 LaV - I was under the impression that OI have SRT's back?
"OI has provided a $21.4m guarantee to SRT to enable SRT to issue a contract performance bond of similar value. The OI guarantee is initially provided as a cash loan of $21.4m with an interest rate of 0.75% per month. The loan is expected to be repaid by SRT with a period of approximately one month and replaced with a bank guarantee on OI's behalf. The OI bank guarantee itself will then be replaced within the next 6 months using a combination of SRT's own resources and UKEF export guarantee program. In return for providing this guarantee, OI is being granted 20,000,000 warrants at a strike price of 35p, with an exercise period of 3 years, which when exercised will inject a further £7m equity for SRT. In the event that SRT does not replace the OI guarantee within 8 months, a further 4m warrants per month will be issued with a strike price equal to a 15% discount on the share price at the relevant time."
Certainly it's exceedingly complex, and by no means cheap, but it seems to work.... |
But liquidity is still a major issue. Even if they get their hands on the £7.5 million today (can they actually use it pre approval at the general meeting?), they will probably be strapped by end February because of purchases for the Kuwait contract. And if they balls that one up, that is $21 million gone and owing to OI. |
I regard the presence of OI as beneficial on balance. It has been suggested that not just their financial support, but their undersea technology, has contributed significantly to SRT winning the Kuwait contract: if that's the case, then it seems a fair assumption that the same will apply to other prospective system buyers.
For me, then, the long and short of it is this:
a. NEXUS, to be launched imminently, should henceforth enable the non-systems side not only to wash its face but to cover most or all of the group's admin costs;
b. We have still to see what DAB can achieve - while it's rather disappointing that no major contracts for this have yet been announced, presumably there are still good prospects, does anyone have a handle on progress?
c. We have Kuwait $213m, Indonesia $180m if and when it happens, plus a handful of other system contracts both actual and expected. If we assume system sales averaging say $80m a year over the next four years, at what I hope is a highly conservative 20% gross margin, that would mean $16m p.a. pretax from 2025-26 onwards. Tax will be reduced because of historic losses (and hopefully, thereafter, because of the patent box, though who knows). Current market cap, pre-dilution but post the placing, looks like c£100m. I recognise that success will depend heavily on efficient execution of the contracts. On the other hand, liquidity should no longer be a major issue - again, like it or not, this is largely down to OI - and the momentum is now flowing. |
Supernumerary, I was in a similar position to you. Most of my SRT shares are held in a Barclays SiPP and Barclays, one of the largest retail brokers, were not participating. The only shares I could bid for were in an ii ISA which I was unable to add funds to, So, I end up getting an extra 1% of my SRT shares to add to my holding and not 10%.
This sort of bookbuilding Retail offer does not work for most retail investors. I believe a Retail Open Offer/Placing with the option to oversubscribe could have raised many times the paltry £0.95m raised. |
Anything world beating that we have will be subject to VC shareholdings and/or takeover in one form or another because we just don’t value it enough.
You can tell that from the crazy push to get dividends from small growing companies, instead of reinvestment.
Shame the UK can’t sell pen-pushing to the rest of the world. |
I increasingly think that there will be no long term for us shareholders. It is not up to the CEO to decide that sort of thing in any case.
I think it is much more prosaic than that. Apart from OI, they have been unable to raise any money from outside investors for at least the last two of many fund-raisings. But they insist on running out of money regularly, so much so that Brierwood has realised that his debt has seasonal equity characteristics.
Whatever they have agreed with OI this time, it is probably ultra vires. That will be washed at the general meeting. |
Maybe for ST ensuring a pole position for OI is the best long term option/succession. The fundraising then a way of moving in that direction. |
Big ears is supposed to be giving tea to Prabowo.
C5
Re the bond, I think it was perfectly within SRT's capability to negotiate a contract which started later, particularly if their system is as good as they say and the competition nowhere near and if they were confident about the cashflows from Indonesia and Saudi. |
I imagine that it wasn't only the 'soft limits' that affected uptake. I hold over 3 accounts, but when I checked only 1 of them was handling the offer, and since that was a non-ISA account I didn't feel like adding to my holding and potential tax liability. I can't be the only one who didn't participate for logistical reasons.
CM - I remain nervous of OI's interest - it's becoming overweening. It would be interesting to know what part they play in current projects, if only because any slip-up will cause another need for cash, and hand them even more power.
BTW I didn't notice any comment on this:
Bahrain activists criticise UK over King Hamad's honorary knighthood
Seems Charlie's playing his part too. |
I’d love to see any suggestions on how SRT could have funded these large contracts, other than diluting shareholders previously at a higher price.
Of course at that point, given no major signings, a big “insuranceR21; placing would have I’m sure been greeted with delight.
If anything of that size was possible in such a poor general market.
Perhaps someone who has actually run a business like this would care to comment. |
@ countryman
So are you going answer my question about your statements?
Many shareholders? |
LaValmy - I nearly always vote against pre-emption rights as a matter of principle.
