By Tom Winnifrith, The Sheriff of AIM | Monday 27 March 2017
Disclosure: I own shares in one or more of the stocks mentioned. 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.
Ho ho ho. Even as it faces insolvency those wags at Advanced Oncotherapy (AVO) do so with a sense of humour as they try to spoof us all with news of an even more desperate financing which will keep the lights on until late June. Dr Michael Sinclair you should go on the stage. You really are a hoot.
The Bracknor death spiral is a disaster. The shares are so illiquid that it is proving impossible for Bracknor to convert its loan notes and dump the shares. In fact it has had to buy shares (spoooooooooooofed you again suckers!) in order to stop the share price collapsing as I noted HERE. Worse still the company has no cash whatsoever. Despite drawing down the first tranche of Bracknor death spiral ( £1.235 million net) and raising £10 million last fall Advanced has spunked the lot and so has no cash left and is burning at least £1 million a month. And so for his next trick, Dr Sinclair has announced....
That Advanced has signed a 12 month loan for £3 million with an option to draw down another £2 million over the next sixty days. The loan is repayable in a year and the provider (Blackfinch Limited) will get repaid in full in 12 months time. Or it can convert into Advanced shares at 100p. FFS the shares are 30.5p.
There is more chance of me shagging the entire Dallas Cowboys cheerleading squad by this time tomorrow than of the shares going anywhere near 100p. So that - and the issue of warrants at 150p - is just one great big fucking spoof to try to get more liquidity into the stock so that there can be more Bracknor death spiral funding.
As for repaying in full, Advanced is avin a giraffe. Right now cash is zero & you can bet the ranch that to avoid insolvency the company has not been paying its bills as quickly as suppliers might want. Cashburn excluding capex on Harley Street is at least £1 million a month but with capex and the clearance of unpaid bills, £5 million from Blackfinch will be gone by June/July. Then Advanced will need more money from Bracknor or anywhere just to keep going.
There is not a cat in hell's chance of Advanced generating any cashflows by spring 2018 and thus it cannot repay. So what security does the lender have on its 11% ( almost junk bond rate) loans?
"The loan is secured on the Company's lease for 141-143, Harley Street and on certain other equipment of the Company. Should the Company not meet its obligations under the Loan Agreement and after a four month period during which the lease is offered for sale, Michael Sinclair, Executive Chairman of the Company, has agreed with Blackfinch to buy back the lease at a value equivalent to the outstanding amount of the £3m loan plus accrued interest and expenses. Michael Sinclair has also undertaken to the Company that, should he be required to buy back the lease from Blackfinch he will offer to the then shareholders of the Company to participate in the buy back on the same terms as his participation pro rata for their shareholding in the Company."
Oh. So in other words the lender was not even prepared to loan monies on security over all of Advanced's assets. It was not sure that this would be enough to get even £3 million back. It effectively wanted a personal guarantee from Mike Sinclair. that is a sign of what a completely rotten covenant Advanced is these days, a company that has seen its entire order book disappear with its customers claiming that they had been massively misled on delivery timetables. They weren't the only ones.
The great spoof here is the pretence that Blackfinch might convert at 100p or value those 150p warrants. that is bollocks. That is just a spoof to try to get mug punters to buy the shares to get more Bracknor death spiral conversions away. With Bracknor sell to dump into any strenth on a massive scale and still having c800,000 shares to offload at any price this remains a stonking sell.
Dr Sinclair: Spooooooooooooooooooooooooooooooooooooooooooooooooooooooooooof
The shares are a stonking sell at 30.5p - the target remains unchanged at 0p.
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