By Cynical Bear | Wednesday 8 March 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 had given Mark Gustafson, CEO of Challenge Acquisitions (CHAL), a few days grace to see if he would do the decent thing and tell his shareholders what the hell is going on at the moment, but seems like he needs a bit of persuasion to come out with the six word RNS: “Um…sorry, it’s gone tits up!”
As I mentioned a week or so ago (HERE), Challenger had a secured convertible loan note falling due on 2 March in the sum of £500,000. That was last Thursday and there’s been radio silence from the company ever since.
I’m sorry to moan but this is unacceptable.
For the purposes of the this article, I am going to make the assumption that Mark didn’t pull £500,000 out of his rear end and actually pay the debt so will take it for granted that Challenger is actually in default – a risky assumption, I know.
If that assumption is correct, it is possible that the secured note holder has exercised its security over one of its three New York Wheel equity units or “magic beans” as I like to think of them.
There could quite possibly be cross-default clauses in the other convertible notes too so that the other lucky ones with security have also been handed one of the magic bean.
It is even possible that it accelerates the rights that Chiel Smits has over the magic bean pledged to him as part of the recent Starneth transaction.
For all the poor Challenger shareholders know, it could be that Challenger has had to give up all its New York Wheel assets and is merely left with a lot of unhappy unsecured convertible note holders banging at his door asking for their money back.
No-one really knows what’s going on and that’s the point.
Mark, as CEO of Challenger Acquisitions, you have an obligation to inform the market of price-sensitive information and some / any update on your negotiations with the note holders that is critical to the future of the company is way overdue by now, even if it to acknowledge the issue by way of RNS and say that you are working on it.
I appreciate that Challenger is on the Sub-Standard List and has no Nomad to enforce the rules. I also appreciate that you have less regulations to abide to; however, you still have to update the market of such critical price-sensitive matters in a timely manner.
It’s not a huge surprise to be honest.
When Challenger re-negotiated the Starneth payments last July, it took over a month to update the market and, more recently, it took over two weeks to inform the market of the Starneth disposal following the due date of payment to the Starneth vendors.
Nevertheless, that doesn’t make it right and the future of the company is in the balance right now. This has been a sorry tale from start to finish but do the decent thing now, Mark, and keep your bedraggled shareholders updated.
Unsurprisingly, the share price keeps dropping on pitiful liquidity and was 3.875p last time I looked – KEEP SELLING!
Never miss a story.
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