 08:09

"Someone likes taking photos of the old OXO building"

Yeah they do don't they. I don't know why they don't just merge the companies, lol.

Looks like the MM's foxed a few on Friday, from not being able to buy any, loads of stock suddenly becomes available thanks to a few sells with delayed notification of an hour. I think there might well be demand today, MM's have just set the buy (above Friday) and sell prices with "fake" trades.

[pjw1956] 15/3/2013 08:49

Morning Old Thumper, I think its a mistake



Was all this being "road-tested" at PLUS?

Global Markets Exchange Group (6 Months old) is a group of companies which offer innovative solutions for the new age of global financial markets with a fresh approach, encompassing:

creation and operation of low cost electronic exchanges in equities, debt, FX, derivatives and commodities in developing and, in a targeted way, developed markets,
consultancy on exchange strategy, product development, clearing and regulation,
development of related market and product indices, and
provision of platform technology.

Led by a knowledgeable team with extensive experience in the target markets, the company has road-tested and derisked the investment quite considerably over the last year. (From Post 4702)

Vj Angelo
Consultant MD
Plus Derivatives Exchange

January 2012 – July 2012 (7 months) London, United Kingdom

Consultant MD - Working on the transfer of OTC Derivatives to CCP Cleared Exchange traded model. Extensive work in regulation, product development, client liaison, new client development. Worked with the Investment bank on the development of the sale of Plus Markets Group.



Off out now, have a good weekend Old Thumper

[old thumper] 15/3/2013 08:31

Morning pjw,

In your link,



Did you notice that Richard Atkins and Rachna Misra give the same address, 12 Roseway, marriage in the air?

[harry f] 14/3/2013 13:15

Sorry about pushing your blood pressure up pjw, not intentional by any means.

I think the extra clarity/ simplicity makes it easier to then derive supplementary questions....such as:

How could the buyer agree to buy the car for £1 if they had no forward visibility of the contract terms regarding the key? For all the buyer knew the related party could insist on £100k pa fee for the key. Therefore unless both items were negotiated at or around the same time then even a £1 offer could have been too much.

Therefore one must ask how could the transactions be treated separately and only partially disclosed? They must have been negotiated at or around the same time, no buyer would agree to one transaction without knowing what the other was.

Your "guess" regarding FSA approval mimic my feelings.

Have a good weekend, OT and squirrel too.

[pjw1956] 14/3/2013 12:24

Thanks harry, for pushing my blood pressure up with the TS post

My guess is that everything is gearing up and moving to St Martin le Grand in readiness for FSA approval

Strang & Harris should be here tomorrow

A notice convening a General Meeting to be held at the offices of Merchant
Securities Limited, 10 King William Street, London EC4N 7TW at 10am on 15 March
2013



Have a good weekend harry Old Thumper squirrel and all