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Milestone Group Plc – minimal prospects of collecting failed placing monies: the fat lady is warming up

By Tom Winnifrith, The Sheriff of AIM | Wednesday 1 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.

In its final results yesterday AIM listed lifestyle company Milestone (MSG) commented about the semi failed October 2016 placing:

As announced on 9 November 2016, a further £1,250,000 of cash was due to have been received for these shares from the Company's placee and this amount remains outstanding. The Company is working with the subscriber to find a solution.”

So will the financial service powerhouse behind the placing be able to cough up and take the loss on the chin. Err sadly not because the broker in question is a tiny firm namely City of London Markets Limited.

As disclosed in its latest accounts for the year ended 30 September 2016, it only just scrapes past its own regulatory capital requirement of Euro 50,000 with shareholders’ equity of £41,401. The company reported a smaller loss of £10,554 but remains on life support from its 100% shareholder continuing to accept more shares.
Interestingly City of London Markets doesn’t disclose any contingent liability note in its accounts in respect of the failed placing so maybe Milestone is still the polite conversation phase of discussions.

Perhaps Milestone might get lucky and find that City of London Markets has some Errors and Omissions coverage and perhaps it can go after this insurance otherwise the chances of recovery must lie somewhere between Bob Hope and no hope and Bob is no longer with us.

And as Cynical pointed out yesterday HERE, without that cash, Milestone is utterly screwed. At any price - SELL

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