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InterQuest – return from suspension… but, with its management shysters, for how long?

By Steve Moore | Friday 13 October 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.

Writing on InterQuest (ITQ) previously last month, I stated shares suspended… but greater hope for shareholders – and the shares are currently back trading on AIM following the appointment of a nominated adviser and broker. However, there remains a question of for how long?

With the prior conduct of the executive management here and the expiry of the prior nominated adviser and broker contract of “which the company will not extend”, there were naturally fears of the management being sufficient shysters to just see the AIM admission cancelled via this latter manoeuvre. However, the company has now been “pleased to announce the appointment of Allenby Capital Limited as its nominated adviser and Peterhouse Corporate Finance Limited as its broker”.

With, following its offer, the attempted management buyout vehicle, Chisbridge, now having a 58.32% shareholding (though more than half of which was from the existing shareholdings of the Chisbridge team), there is also stated to be “a relationship agreement to ensure that the company is managed for the benefit of the shareholders independently of Chisbridge. The company is also seeking to appoint a further non-executive director, independent of Chisbridge, to its board”.

Hmmm, we’ll see – and confidence is not aided by it then stated “the executive directors, being Gary Ashworth, Chris Eldridge and David Bygrave, continue to believe that InterQuest would benefit from the cancellation of trading in its shares on AIM and re-registration as a private company and will continue to look for ways to achieve this”!

This is followed by “it should be noted that Chisbridge is free to acquire further shares in the market” and that “under AIM Rule 41 where an AIM company wishes to cancel admission of its securities from trading on AIM, it will require not less than 75 per cent of the votes cast by its shareholders to be in favour of approving the cancellation at a general meeting. Shareholders are reminded of the resolutions approved at the company's annual general meeting on 23 May”.

The latter seems threatingly vague – perhaps pointing to the ability to, to an extent, allot securities, disapply pre-emption rights and buy-back shares. This all raises the questions are the shares only back trading currently as the level of complaints about the prior nominated adviser and broker situation forced the matter? And what other ways will the executive management now look to use to achieve stock market cancellation?

I currently continue to hold and to consider the shares materially undervalued on a fundamentals basis. However, I question what’s happening to the managing for the benefit of the shareholders independently of Chisbridge already? And it certainly now looks safer to be out of this.

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