The Financial Reporting Councils decision today to investigate Grant Thornton's conduct re its audit of Globo may give some very slim hope to Globo shareholders of getting some cash from them in the distant future.........If negligence is shown.
It is assumed that there is some value in the subsidiaries. Not a great deal of value but some value. That "value" will be returned by either the subs being sold or liquidated. The cash from such sale or liquidation will be returned to the holding company and used to repay the bank debt.
If there is any money left over after that then it would go to shareholders. But it's already been indicated that there's no expectation of any money being left over and the suggestion appears to be that the banks will not get all of their money back either.
As Globo PLC is in administration shareholders no longer have any influence over the running of the company;they now become unsecured creditors ranking after all other creditors for payment(This would be any money remaining after all other creditors have been paid).
However the specific cancellation of Globo shares is due to the requirements of AIM Rule 1.Globo's NOMAD has resigned, without a NOMAD Globo's shares cannot be listed/traded on AIM.If no new NOMAD is appointed within 30 days its listing is cancelled,however as Globo is in administration no new NOMAD can be appointed because he could not do the job as required under AIM rules.
How can the Administrators decide to cancel Globo's shares whilst
Globo's subsidiaries continue trading outside Administration. I assume
the subsidiaries belong to Globo Plc and as such belong to Globo's
TA takes time to get your head around, but it focuses on sentiment rather the notions of the 'funamentals'. If you decide to take it on board, experience will help your understanding, but its important not to be too mechanical about using it - nothing is ever guaranteed unfortunately.
I find it always helps to have a basic grasp of the fundamentals, but sentiment drives markets predominantly, so I hope you find the link gets you more intrested.
Maybe others have useful alternatives to get you started, if that suits you at the moment. TA has certainly improved my general portfolio performance over the past decade, but its not for some, but ultimatel its a matter of getting it more right than wrong! Best of luck - AR
i think being able to detach youself from the story is a very good tip and prevents people from getting carried away.
I would like to take a look into TA, andy can you recommend any books or online based tutorials?
dkok - the problem is that when a direcotor deliberately sets out to cheat investors and the market there is no amout of regulation that is going to prevent the scam being attempted.
So often, after a scam has been exposed, it all seems so obvious, but that is partly because most people assume everything is being done legitimately and by inclination we dont like to focus on wrong doing and criminality.
On the other hand the professional people, auditors, regulators etc, are supposed to be there provide a bit more reassurance that the rules are being applied. Unfortunately history throws up many examples where they have also been duped by scams, and failed to prevent absurd levels of risk taking. Enron, Madoffs Ponzi scam, the banking crisis, etc etc...
It just reinforces the need to apply a big dose of scepticism when investing, and which is why I prefer a TA based approach, as it detaches you to a degree from getting too involved with the company's story and it management. AR
If that is the case, and the administrators are looking to maintain the holding company in order to seek the best outcome, how come they are allowed effectively to de-list the shares, effectively denying the actual owners of the holdong company thier rights?!!
This is highly suspect in my opinion, but it seems we have no voice and no protection. We have been lied to by management who it seems have deliberatley falsified the financial statements, the auditors GT has quite possibly not done its job corerectly as if the directors are identifying cash generative business, they should be seeing the bank statements to prove it and should have been interrogating them rigorously before signing them off.
The shareholders therefore have been mislead by the BoD, have been let down by potential accountancy negligence by GT, and are now having their shares cancelled by the auditors before they have even done thier job in trying to sort the company out as a going concern.
AIM needs to be thoroughly reviewed and rules amended if it is to survve IMHO, as it is currently not fit for purpose. There should be rules in place to ensure that business owners cannot sell such a large percentage of thier share ownership as Costis did without enfored notfication, at say every 1% of holding. That at least wouldhave allerted shareholders to him exiting from the company with money, and effectively may have prevented us all being in a total; loss situation.
Thankfully, i didn't have as much in here as I had earlier in the year as I had sold a chunk just prior to the Greek vote in orde to do a property deal, but I have still lost 20k shares as it stands. A company not doiung as well as expected and the share[rice falling I could take, but the most alarming thing about Globo is the deception.
Seriously considering my investment strategy and may well consider giving any AIM companies a very wide berth, or only hold a small number as part of the speculative portion of my portfolio.
The administrators will have control of the subsidiaries by virtue of having control of the holding company which owns 100% of the subsidiaries;the administrator is basically acting in place of the previous holding company board;normally administrators avoid if possible putting operating companies into admin as it saves money and allows them more easily to be sold as going concerns for a better price.
