Thinksmart Share Discussion Threads

[kadvfn1] 20/12/2021 08:52

125m down to 72m and that's an agreeable term? Absolutely crazy...

[kadvfn1] 20/12/2021 08:14

Now all we can do is hold for block shares

[hpcg] 17/12/2021 12:46

Mechanically, institutions will have shorted Square, as was, at the time the Afterpay deal was announced so as to lock in the purchase price. This will be one element of the SQ share price decline. That alone generates downward momentum. Laterally there has been concern over growth multiples and interest rates. These all feed through to a lower valuation on TSL. More positively the vast risk discount baked this potential in.

Were the Afterpay - Block deal not to go ahead then long SQ would be an excellent trade.

[kadvfn1] 17/12/2021 08:04

Sq and aft still taking a hammering. Hope aft results will be as amazing as we thought to reverse this trend

[xboxkoalabear] 16/12/2021 20:40

why the jump on Thinksmart's price today?

[jon l] 15/12/2021 10:09

I understand that the BoS process has a statutory deadline of 21 February. Block/Afterpay expects to receive the decision in mid-January. If approval is not given then the deal will not proceed.

The problem concentrating minds in Block/Afterpay will be that exercising the TSL call option after the takeover must be done in hard cash. A less painful handoff in Afterpay/Block shares is only possible if TSL can be induced to agree to a sweet deal *before* the takeover date. TSL is not obliged to agree.

This being so, TSL could decide either:
(a) to accept shares in Afterpay/Block - only possible if TSL agrees an attractive offer *before* the takeover completes,
or (b) to hang in there for Clearpay's future growth within Block Inc.

If (b) is chosen then TSL can ride along and keep revaluing its Clearpay interest upwards towards 2024; Block will have the right to close TSL out at any time, but only for cash.

All speculation and quite possibly all wrong given that much is not publicly known. We'll learn more in the next month.

[carcosa] 15/12/2021 04:43

blueclyde,

Depends on your definition of intrinsic... I'd hazzard a guess its in the 20-30p range.

It's valuation however is somewhat different. The terms of the put/call option have never been provided. Thinksmart have on prior occasions provided estimates of what they think it is worth based on three independent valuers and taking, not the average but 67% of the spread. But again we don't know what the spread was.

AfterPay have provided in their past accounts the liability for the option and applying the Black-Scholes model to that has given about 75%-85% of what ThinkSmart have publicly valued their holding in ClearPay to be.

If you accept ThinkSmarts valuation then adjust for exchange rate differences and AfterPay's share price change over the intervening period then you can come up with 141p with no discount. If you accept the 17% liquidity discount is no longer valid and accept the 35% discount for the employee scheme then that leaves 92p/Share.

However all of that is based on data that is 6 months old which in this business is a long time. ThinkSmart have already stated that in their negotiations they consider Active Customers to be the key metric. It's not as simple as saying ClearPay is worth 10% of AfterPay due to the shareholding percentage because ClearPay UK is providing the bulk of the EBITDA, more than their fair share of customers and revenue. These items are thought to be growing even larger over the last 6 months.

If as a crude measurement you were to simplify the valuation as a proportion to the AfterPay market cap then an additional 1% Change in ClearPay's value to AfterPay Leads to an 11% Change in ClearPay's valuation.

Things we do not know:
1. We do not know how much wiggle room there is within the Option mechanism (negotiation, input values, time). Note that the option is described as key 'valuation principles'. That could cause quite a lot of friction I'd imagine.
2. The effect of a cash call on AfterPay for the loan note repayments if the Bank Of Spain drags its heels and its knock on effect with ThinkSmart
3. What the state of business is with AfterPay and/or ClearPay
4. Whilst it would be highly advantageous for AfterPay to buy the remaining shareholding of ClearPay with shares, the share price decline for Square and AfterPay may shift them to a cash purchase post merger.
5. The 35% discount for the employee share ownership plan is a maximum number; we do not know if this would be the final discount level.
6. Given share price declines of all parties involved they may decide not to exercise the option at all giving ThinkSmart until February 2024 whereupon the ClearPay holding valuation could be significantly higher still.

