By Tom Winnifrith, The Sheriff of AIM | Thursday 16 February 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
I have flagged up many times before that the Hubio (formerly known as the fraud Himex) and Ingenie operations in Canada faced serious issues because they had simply failed to deliver product as promised to major customers such as Aviva. Now it is out in the open with writs flying both ways. Oh dear...this is not going to end well for Watchstone (WTG), the legacy of fraudster Rob Terry strikes again.
I sense Watchstone already has new concerns following the news out of Slater & Gordon (SGH) in Oz overnight as discussed in a bonus bearcast HERE. But this is also bad news.
Essentially, Watchstone's Canadian subsidiary Hubio Solutions Inc has filed a claim against Aviva for unpiad amounts on a contract announced by Mr Robert Simon Terry on 21 October 2014 as part of the pre-mega bailout placing ramp. It does so becuase Aviva has filed claims against Hubio and Ingenie (Canada) even though - Watchstone claims - Ingenie was not party to Terry's agreement for a patent failure to deliver as promised.
Watchstone says that it "is confident in the strength of the Group's case and will defend any claim robustly." I can never remember whether it was Christine Keeler or Mandy Rice Davies who said it but, to slightly misquote: "It would say that wouldn't it".
Watchstone adds: "The Group is disappointed that having worked closely with Aviva Canada for many years, Aviva Canada has chosen not to fulfil its obligations under the Agreement or make the payments due as invoiced." Aviva seems to think that a failure to deliver anything means it need not pay and indeed it can claim against Watchstone.
Is your money on Watchstone on the basis of a deal signed by fraudster Rob Terry or one of the world's largest insurance groups? Yup, I too go with the latter.
All of this is terrible news for Watchstone. I put it to you that legal fees will rack up quickly. Perhaps it might get a cute deal for Slater & Gordon to represent it? That will eat into Watchstone's cash reserves and meanwhile if/when it loses, that is another hole in the bank balance appearing. Meanwhile if/when it loses that also suggests that the goodwill still attributed to Hubio - which do not forget was Himex, the biggest fraud of the Terry era and a totally worthless POS - will need to be written off. That Watchstone still insists that there is value in Hubio is a testament to how delusional its new board remains.
Assuming that Watchstone gets not a cent out of Oz, an increasingly good bet, then the shares trade at a premium to a rapidly depleting cash pile (net of other current assets/liabilities). That is not justified and at 183.5p the stock is a sell.
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