By Tom Winnifrith, The Sheriff of AIM | Saturday 17 October 2015
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.
Time and time again I have warned you that AIM listed Rightster (RSTR) was a wrongster, an accident waiting to run out of cash. An announcement on Friday must go up as another win for the Sheriff, it is five minutes to goodnight Charlie for shareholders.
On Friday morning Rightster announced:
Rightster Plc LSE AIM: RSTR), the digital video distribution and monetisation network, today announces that it has commenced a formal strategic review of the options open to the Company to maximise value for Rightster shareholders. The strategic review will be wide-ranging and the Rightster Board will consider all strategic options available to the Group including a strategic partnership, acquisition(s) to increase the scale of the Group, corporate divestitures, a sale of the Company or a new debt facility to continue to invest in the Company. Raine Advisors Limited ("Raine") will assist the Rightster Board in the strategic review. On 30 September 2015, the Company announced that it was exploring ways of seeking additional investment in the fourth quarter of 2015 to ensure it can continue to move towards cashflow breakeven and has sufficient working capital.
I have underlined the key words. To put it bluntly the balance sheet is fucked. As at June 30 there was £8.1 million cash left But £850,000 went out on September 1 as a deferred consideration, net trade payables as at June 30th were £2.3 million and there is a tax payment due in November of £3.6 million so let’s call that real net cash of £1.45 million. In H1 the company spunked £5 million to money heaven.
Now it is likely that the rate of cashburn has diminished but it is abundantly clear that Rightster is still burning cash and that it may not even be able to meet that November tax bill.
In the old days one did a “strategic review” to maximise value. These days it means “to save whatever value is possible at a company that is heading towards toast status.” At a 10.5p mid Rightster is now capitalised at £39 million. For a company that could go tits u within a month and which is loss making and burning cash that looks a tad on the generous side does it not?
Still a sell.
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