Software Circle Share Discussion Threads

[gazza102] 05/10/2010 10:18

Why are people selling in the open market at a lower rate when the tender offer is 8p?

[stewjames] 04/10/2010 18:51

Contact your broker and ask them.

I've had accounts with 3 different brokers and all of them would usually contact me in such cases without prompting. Sometimes they did need chasing up, though.

[gazza102] 04/10/2010 15:43

Anybody know what I need to do to sell at 8p. My shares held are in a nominee account. Thanks in advance.

[muxdapanza] 17/9/2010 15:34

Once the High Court and the votes have gone through successfully the bid will be set at 8p by the company through the market makers

I don't know how long that process will take.

[zangdook] 17/9/2010 15:23

Sage

If that's so, it might be worth rejecting the tender and holding on? But then they wouldn't be wholly owned within China...

I'd sell mine now if the bid would get a bit closer to 8p.

[the_doctor] 16/9/2010 19:04

You may be right S&O, it's all too odd IMO

[sageandonion] 16/9/2010 18:56

I think that there is more behind this offer than meets the eye.

From memory I recal that a large portion of Sinosoft contracts are PR China Govt contracts, I also recal that they recently purchased another software company in order to qualify for more govt contracts that were only available to that company because they were wholely owned within China. I remember thinking at the time that it was strange as now that Sinosoft had bought them then surely that would disqualify them from those same contracts.

I believe that this whole episode has been "arranged" in order to take Sinosoft back into private Chinese ownership where it can win further PRC Govt contracts without having to worry about foreign ownership and AIM rules about declaring business activities to the wider world.

Once they are back in Chinese hands then you can bet that the contracts will role in and they will be back on a winning path. They have come to AIM raised finance at a relatively high initial offer price off the back of a PRC Govt contract and then things have gone downhill ever since. The PRC Govt pulled the plug on the Export Tax digitisation rollout which would have secured Sinosoft had it gone through to completion in the way that was planned.

Beware of investing in China, sure there is money to be made but the risks from shadey dealings are high. In future if I want an investment in an emerging economy then I will stick to India, Singapore, SA, Africa, etc and avoid the Communists.

[the_doctor] 16/9/2010 06:38

'a prolonged period at current operating loss rates or losses widening further.
I'm comfortable calling the business a failure in either of those scenarios.'

well, I'm also considering a scenario in which wider economic weakness pushes SFT into a prolonged loss, but the business could be a success when things then improve.
Spending too much of their cash now on things they have no need to spend on, wipes out that shot at making it.
Most companies are trying to conserve cash, particularly those that foresee a period of challenge

They're actions therefore strike me as odd. Maybe the trading wasnt quite as difficult as they made out? Would be handy if they could knock the share price down and buy a load back on the cheap?

'a little extra risk'
I see where you're coming from, but IMO it makes the risk much greater

[stewjames] 15/9/2010 18:06

the doctor, I am indeed only looking at it succeeding or failing. There's a reason for this - adding it up, the only ways they end up needing the cash they're planning on using for the tender offer is a prolonged period at current operating loss rates or losses widening further.

I'm comfortable calling the business a failure in either of those scenarios.

OK, I grant you there's a small likelihood they need the cash *and* it would have been enough to turn the business around *and* they're unable to secure funding despite the evidence a turnaround is viable, but IMO the chances of this confluence of events is negligible. The move makes plenty of sense from the point of view of the major shareholders. It significantly improves their potential reward for only a little extra risk. (Which doesn't mean retail shareholders should reject the offer - they don't get the same benefit since their risk is considerably heightened by a delisting)

[zangdook] 15/9/2010 15:05

A sceptic might wonder if they wanted to take it private on the cheap and orchestrated the whole thing.

[boadicea] 15/9/2010 08:58

We should probably try to look at SFT with eastern logic.
Their problem, perhaps, is not (in their eyes) that they wrongly gambled in fx but that they failed and got caught. Honour now dictates they should fall on their knife rather than apologise and carry on.
So, shut up shop on AIM and surrender 8p (which approximates to the share price before the debacle emerged.).

