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Pebble Beach Systems – trading & strategy update, no offer considered to “reflect the value”. Hmmm…

By Steve Moore | Friday 1 December 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.

Previously writing on Pebble Beach Systems (PEB) I noted ‘Final Settlement of VCS Consideration’, so much for ‘substantially debt-free’! Today brings an Update on trading and strategic review announcement from the company…

This includes that “the group is expected to report FY17 continuing operations revenues slightly below FY16” and that it is “currently in discussion with xG Technology, who are looking to offset significant additional costs of completion and other VCS costs that xG Technology consider should not be borne by it under the original agreement. There is no likelihood of agreement between xG Technology and the group”.

Er, ok – what happens then? And what’s the bottom-line impact of “slightly below FY16” revenue? These are though not answered and I note also come with, after it “engaged with a number of interested parties… discussions did not result in an offer which was considered by the board to reflect the value of the group's operations”.

However, ‘needed’ to remain independent is bank support – discussions have “commenced” and “the board is confident that it will reach an agreement with its bank which will allow the business to continue as an independent entity”. Though, even if it does, last results showed a loss-making business with more than £11 million of net debt.

Additionally, it is further announced today that Chief Technology Officer and a founder of the group's continuing business, Ian Cockett has resigned and that continuing as an independent entity will see it needed to appoint a new executive team to the PLC board. The current position unsurprisingly sees the shares further lower and I presently continue to consider that this remains a certain bargepole stock.

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