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The Worthington CVA - this is comedy genius

By Tom Winnifrith | Tuesday 18 October 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.

Prompted by our shock revelations yesterday Worthington (WRN) has been forced to put out a statement to explain why it itself is heading for a CVA. It really is comedy genius.

The company insists that discussions with bankrupt ( but not pro tem in administration) re a RTO continue even though Nuna is now delisted. The statement makes it clear that the UKLA is adamant that Worthington too will be delisted in due course. So those folks holding "golden tickets" (ShareProphets translation service: worthless confetti) will never be able to trade them again.

The company says that because it has been unable to complete its ludicrous and worthless acquisitions it is has been unable to address its gaping pension fund deficit. But at least the £3 million quid that Jerome lent to allow Craig Whyte to buy Rangers has now been returned. None the less the only way for poor retired mill workers who are supported by Jerome to get anything like the cash they are entitled too is for the scheme to enter the Pension Protection Fund so that existing pensioners will be paid in full, and deferred pensioners (i.e. those yet to retire) will receive 90% of their pension entitlements. In order for the Pension Fund to qualify to enter the Pension Protection Fund, it is necessary for Worthington to go through a qualifying event.

Hence we are told that: the Board of Directors have therefore decided to propose terms for a Company Voluntary Arrangement ("CVA") with all creditors; the principal terms of which are envisaged to be as follows:

· 50% of the proceeds, after legal costs, of any successful litigation that the Company, or its subsidiaries, has against various third parties will be distributed to the creditors of Worthington up to the amount of their full verified claim.

· 10% of any pre-tax profits that the Company makes, following the successful completion of its acquisitions (before or after any change of control of Worthington), will be distributed to creditors until such time as creditors receive full payment of their verified claim. Thus, 90% of the after-tax profits will be retained for the benefit of shareholders in the enlarged Company.

In order for the CVA to be implemented, 75% by value of the creditors voting in the proposed CVA must vote in favour of the CVA, together with shareholders representing 50.01% of the votes cast at the general meeting to approve the CVA.


The main creditors are of course a stack of companies linked to all the usual villains here: Aiden Earley, his brother Wulstan, the clown Doug Ware and Richard Spurway.

Normally shareholders get monumentally screwed in a CVA and Creditors take a mega haircut. Heck why should creditors (who don't have equity upside) take all the pain? But here we are being told that this is exactly what will happen. The idea that a share of future profits from joke businesses are worth anything at all is absurd.

Of course the fools who own this stock will vote through the scheme as will the creditors. That at least sorts out Jerome but it leaves a joke company with no cash, no assets worth anything, run by hoods, no share listing and no accounts since the year to September 30th 2013.

What could possibly go wrong?

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