The only thing they need to ensure is that the operating companies remain solvent & as they will be working in concert with Globo's lender(Barclays) & main creditor this should not present a problem .
The recent acquisition didn't go ahead. Costis said the deal would be funded out of cash resources that obviously weren't there...
If the administrators can't get control of the subsidiaries - understandably difficult given the numerous different jurisdictions - then it makes a bit of a mockery of the whole process really.
Previous acquisitions no doubt had earn-out and other contractual considerations that would probably allow them to now take back their companies and software so unsure what might be available to sell uncluttered from prior claim.
Still, as long as the Administrators get a decent fee, payable ahead of everyone, then why should they care...
Did Globo not acquire a Company not so long ago. We were not told the
name of the company nor, I don't think, the payment for that Company.
Who owned that Company, who bagged the payment....
Or am I wrong in thinking that every aspect here stinks to high heaven?
It is normal for some or all of the executive directors of the holding company to also sit on the boards of subsidiary companies;in addition the board of subsidiary companies may include other people,usually senior management of that company.While it is probable that Costis and other former exec directors also sat on the boards of subsidiaries;I presume they have also resigned these posts.
Cash balances can be held within subsidiary companies but it is normal for the holding company banker,where it is also a lender to the group,or indeed any other secured lender, to have cross guarantees between subsidiaries and holding company to secure its debt.In the case of Globo Barclays appears to have about 13 secured charges between holding company & subsidiaries.(These can be seen free of charge on-line on Globo's docs at Companies House).
I imagine Globo's administrator has looked at group debts,including secured debts and also at cash and the probable value of other assets and rapidly drawn the conclusion that the former considerably exceed the later.Remember shareholders are last in line for payment and are only due any surplus after all other parties have been paid in full.
There is now quite a litany of delisted or suspended AIM companies whose cash balance has turned out to be fantasy: Globo, Naibu, Camkids are three I can name off the top of my head so I imagine there are more.
I have no idea if the issue is the accountants. One of them - Camkids, I think - boasted that the non execs had travelled to China to view bank statements verifying cash deposits as claimed.
This has not helped shareholders even remotely now the manure has hit the fan.
Would the large amounts of cash that were on the balance sheet be
held in the subsidiaries..... Would ostis not have any connections with
Do I smell a stink or do I smell roses?
Shareholders have shares in the plc. It is the plc holding company that is in administration. The plc holds shares in various subsidiaries that are mainly still running and they belong to the plc. In theory therefore the subsidiaries indirectly belong to shareholders.
But the piece of the jigsaw that's missing is the debt. The debt is at the plc level and one of the first priorities of the administrator will be to repay creditors by running the business as a going concern so as to realise maximum value.
The RNS tells you that the administrator does not expect the banks to be repaid in full, hence there will be no value left for shareholders.
I am ata complete loss as to understand how the so called administrators can within only a few day of being appointed, decide that there will be nothing for shareholders and apply for de-listing, effectively wiping us out as any kind of creditor to the company.
I understood it was an administrators role to seek means of the company continuing or failing that, get the value out of the company and distriubute accordingly to the various classes of creditors (thier fees being No.1 creditor of course!!), before any closing of any class of share etc.?!!
Clearly, the scale of deception here is huge for the supposed cash at bank etc. and assets to suddenly be worth nothing, and the level of debt to be much higher than the assets.!! Otherwise, we are all being turned over as well by the Auditors.
Never did trust accountants! Trust them even less now.
According to today's RNS, Globo's subsidiaries are not affected by all this.
Now, who do those subsidiaries belong to? I would have thought Globo to
be the owner of its subsidiaries, and thus all of the value in the subsidiaries
to belong to Globo;'s shareholders, i.e. not the respective directors of
the subsidiaries? And... who are the directors of the subsidiaries.....
Am I entirely wrong here?
Someone should send that Reuters article to Cameron and Osborne and a few others and ask them for their comments. A complete systemic failure. 100% - except of the market's nose at the end. Had market conditions been better? Who knows? What would have happened if a big acquisition been made? We don't know the scale of the illusion so can only speculate.
Bill Cash MP fought for years to get a bill read in the House on more effective shareholder representation on the boards of listed companies but was consistently denied. In latter years, Frank Field was said to have taken up the challenge when Cash ran out of steam or became otherwise occupied (perhaps turning his attention to his expenses?).
I wrote a long and constructive letter to Frank Field that wasn't even acknowledged. Says it all.
The Treasury makes more by regulators not interfering.
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