Sovgem Share Discussion Threads

[jhan66] 04/11/2005 09:16

wonder when we'll hear about these other `investment prospects' they were persuing?
don't want them to rush in & make a mistake but thought we'd hear something by now, if only to defer doubts about previous supply-channels closing.

[jonwig] 04/11/2005 08:42

SOV hasn't enough of these left to make a big impact, but:

Bodisen Biotech Announces 3rd Quarter Earnings of $0.22 per Share, 94% Increase in Revenue and 80% Increase in Net Income; Before a One Time Financing Related Accounting Charge of $0.03 Per Share



Will be worth following when they come to AIM.

[hugepants] 03/11/2005 17:20

Its reassuring that this character is continuing to buy. I wonder if he has business relationships with the chairman. Note: They both sound French and have "de" as their middle names.

[jonwig] 03/11/2005 11:31

Just announced:

By a letter dated 2 November 2005 the Company was notified that Antoine de Sejournet has an interest in 1,200,000 ordinary shares of 0.001p each in the Company (representing 5.27 per cent.).

That's an addition of 100,000 -probably on 28 Oct, looking at the trades lists.

[hugepants] 28/10/2005 08:45

Good research guys.

[jonwig] 28/10/2005 08:41

Thanks for the translation, John.

I posted #50 yesterday evening, but pulled it whilst trying to find out more.

Anyway, I think this might be significant, with New York Global being in the China dealmaking business and new partners being sought.
I've just added to my holding at 8.2p - though I think the trades at 8p earlier in the week will have been buys. So my breakeven bid price is now under 10p which I feel comfortable with.

[jonwig] 27/10/2005 17:55

By a letter dated 27 October the Company was notified that Antoine de Sejournet has an interest in 1,100,000 ordinary shares of 0.001p each in the Company (representing 4.82 per cent.).

425,000 shares were traded on 26/10 - the only day for a while with decent size volumes, so my view is that it's taken him from sub-3% to a notifiable holding.

A google search on his name gives this, which is probably correct:



but that was in Chinese. Here's the website in English:



And here they did research coverage on Bodisen and Harbin:



New strategic partner when Benchmark collaboration expires? Or connected with Benchmark?
In any event, I hope we can look forward to resuming deals in the near future.

[hugepants] 17/10/2005 16:35

Thanks. I guess a little bit of guess work required.

[jonwig] 17/10/2005 16:02

HP,
my spreadsheet assumes 250,000 Harbin and 80,000 Bodisen, as I've heard nothing since the reply to my e-mail.

[hugepants] 17/10/2005 15:52

Harbin is still doing well. Up 3% today. Do SOV still hold 250,000?


Bodisen up less than 1%

[jhan66] 16/10/2005 18:01

US investments recovering even though the general market still declining.
Assuming $4.50 & $7.40, thats £90K extra, making £3,574575 or 15.7p per share.
Hopefully interest on the £2.6M cash is covering running costs (& then some).

So 11.4 per share in cash +4.3 per share in investments, all for 8p. Still sounds like good business to me.

[jhan66] 09/10/2005 11:41

that's a lot less Bodisen shares than I expected them to have.

[jonwig] 08/10/2005 19:41

Since the FD hasn't contacted me, I'll post up what I know from the CEO's e-mail. I'm not keen to ask him again: experience has shown me that if they don't contact you back, you're unlikely to learn much by pressing further.

End-Sept nav was 15.3p/sh (Interims).
They held ~250,000 Harbin ($4/sh - Interims).
They held ~80,000 Bodisen ($7/sh - e-mail info).

This requires them to have £2.6m in cash, ie. 11.4p.

So an overall discount of over 50% to net assets and a discount to cash, too.

I'm using $0.57 = £1.

Very strange!!

[jonwig] 08/10/2005 19:12

HP.
The Benchmark Agreement is a bit complicated as to terms of severance, but these from the prospectus;

The Benchmark Agreement is terminable, inter alia, in the event that SovGEM declines to participate in three successive private equity opportunities introduced by Benchmark under Benchmark Agreement.

[This may well have happened?]

The Benchmark Agreement includes a three year non-compete covenant on the part of SovGEM which provides that SovGEM will only be able to make private equity investments in China under the terms of the Benchmark Agreement and will not conduct investment banking or consulting activities in China without the prior written consent of Benchmark. Therefore, it is possible that in the event that investment opportunities were not forthcoming from Benchmark, or if the investment opportunities were not of a sufficient quality to enable the Directors of SovGEM to commit funds, SovGEM could be left in a position in which the Benchmark Agreement both failed to provide investment opportunities to enable it to achieve its business model and was unable to source opportunities in China. In this event, the Directors may resolve to liquidate the Company. Any return of capital to the Shareholders in these circumstances cannot be guaranteed but in any event would be substantially below 50p per Ordinary Share.

[We know this last bit well enough: the rest is opaque.]

The Benchmark Agreement terminates automatically in the event that SovGEM fails to invest 75 per cent. of its investable capital within six months of each private or public financing transaction of SovGEM (which would include the Fundraising described in this document) or if SovGEM refuses to participate in three consecutive private equity transactions presented by Benchmark to SovGEM. In this event the Directors would, subject to any restrictions imposed upon it by the Benchmark Agreement, seek another partner in China and other opportunities in emerging markets. Generally however, in the absence of appropriate opportunities, the Directors would be likely to resolve to
liquidate the Company. Any return of capital to the Shareholders in these circumstances cannot be guaranteed but in any event would be substantially below 50p per Ordinary Share.