Having said all of that, as of today I would be disappointed if we did not get north of 120p/share (plus TSL NAV for legacy business).

[kadvfn1] 14/12/2021 18:38

Target still easily 140p

[blueclyde] 14/12/2021 17:29

With all the share price movements in the other parties involved what now stands as the intrinsic value?

[babbler] 14/12/2021 12:00

so why fall on confirmation.?

[jon l] 14/12/2021 08:16

The wide decline in tech shares since August, including Block, is a bit of a dampener. Going in the opposite direction is the fast-growing valuation of Clearpay within Afterpay. We await AFT's numbers for the December quarter, just in time to clinch the Thinksmart handoff.

Nothing yet known about the TSL-AFT discussions, not even a leak to the press in Oz who have reported the Thinksmart angle before.

[carcosa] 14/12/2021 04:05

Of the total votes tallied, 99.79% were in favour of the Afterpay merger with Block. The deal has until April 2022 to complete but as mentioned before Bank of Spain approval is expected mid January 2022.

So that is another, but important, detail completed today.

Hopefully I would expect Thinksmart's ClearPay stake to be bought out next Month.

Meanwhile the share prices of all companies concerned continues to slide along with their competitors.

[babbler] 07/12/2021 11:01

rns out. no reason

[portugull] 07/12/2021 09:26

Does not make any sense to me.

[shaker44] 07/12/2021 09:18

Any clue what is driving the fall?
Pretty dramatic

[kadvfn1] 07/12/2021 09:08

All the sells being hoovered up now

[portugull] 07/12/2021 08:54

Big fall in TSL share price this morning down 13%

[kadvfn1] 06/12/2021 10:33

Thank you Carcosa, appreciated the detailed response. I'm LTH myself so will sit back and enjoy the ride. I can't see why ClearPay won't have a great X'mas and New Year

[carcosa] 06/12/2021 10:09

If call option is exercised before 18 January 2022 and settled by Afterpay in shares, then at a £233m valuation this would only result in 3.76m Afterpay shares being issued, a very insignificant sum.

Afterpay shares would then be converted into Square shares at the rate of 0.375 per one Afterpay share when the Square takeover completes.

Post completion, Square would have 571m shares in issue, so ThinkSmart's own holding would be 916,500 Square shares; i.e 0.16% of the total.

Hence any suspicion of walking down the price would not make any sense if paid in cash or shares because it is such a relative tiny amount; a thorn in the backside so to speak.

Conversion would me a very simple matter for a court to do. Would take maybe a minute.

Given the £233m valuation was estimated a long time ago (7 months old by time of completion) and the fact that ThinkSmart Directors believe that greater weighting should be assigned to active customers there is good reason to believe the valuation can be well north of £233m.

Short term share price fluctuations should have no bearing on the valuation; concern that the deal may not actually happen is the primary focus for TSL and AfterPay shareholders. Given that Square have already signed off on it and AfterPay are pushing hard for it to complete then there I believe it is reasonable assumption the deal will go ahead.

Thinking more about the 14 December meeting and actually reading the ASX RNS it seems as though this meeting will go ahead because Afterpay intends to approach the New South Wales Supreme Court (Court) for orders in connection with the conversion of the Bank of Spain condition precedent to a condition subsequent. Or in other words, as I read it, Shareholders will vote on the deal but will only be implemented when the Bank of Spain approval is obtained.

The Bank of Spain approval is necessary because that is AfterPays gateway for operation in all of the EU; not just Spain. Given that, it does not fill me with a confidence they will act quickly...

The negotiations have already been underway for some time between TSL and AfterPay, as was reported. TSL has the upper hand because it is Afterpay that is under time pressure to complete the deal. Long term TSL holders may be happy to have shares in a US listed growing disrupter company anyway.

If ClearPay has a great Christmas and New Year then that would further increase the value of TSL;s stake; so a delay is not necessarily a bad thing for TSL holders unless AfterPay has a blow-out year end; Interesting to note Afterpay did not issue their last quarterly operating update...

[kadvfn1] 06/12/2021 09:44

How hard/easy will it be for the court to convert; do we think?