" · PwC are undertaking a review of the business and its future finding requirements and this work stream is progressing well;"
would suggest that there is a pot, a kettle and probably a frying pan involved."
SeaDoc, so you're suggesting PwC is some sort of 'Pot kettle black' scenario? I don't really get it......more like 'Thief Catch Thief'.....shirley!!
I would be surprised if the institutions arent prepared to back it as most of the business units are ok/ viable if run well. The net debt dictates the price imo. All this can be done quickly but much depends on either HMRC agreeing a deferral of payment terms or short term bridge finance being available. I think the former is probably reasonably likely assuming they can pay £10 -15m on time. With deferral of dividend I think thats likely.
My read on this is that the business will be rescued assuming there are no other nasties in the accounts. Expect all funding and HMRC goodwill to be dependant on that as well as no material downturn in current trading.
I still think 50p range for equity is most obvious price point but I see some people/analysts arguing higher.
"funding requirements perhaps?..........pot kettle black?"
Seadoc, perhaps!!!!!!!!!!!! Of course it's 'funding' and not 'finding'. It's not a difficult puzzle to crack but it does make you wonder that no one seems to have checked the RNS for mistakes (definitely for spelling & perhaps factual content). Could be that 'the management' is under quite a bit of pressure and are showing the strain. But it is symptomatic of their trouble isn't it?...missing a huge tax liability. OK 'finding requirements' isn't so serious but it's very shoddy.....'You cannot get the staff'.
The shares cannot return from suspension until PwC can sign off a working capital statement saying that with the additional capital the company has sufficient working capital for the foreseeable future. I.e the next 18 months.
I'd expect Investec to have indications of potential institutional support within a few days and can put a plan together by early next week. Depending on the need for a shareholder circular, I'd expect a return from suspension on publication of the circular or the announcement of the planned refinancing containing PwC's opinion that the money raised will be sufficient. In other words the price of the initial fund-raising will be set while the shares are still suspended maybe followed by a second stage equity raise open to all shareholders once the shares have resumed trading.
"... does anybody have any perception as to when shares might start trading again? other than pure speculation i mean.... what price would the rights issue be at as its usually a discount to market price but noone knows what that market price is?... or would they just privately off the new shares to a couple of financial institutions leaving the PIs to nurse heavy losses as usual? "
CB - I think they have to price and underwrite the rights issue before trading can resume. If they can... as I posited previously, it may not be possible. Not sure how long this takes... not days, not months. A few weeks, perhaps? Not in time to pay the tax bill, as due, we can be certain... but it doesn't sound like this is necessarily critical?
I don't believe they can just place new shares privately - normally, this is limited to 10% of the existing capital, and that clearly doesn't cut the mustard here. We've seen exceptions, but I'm not sure what the justification for such would be here. And I see their best chance of raising a meaningful amount of equity in a broad "appeal" to all shareholders, who have a vested interest in salvaging something of their investment.
As to what the price will be... that will be determined by the consensus of existing major holders, on a "book-build" basis, who will presumably be made "insiders" and given a reasonable amount of insight as to the thoughts and findings of PwC and those directors who end up surviving this process (may not be many of them).
does anybody have any perception as to when shares might start trading again? other than pure speculation i mean. presumably some sort of payment deal can be arranged with the IR fairly quickly. but if there is a need for a rights issue that will be more complex.
also if the shares are not trading then what price would the rights issue be at as its usually a discount to market price but noone knows what that market price is?
or would they just privately off the new shares to a couple of financial institutions leaving the PIs to nurse heavy losses as usual?
"Anyway todays numbers kind of confirms what we thought most likely. Short term support, a Pwc review of the financials to ensure no other nasties followed by a heavily discounted rights issue/placing to repair balance sheet. Im guessing here but Id imagine in the 40-50p range..."
Yes, for the most part, all fairly predictable and designed to calm a few nerves, I am sure.
But I did hope they could avoid an immediate equity raise - suggesting, as per previous posts, that the extension of the PwC remit and ongoing "discussions" with bankers have indeed turned to the outlook for next year and the likely conclusion that covenants will be breached. Because this is going to be difficult indeed - basically, you have one bunch (Investec) with shot credibility, asking for new capital to trust to another bunch (CVR management) with shot credibility...
