Stanley Gibbons Share Discussion Threads

[greekfire] 10/1/2018 16:36

The debt is not 3 million. That was the six month loss to Sept 2017.
The debt is more like 17 million.

[sikhthetech] 10/1/2018 15:43

yes, I believe SG would be able to turn the business around and potentially be profitable if they were debt free...
They've been servicing their debt.. if they were debt free then they would save the costs of servicing that debt, wouldn't they..
They have reduced their liabilities by placing SG Guernsey in administration..


The concern I have is the requirement for £5m and the debt, which needs to be renegotiated soon..
I don't have a problem with their reputation amongst Stamp Collectors/investors nor do I see a problem with investors buying high value Stamps from them...



ltcm110 Jan '18 - 11:11 - 3296 of 3302
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assuming for the sake of argument SGI are debt free, could they even make a profit with their enormous cost base???

[ltcm1] 10/1/2018 15:36

jasdan if the debt was 3 million why would they need to raise 5 million. The future profits you speak of could easily pay this off!

I am not really up with this but isn't debt around 12m, with the enterprise value being around the 20m mark?

If what you say is true the share price would shoot up to reflect this, if someone put 5m in you would expect a hefty bounce at least just on the basis there might be a plan for the future too.

You would think if the company has a business plan that can generate enough profit to pay down this debt in future years then someone would have invested by now, not least the management.

Perhaps there will be good news but as every day passes that gets less likely.

[jasdan] 10/1/2018 14:39

It happens more frequently than you may think, especially where a fall in the share price is overdone.

Here, there were two sharp share price falls in the last few years:
a. from £2.40 down to £1 in September 2015
b. from 70p to 17p in February 2016.

Both followed negative news updates, both were over-reactions. Since then, the price has slowly drifted down to 4p whilst the Board have closed Interiors, Marketplace, Guernsey etc, got rid of the old Board, and closed other none core interests.

Once the ordinary trading shows itself to be profitable again, you will see a rapid reassessment of this stock - especially once their new, more favourable banking facility is provided, and they are given £5m in funding.

It seems that most folk on here assume they will incur huge losses indefinitely. This is not the case, the losses and liabilities are now largely historic and there is only so long any further losses can hit the accounts from the old closed businesses. We are not at that transformational stage, but you will not be able to see it until the next update in half a year's time; by which time this will be history. If you were a large II, you would be updated much more frequently and therefore understand the dynamics more.

[augustusgloop] 10/1/2018 14:20

When was the last time that you saw a company in trouble do a placing at a substantial premium to the present price?

[jasdan] 10/1/2018 13:51

The point is that at the AGM it was pointed out by the Board that there was never going to be a general rights issue at the current distressed price as existing shareholders had lost too much.

It is a question now of stabilising the boat, and it is happening fast. Just look at the way that debt has been cut from £28m down to £3m.

[jasdan] 10/1/2018 13:47

It seems that many of you on here are labouring under a common misconception: you believe there must be a massive dilution of current shareholders to raise £5m because of the current share price.

There is no rule at all that a rights issue has to be at a discount to the current share price. Perhaps the clue is in the amount of stock currently available: there are 179m shares, but 40% are owned by two institutional investors and they have Board representation. So only 60% are available in the free market. If you wanted to buy any decent amount of these shares, you would end up increasing the price.

In the recent AGM, a resolution was passed [special business, item 10] allowing up to 25% additional stock to be issued without a general rights issue = 44.5m shares. If £5m is provided via this route, it will equate to a share price of 11.24p each - a premium to the current share price.
Yes, you are all shouting, but why would they pay more than the current market price?
Because once the banking facility is sorted out simultaneously, and the £5m provided, there is no way that the current share price will be just 4p. the 40% shareholders want a return on their investment, this is it, but they equally do not want to particularly dilute their own holdings. Therefore, they provide the bulk of the £5m, existing shareholders do not get a look in, but can't complain as the share price rapidly moves up to 15p - 25p range. And in reality, if a major II wanted to purchase the same amount now, equal to the amount they are providing to the rights, the price would probably not be that far off. It is impossible to get a pricing on the price to buy 25% of SGI, but clearly, you would pay a substantial premium to 4p.
That is what appears to be going on, as bourne out by the Outlook in the recent statement.

[ltcm1] 10/1/2018 13:06

Interesting augustus. Do you have any flesh to put on the bones of your argument?
Is there any evidence SGI are dumping stock??? I have not read of anyone claiming that on there at least.

I think the problem a lot of potential investors have is that there isn't any projection of what the new SGI can make under normal circumstances. It just seems to be a colossal cost base from what I can make out.

