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InterQuest – trading warning, but the attempted robber barons admit “solid” longer term fundamentals

By Steve Moore | Friday 16 June 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.

A “Trading update” announcement from InterQuest (ITQ), a company subject to an attempted robber baron (Oops) management, buyout with a first closing date in less than a week. Hmmm.

The update states that the company “has been experiencing weaker trading in recent months, particularly in its core contractor market”, notes “one off costs” as it continues to restructure and that “whilst it is still early, the company recognises signs of potential challenges ahead in the political and trading environment resulting from BREXIT, the result of the UK election and the subsequent hung Parliament”. These see that;

“The company considers that a more prudent policy on dividend payments is necessary and has agreed that dividends will only be declared in circumstances where net debt levels are below twice EBITDA. This amended policy does not affect the dividend previously announced by the company on 14 March 2017 which will be paid on 16 June 2017 to shareholders on the register on 19 May 2017.”

Hmmm, short-term negativity right as the executive management team are trying to buy the company hey! However, the announcement also sees it admitted that “the executive management team and Independent Director concur that the company, whilst benefitting from solid sector fundamentals which underpin the business in the longer term”.

The overall picture has seen that “the Independent Director, who is being advised by Panmure Gordon, has concluded that he is unable to recommend the offer to InterQuest shareholders on the basis that it materially undervalues the company and its prospects”. I consider this the case on a number of bases, including that Panmure had derived a 100p target price for the shares before the attempted robber barons’ (Oops, did it again!) executive management’s 42p per share offer.

As such, I continue to hold and will certainly still be ignoring the offer.

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