The guys at the major shareholders are ultimately little different from most of us on here... so all shareholders on here should consider the question, how would you respond to the call from your man at Investec? If at all... letting it go to voicemail might be the safest option. It will be incredibly expensive, the holders will demand a high price in other areas (eg. wholesale personnel change) to even consider it... and I very much fear that the mooted 40-50p will NOT be deeply discounted, or any discount at all, to where the SP would now be if not currently suspended...
It might not even prove doable... Given CVR is merely an amalgam of several hitherto relatively decent businesses assembled in haste, it is possible some holders will judge that they'll get better value in a swift execution, a full and formal admistration followed by the winding up of whatever CVR is (or was) and the orderly sale of the constuent parts.
All of this, increasingly, invokes the old proverb... for want of a nail, the whole kingdom was lost. Maybe not... not quite yet. But expect further announcement(s), on board changes (executive and non-exec), as Investec gets to work...
"Today they release an important RNS with a spelling mistake. This is definitely a case of 'you cannot get the staff'..."
It is, of course, debatable whether it's a spelling mistake at all... I think one of the more urgent tasks for PwC is indeed to look at "future finding requirements", given the literally incredible rate at which they have been "finding" previously hidden things over these past few days and hours...
It's hardly "quite unique" for there to be big name institutional investors on the share register of a company which gets into trouble. In fact it would be quite unique if they weren't. Don't forget that in the past we have had companies go bust which were in the FTSE 100 (Polly Peck, B&C etc).
But your point about possible deliberate misrepresentation is well made. However, just because an exec buys shares does not prove they are not culpable - don't forget Nadir was buying shares in Polly Peck when it was raided by the SFO and Maxwell played similar games before going for the ultimate late night dip.
What sort of management do AIM companies have? They must be run by charlatans or nitwits.
First of all they forget that they have to pay £30m tax.....or did they just 'forget' to register the business off-shore? Today they release an important RNS with a spelling mistake. This is definitely a case of 'you cannot get the staff'.
Charlatans or nitwits? Or a bit of both....Charlawits!!
It's quite fitting that in the week that Stephen Hawking sadly passed away that PwC are now looking for black holes in the Conviviality accounts. Hopefully the extent of most of the bad news has already been found and announced.
Investec as NOMAD and broker to the company have a massive credibility issue here and they need to protect their reputation. They are also NOMAD and broker to Fevertree Drinks which they would risk losing if Conviviality were to collapse. I understand Investec are pulling out all the stops to ensure that Conviviality will survive.
My guess is that PwC won't find anything horrific but they will question some of the accounting treatment regarding customer ordering and sales and will suggest more conservative treatment should be used which may need the previous year's accounts to be restated. This is what accountants do when they investigate. The fact that CVR has run out of cash despite being 'profitable' suggests to me that there might have been advance booking of profits. Or it may simply have been over-trading on too small a capital base. As long as it's nothing worse than this the problems should be fixable with a sizeable cash injection.
The tax bill wasnt unexpected it was just not put in the cash flow forecast!!! Presumably thats why the year end net debt numbers didnt change.
Not a whole lot better, granted.......
Anyway todays numbers kind of confirms what we thought most likely. Short term support, a Pwc review of the financials to ensure no other nasties followed by a heavily discounted rights issue/placing to repair balance sheet. Im guessing here but Id imagine in the 40-50p range
all true Hugh but there must be more to this story than we know .yes we've been conned but so have the CEO /CFO having ,only days ago , bought shares .i'd like to see if anybody has been shorting these because the share price has been on a gradual pull back for weeks .also I've been checking out which of my funds have CVR in the portfolio and I can tell you quite a few of the best smaller co's funds have at least 2% of the funds invested here .top draw managers have come unstuck here .this is quite unique in my experience . let's hope Bill is right in his appraisal that all may not be lost here .the only lesson I can take from this experience is to continue to sell off my individual shares I hold and put the brass in really boring investment trusts like Witan . boring looks quite attractive .
I think it would be prudent to raise additional working capital via an open offer to shareholders as I feel the company is over geared financially;but providing there are no further significant horror stories to be revealed administration is unlikely simply because the enterprise value of the businesses owned by the holding company are worth well in excess of the tax bill even after taking bank debt into account.Trade debt is more or less balanced by stock & payments due from customers.
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