[the_doctor] 15/9/2010 08:05

Stew

They are making an operating loss at present

things dont have to get worse, they could remain disappointing, in which case SFT would burn through its cash

'in which case the business will have failed and all the cash will be doing is prolonging the death throes'

you seem to look only at it succeeding or failing.
However, on the way to either of those outcomes takes time and possibly money

my point is that having more cash could allow it to get to later success, whereas not having enough could mean that it runs out on the way there

I find that strange.

[stewolf] 15/9/2010 07:14

A promising company that it seems has lost it's way. The 8p proposal, if agreed and finalised, is better than them just shutting up shop in the UK and waving two fingers in the air to us AIM shareholders without a by-your-leave, but a disappointing outcome to my investment here.

Not lovingly attached though, as per the oft given advice regarding investing in a company, so I'll take the 'like it or lump it' offer and move on.

Enjoyed this thread . . don't get many like this!

GLTA.

[stewjames] 14/9/2010 20:19

"no, it would buy them time, time to get cash flow positive again"

Look at the numbers. They won't need the cash unless things get worse, in which case the business will have failed and all the cash will be doing is prolonging the death throes.

Looks to me like the majority shareholders are taking the opportunity to get full control and freedom from the costs and restrictions of a stockmarket listing, using surplus cash in the coffers to do so.

[boadicea] 14/9/2010 14:20

Agree it's difficult to follow the logic.
However, it's worth noting that the loss is not all negative cash flow. As they point out, one of the contributory factors is the high write-off of capitalised software development costs - a non-cash-flow item.

[the_doctor] 14/9/2010 13:56

'Well, yes, but in that instance the cash pile would just allow them to prolong the agony.'

no, it would buy them time, time to get cash flow positive again

You dont find most loss-making companies buying back shares.

It's all odd IMO.

[muxdapanza] 14/9/2010 13:39

How long will we need to wait to get the 8p on the bid, any ideas anyone.

[stewjames] 14/9/2010 13:36

Well, yes, but in that instance the cash pile would just allow them to prolong the agony.

If they pay out the full 4.3M, they'll still have around 2M left, plus 3M in investments (a property deal IIRC...excuse my laziness not checking - I'm not a holder). That's enough to give them time to turn around current operating losses. If those losses get worse...well, all they miss out on is drawing a couple years of wages. Meanwhile, there's significant upside for them if they can turn it around (another IIRC...management hold a substantial stake)

[the_doctor] 14/9/2010 13:30

That's what I was after, thanks

It's a very odd move. Or is it dual-listed?

They'll be screwed if they buy back shares then still find trading difficult and continue to burn cash

[stewjames] 14/9/2010 13:26

anyone know what the value of shares on AIM is?
I'm assuming it's not the full listing, since they'd not be able to afford to buy the whole lot back

Not quite what you were asking, perhaps, but from the announcement:

As shareholders holding about 69.1% of the issued
share capital of the Company have indicated that they would provide irrevocable
undertakings not to accept the Tender Offer, the Board have calculated that a
maximum of about GBP4.30m would payable under the Tender Offer

[the_doctor] 14/9/2010 13:25

'How could you possibly trust them enough to hold without a listing?'

yes, but then, why would they want to buy back the shares??

[stewjames] 14/9/2010 13:23

Difficult to refuse, I would say.

Think I'd go with "stupid" instead of "difficult". How could you possibly trust them enough to hold without a listing?

[the_doctor] 14/9/2010 12:44

the_doctor - 28 Jul'10 - 08:41 - 585 of 610 edit
Does nobody have an explanation for cash being materially below the year end figure when they should have been making cash and the speculation loss was supposedly only $3.8m



So, there's the answer - they were making a loss
It also seems likely to me that they were speculating in order to offset operating losses?


anyone know what the value of shares on AIM is?
I'm assuming it's not the full listing, since they'd not be able to afford to buy the whole lot back

I find it odd that they're trying to buy back the AIM shares when they dont have much cash and are currently loss-making.


'Difficult to refuse, I would say'

Almost seems like it has all been set up to encourage people to give up their shares!?

[boadicea] 14/9/2010 12:33

Interims issued at 13:00 and just posted on advfn.



Don't be fooled by today's jump.
The trading results are abysmal compared to py with the exchange casino losses on top.

The rise is due to the company's proposal to buy in AIM stock at 8p and cancel the listing. Difficult to refuse, I would say.

It gets easier to understand why China cos wallow on such low valuations.

[tonydev] 18/8/2010 23:06

I think you probably have;-)