[Again a bit opaque, and what about penalties? - none are mentioned.]

Regarding tax:

The Company is incorporated in Jersey and has been granted tax exempt status in that jurisdiction. The Directors intend to maintain that status. Should any tax authority challenge that status the Directors intend to defend the Company's tax position. However, should that status be challenged successfully at any time the Company's profits may be subject to taxation at a higher rate than is payable under its current status.

Regarding shareholdings:

Three significant holders connected with Benchmark had a total of 23.44% of SOV prior to admission, which became 16.94% after admission. Now 16.94 ÷ 23.44 = 0.723, exactly the required figure for selling out 27.7% at 50p on placing: ie. the Benchmark interests gots theirs f o c.

[jhan66] 07/10/2005 18:48

Bodisen up to day & should stay up with positive statements-


Oct. 6, 2005--Bodisen Biotech, Inc. (Amex: BBC - News; website: www.bodisen.com) announced today that it has made a strategic investment of $2.853 million for a 12.9% equity stake into China based Xi Lan Natural Gas Co., Ltd., one of the two natural gas companies serving the city of Xi'An, home of the Terra Cotta soldiers and one of the largest Chinese cities with a population of over seven million. In addition, Bodisen will report record 3rd quarter earnings for the quarter ending September 30.

Ms. Wang further commented: "In the third quarter of 2005, we experienced strong sales across almost all product lines. We will report record third quarter earnings........... Bodisen is on track for strong 2005 financial results as well."

[hugepants] 06/10/2005 22:38

Evening All

Ive just read through the AIM Admission document. The agreement with Benchmark I think was the reason they raised cash at 50p. SOV were able to get cheap shares in Chinese companies floated by BenchMark, who did extensive due diligence, in the US. Its no coincidence SOV have done so well out of Bodisen and Harbin. However SOV had to invest 75% of their funds within 6 months of the fundraising or the agreement would be cancelled. Well its now been cancelled since they only invested about 30% and SOVs' business plan has evaporated because part of the agreement is they cant use a substitute for Benchmark but they are allowed only to invest directly in Chinese companies now with no gaurantee of a floatation. Thats how Im reading it anyway.

Incidentally 16% of SOV's share capital is owned by people associated with Benchmark. I wonder if its selling by these holders that has forced the price down. Frankly anyone selling now is either desperate for cash or cant count - NAV is twice the bid price and cash is greater than the ask price.

Also SOV are registered in Jersey and the document states SOV dont have to pay capital gains tax? Does this mean no CGT on any investment gains?

[jonwig] 06/10/2005 07:20

HP

...I'm sure pljohnson is right - he seems very confindent - but rumour has it there's a terrestrial explanation called a 'prospectus'.

According to this, 27.7% of the whole share capital was issued at 50p, so the nav after float was ~13p/sh.
The only rational explanation for paying 50p to get your hands on 13p is, I think, that you were given free shares too. Since the company is newly-formed, the other 72.3% of the share capital will have been given away to somebody.

I offered, in an earlier post, to mail out the prospectus to anyone who wanted it. If you do, mail me off-board at TMF [AIM shares will find a post or two - but I'm away till Sunday now].

John

[pljohnson] 05/10/2005 20:39

HP

Galacticus 5 - come on this is basic knowledge

[hugepants] 05/10/2005 14:41

The people who funded SOV less than 12 months ago put in 3M in cash at 50p per share. Its easy to sit here and be critical now but from what star system did these people come from?

[hugepants] 04/10/2005 15:31

A veritable flurry of trades (for this stock anyway). Bought another 50K online at 7.5p this afternoon.

John, If you manage to talk to the FD ask him why the company isn't buying back as many shares as they can at this price :)

[jonwig] 04/10/2005 11:15

Hi John.

No he hasn't, unfortunately.
If he doesn't this week, I'll post up what I know.

[jhan66] 04/10/2005 11:09

John, How are your figures coming along, did the FD respond?

Here's my numbers
June exchange rate was $1.82, today it's 1.76, so average at $1.80
balance sheet investments= £1.075M at 30th June
They had 250000 Harbin @ $3.15 approx. $787500 /1.8= £437500. (Today its about $4 each)
Subtract this from the balance sheet leaves £637500 or $1143000
At $5.70 per share in June, that equates to 200526 shares in Bodisen (worth $7.50 on 27sep, though a little lower now). So it seems they've sold very few Bodisen shares so far.

These numbers are reasonably supported by cash situation.
Had £1.7M, now £1.98M. (Realised gain in period was only £54K, but true cash level includes all the H. sale)
Harbin share sale i estimate to be 250K @ $3.50= $875K = £486000
1.7 +0.48= £2.18M, so £200,000 to cover costs & admin for the period ?

[jonwig] 01/10/2005 12:35

John,

The 'Benchmark' referred to is Benchmark Capital & Finance, Inc. whose website is in Chinese script, I'm afraid.

I'm unclear whether 'termination' refers to complete severance of links, or just the unique nature of their relationship: my reading is that they are going to use a variety of sources, not just the one.

John