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By Nigel Somerville, the Deputy Sheriff of AIM | Monday 17 July 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.
AIM-China investment company Grand Group (GIPO) has announced the departure of its Chairman. It may not formally be one of our Filthy Forty, but it sure is doing its best to make the grade.
To remind you, Grand only joined the Casino in January 2015 at 80p. It had two investments and last June was suspended for producing no accounts until December. The excuse was that the investee companies own accounts were lacking audit sign-off in terms of opinions over the accounts and thus the parent accounts couldn’t get an opinion. The solution was to sell the underlying businesses.
This year’s accounts came out on time and the company reported that as at April £25 million has come in from the sales. But unfortunately there was a bit of a deadline coming up in the form of 30 September to comply with its investing policy (or complete a reverse takeover) or face another suspension from AIM.
By this time the shares were around 14p or so, valuing the company at £4.8 million for a cash shell with £25 million of cash in the bank. Quite a comedown compared to the 80p listing price, surely it was a buy. Or was it too good to be true?
But last week saw another big sell-off early in the week, followed late on Thursday with an announcement that it planned to put forward AGM resolutions to widen its investment mandate, and that contrary to speculation it would not be returning the funds to shareholders. Worse still, noting the AIM Rule 15 conditions that suspension looms and that the company would be delisted in the absence of a suitable deal six months later, the board claimed that it was considering a listing on another market.
Sadly, for keen watchers of the filthy forty, other companies have also considered listing elsewhere but nothing came of it. You’ll pardon the cynicism for wondering whether the apparent cash pile is just going to disappear. If it ever existed.
Now, to top it all off, the Chairman – whose comments in the full year 2016 accounts referred to the clean slate, £25 million of cash to spend and with its listing restored (for now), an improved position to make investments – has walked the plank.
At time of writing the shares are off again to just 5.375p. With a spread a wide as a bus (5p – 5.75p) it values the company at about £1.8 million – a discount to cash of some 92%.
The story here simply looks awful to my tiny little mind, too close to the China Fraud playbook. If I were a holder I’d de looking for the exit gate pronto.
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