I find myself in a grouping of less than 10% more often than not so would welcome your company |
I, along with many shareholders are nervous of O I owning 24% of the company, when warrants are exercised. Re previous post, do SRT critics have a suggestion of where the Kuwait bond should have come from at short notice?
Come to the AGM and put your questions to our new NED, Oliver Plunkett |
I haven't a clue what's going on but it sounds as if smaller shareholders have been shafted There's a surprise. |
LaValmy
Perhaps if you’re that unhappy and not in paper loss, it might be better to sell, seeing as you think its all mismanaged.
You could then spread the risk amongst other shares - I note you only post about SRT.
Just possibilities - no advice intended - all generic stuff. |
@countryman
“The share price has been kept low”
State your source.
Have you never noticed that prices normally drop into placing prices and often fall below afterwards for a while.
Quite frankly, I’m thinking of filtering you because of the long posts that are half fact, half supposition stated as fact. |
Well, if the business is being run at all in shareholders' interests, then it would seem to be on a LIFO basis.
If I am present when or if the issue next arises, I will vote firmly against any motion to disapply pre-emption rights. Sure it is late to do so, but it has led to the latest shenanigans and has encouraged perennial mismanagement of shareholders funds and last minute fundraising to keep the lights on. The board have been pusillanimous. I note the chairman still does not own any shares but assume that his options will be repriced to reflect the loss of value from this latest dilution, whereas we FIFO shareholders do not enjoy such charity. |
So do Airbus and Leonardo have similar systems ready to go?
(Seeing as you say Kuwait is pushing to start.)
You seem to have information that nobody else has.
Or can’t you resist making stuff up to pad out your posts?
“Banks would not lend”. You know that as well?
Perhaps they weren’t even asked.
Some investors have said SRT needs access to another shareholder with big pockets, rather than running up debt in a high interest period.
Take your pick. |
Kuwait was pushing hard for an early start for their contract, $21.3 ? was required upfront to secure the contract. SRT had limited options. I. Raise the finance. UKEF required time to make decision. Banks would not lend. OI was the only game in town willing to take the risk. 2. Walk away and let Airbus or Leonardo take contract, who would then take the lead for the rest of the ME. What decision would SRT critics have taken? Clearly SRT risks being taken over by stealth, but O I will have to acquire 51% to control company. We have some major shareholders who control ? % of company. I suspect that they will require a fair price before rolling over. How many small shareholders will support the major shareholders in resisting a 'give away'? I am conscious of 'concert party' rules. We have an AGM in January and this might be a time for a group of like minded shareholders to identify their shareholdings and agree a common approach. The 'FOR SALE' sign has been placed beside SRT but it will not be sold if 51% of shareholders say no. I am fairly certain that O I and other potential bidders read this board. It is only a matter of (short) time before various parties recognise the takeover potential of SRT and start trying to take positions. The share price has been kept low because of the potential to buy shares at 35p. The market also awaits the detailed broker's note to give guidance .
Interesting times lie ahead. My only surprise is that any shareholders would sell at these very low prices. |
Was just about to say the same. Having underwritten the whole issue, OI seem to have restricted the amount issued to individual shareholders to 10.9% of their holdings, rather than letting them have all they requested. OI then pick up the rest ! Nice way to run a fund raise. Suggest it is now more than likely SRT cannot make future payments and OI get issued more warrants (as per previous RNS) and take over the company by stealth. |
Totally agree, sham exercise
Raising £0.95m at a price of 35 pence each.
When :
Total demand under the Retail Offer was c.£2.5 million, however allocations were made to existing shareholders applying the principles of soft pre-emption. Shareholders were allocated 100% of their soft pre-emptive allowance(1) when their order matched or exceeded their soft pre-emptive allowance. |
Where has the “tremendous pressure from Kuwait” been disclosed?
Or is someone just adopting some sort of story-telling prose?
Big contracts are scary if you’ve never been involved in them. |
More topically, there's this :
13 Nov 2024
The Philippine coastguard is set for a transformative upgrade with the planned acquisition of 49 new ships from France and Japan, as it seeks to bolster its ability to defend the country’s maritime sovereignty amid escalating tensions in the South China Sea.
“Starting 2027, we will be adding at least 49 ships to our fleet. So that will more than double the capability of the Philippine coastguard,” Philippine coastguard commandant Ronnie Gil Gavan announced at the Manila Dialogue on the South China Sea.
On the sidelines of last week’s conference, which was also attended by coastguard chiefs fromIndonesia, Malaysia and Japan, the admiral confirmed to This Week in Asia that the new vessels would include 40 fast-patrol craft (FPC) from France, measuring 35 metres (115ft) in length, to be acquired through a long-term financing deal with the French government.
Maybe Malaysia is a prospect?
GLA |
Defence secretary (Philippines), Gilberto Teodoro recently gave an interview to the FT. He said 'We need to put in a lot of infrastructure in the eastern seaboard (for) air and naval basing'. Last week China summoned the Philippines' ambassador to protest after Marcos signed two domestic laws to define Manila's sovereign rights in maritime zones and sea lanes. |
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