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Rosslyn Data - moves goalposts with bailout placing to hide its abject failure

By Tom Winnifrith | Wednesday 26 April 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.

Floated at 33p by Lagos Securities, or Cenkos as it prefers to be known, on the back of a prospectus that forgot to mention critical damaging information, Rosslyn Data (RDT) has been a serial disappointer and was clearly set to run out of cash this year, despite numerous protestations from its discredited management that this was not the case. And so today, the oldest trick in the book - a bailout placing dressed up as an acquisition. The price of the bailout, just 4.5p.

Oddly the shares were spoofed up to 10p ten days or so by the usual horseshit sort of AIM antics. But then fell sharply. I asked a man who knew and was made an insider, a placing was underway, Lagos was targeting 5.5p. And so the fact that the offer is at just 4.5p - a 55% discount to the price when the dog and pony show started tells you what a dog this is and how no sane individual sees it as a value investment. But hey ho at this price £4.5 million has been raised and there is a £500,000 open offer so Lagos will bank £250,000 in commission. Coke & hookers all round.

Rosslyn has agreed to acquire Integritie (UK) Limited for a total initial consideration of £2.588 million with an earn-out of up to £750,000 based on revenue targets. Not profits targets you will note. Madness. We are assured that there are cross selling opportunities and synergies ( ie duplicated costs to be taken out). So if this is such a fffing good deal and Rosslyn insisted that it had enough cash to see it through to organic profitability why is it raising almost £2.5 million more than the acquisition price?

Could it be because Integritie is a total dog? The last accounts are for calendar 2015 and were finally filed in correct form on 16 March 2017. Net current assets went from £940,454 at the end of 2014 to MINUS £2,211, 499 as the company lost almost £2 million that year. maybe 2016 was less abject although Companies House shows that there are still charges against the assets.

Shares in Rosslyn have slumped to 5.25p mid. Do not take up the open offer. In fact, keep selling.

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