[augustusgloop] 10/1/2018 12:37

If they were debt free, they wouldn't be dumping stock -- and thus would be working with a DIFFERENT business model.

I believe that the underlying business is sound, perhaps even valuable.
The problem is the debt - and returning the business to 'normal' conditions.

---------------

As for the idea that they could raise £5m without great dilution - that is obviously nonsense. A small discount on the share price would mean that small holders were diluted by 50%. And I don't think that a small discount would entice the IIs.

Also, £5m may just be a stop-gap. Another cash input (larger) may be needed later.

[ltcm1] 10/1/2018 11:11

I have attempted to make this point a number of times - assuming for the sake of argument SGI are debt free, could they even make a profit with their enormous cost base???

Who is going to invest if the board are unable to show they can make a profit??? The business model is clearly broken IMO.

[pugugly] 09/1/2018 20:56

jasdan - Why chuck good cash after bad - The II's having been conned once at 10p are not panting there with their tongues hanging out to be shafted again - If they could see any potential value they might be tempted at say another 80% plus discount -

OOOps sorry that is the discount they were conned with last time - Once bitten multiple times shy !!!!!!!!!!!!!!!!!!!!!

[superiorshares] 09/1/2018 18:48

jasdan the mkt cap is 6 odd million , how do you work out 5 million can easily be injected without any dilution ????

[jasdan] 08/1/2018 03:47

Sikh, the cash injection is only £5m and this can easily be provided by institutional investors without any especial dilution to ordinary shareholders.
At the recent AGM a resolution was passed to allow exactly this

[sikhthetech] 07/1/2018 18:46

Yes, the problems do stem from the mis management by the old BoD....
However, they have said they need to raise money ...
Question is where will that cash injection come from? RI, placing, IIs????

Based on that I sold the last of my holding earlier in the week....

It doesn't affect my interest and investing in Stamps nor that I think the high net worth investors will still look to buy or seek advice from SG...

I think SG will survive...
I'll keep an eye on them and maybe re-visit in a few weeks...

[orange1] 06/1/2018 09:23

As I said here's another write-up from a different analyst and another reality check for the over-exuberant:

[jasdan] 05/1/2018 22:27

Fair comment Estienne. In my opinion, he had completely failed to read and understand the update. Losses have been reduced from -£29m to -£3m and clearly that alone is a major result, we will in due course hopefully move towards a profit again. However, we are in the middle of the turnaround, and the refinancing is now taking place.
There is a lot of resentment manifest on here from ex employers, disgruntled investment plan holders, shareholders who sold at a loss and so on. These folk need to learn to give it a break.

The new management are doing their best - they were given a very poor hand by the old management but now at last things appear to be turning round.

[ltcm1] 04/1/2018 15:04

The problem with the retail model is you have to hold a vast amount of stock, and it is this that has come back to haunt the company. The model doesn't suit the plc format because of the neccessity to pay dividends as you need to ride out the lean times by keeping cash in the good times. It was this that led them to the Investment plan idea in the first place, to smooth revenue and reduce stock levels.

Now the investment scheme is gone the retail model will never make enough profit to run a plc and pay shareholders, let alone pay off all this debt. Clearly the business costs a fortune to run and that is the problem. Until costs can be controlled what is there to invest in???

[orange1] 03/1/2018 08:36

Here's another write-up and another reality check for the over-exuberant:https://www.stockopedia.com/content/small-cap-value-report-fri-29-dec-2017-sgi-final-thoughts-290378/

[highasakite] 02/1/2018 20:52

"The £5m is going to provided by the major shareholders only, at little dilution to current shareholders who will not be participating"



Jasdan

Are you for real or are you on a wind up ?

The only avenue left is a D for E swap which means wipe out for shareholders.

Don't say you haven't been warned mug.

If there was a major shareholders placing as you suggest it would be at circa 1p which would mean massive wipe out for current holders you fool. ( 500 million new shares @1p = £5 million)

[jasdan] 02/1/2018 20:29

Debt for equity swap?

Get a grip out there. The £5m is going to provided by the major shareholders only, at little dilution to current shareholders who will not be participating. That, combined with a revamped improved banking facility will lead to a sharp correction upwards in the share price.

We will see who is right shortly.

[pugugly] 01/1/2018 22:23

ALS - Thanks for the TW take - He has put it in far more detail than I could - Obviouly put substantial time into it - Same result however - Shareholders likely to be about to be impaled !!

A very painful process -

[arthur_lame_stocks] 01/1/2018 21:05

On the pro forma balance sheet at the bottom of their results TNAV is down to about £1.5m. Effectively nothing.

And they can't make a profit so how long do they have?

They really should have been more explicit about what the refinancing meant for existing shareholders is it almost certainly means a near total wipeout IMO.