By Tom Winnifrith, The Sheriff of AIM | Tuesday 12 July 2016
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.
Oh dear, this is the end for you my friend....Avanti Communications (AVN) has announced a "strategic review". In other words it has admitted that it s well and truly fecked. Shareholders should, whatever the weasel words of the RNS, prepare for wipeout. This is - as we pointed out in a 25 minute presentation at UK Investor Show, a zero. The statement is typical King of the Bombast David Williams horseshit.
On 7 July 2016, the Board of Avanti Communications Group plc announced its intention to engage in discussions with a number of potential investors to address its funding requirements.
Following that announcement, and in response to initial interest from potential acquirors, the Board is of the view that it should, in parallel to considering an equity raise, conduct a wider strategic review to explore additional opportunities including a corporate transaction such as a merger with or offer for the Group by a third party or a sale of the Group's businesses. The Board therefore intends to pursue all of these possible alternatives to ensure the best outcome for its shareholders. The commencement of a "formal sale process" in accordance with Note 2 on Rule 2.6 of The City Code on Takeovers and Mergers (the "Code"), provides the most appropriate framework under which such considerations can be made.
There is more horseshit in a short Avanti press release than there is at Aintree the day after the Grand National.
The yield on its bonds is now well over 20% and they have security over Avanti's assets. So who will put in new debt? Even the party with a screw loose that is considering this is demanding Avanti stump up cash with a new equity raise of a magnitude roughly equivalent to the market cap. Why on earth would anyone put in equity when this company is being investigated by the FRC for dodgy accounts, misses every target going, is a cash guzzler and is obviously "owned" by the bond holders. It is just horseshit.
So might someone bid? If they do it will be for the bonds which - as Avanti is bound to breach a covenant - if indeed it has not already - will give ownership of the assets. I bet you bond holders would bit off their own willies if that gave them the chance to sell to a "bidder" even at a steep discount. The idea that the equity has any value is sheer fantasy.
I am, of course a nice guy and so not only do I have a song for David Williams but I will do his strategic review for him so saving vast fees which he will be paying out to wanker crony capitalist consultants. David you can buy me lunch, the review conclusions are:
1. Fire David Williams as CEO as he is not worth $1 million a year including bonuses for failure but excluding mammoth expenses
2. Fire the PR fucktards charging £10,000 a month for lying.
3. Tell the bond holders that if they bid 0.5p per share te board will recommend acceptance and they can then fund Avanti and save the company.
4. Issue an RNS saying Tom Winnifrith's bear analysis of the past three years has been spot, his investigative skills excellent and that he is a fecking genius who deserves an MBE ( not that he'd accept it), while apologising for the fascist bully boy lawyers letters your company has sent over the years.
Er that is it.
The shares are a sell at 28p - target price 0p.
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