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Servision admits that shareholders are fecked, another vindication for the Sheriff of AIM

By Tom Winnifrith, The Sheriff of AIM | Tuesday 13 March 2018

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.

With its shares suspended pending clarification, long time aggressive accounting, cash guzzling, AIM uber dog Servision (SEV) has updated those dumb enough to hold its shares, despite all the warnings here, about the slide into the abyss.

In order to make that slide orderly the company's shamed boss Gidon Tahan has appointed a lawyer on 12 March 2018 to seek from the Israeli Court protection for SerVision Limited - the main operating subsidiary of the PLC - from its creditors. Part of the petition is expected to include a commitment from Cascade VP, LLC, a substantial shareholder in the Company owning 10.0% of the issued share capital of the Company, and Ronnie Cohen to provide around US$0.5m of interim funding in the form of debt and/or equity to enable SerVision Limited to continue to operate during the period of creditor protection.

What old Gidon is trying to achieve is the sale of Servision Limited. But he fesses that if that is not achieved the whole shooting match goes tits up and it is a 100% wipeout for investors. If it is achieved there will be no value returned to the PLC and its only asset would be Servision UK Limited "to which the Board ascribes little value without ownership of the main operating subsidiary."

So that would leave the PLC with no assets or value, no cash and almost certainly some liabilities - that is to say monies owed and unpaid PLC bills. Gidon says that the PLC would become an AIM Cash shell ( except that it would have no cash only unpaid bills) and thus "the Company would need to raise sufficient funds to continue operating and to complete an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14 within 6 months of becoming an AIM Rule 15 Cash Shell. In the event that the Company does not complete a reverse takeover under AIM Rule 14 within six months of becoming an AIM Rule 15 Cash Shell, the Exchange would suspend trading in the Company's shares pursuant to AIM Rule 40."

But there may be a way out. We are told...

"The Directors are also currently in discussions with potential investors to invest new equity funds into the Company by way of a placing. Such an equity fundraising would require the approval of shareholders in a general meeting and would be conditional, inter alia, on: (i) SerVision Limited being divested; and; (ii) an acceptable arrangement with the Company's creditors (which currently total circa US$2.2 million). If no such discussions can be successfully concluded, then it is likely that the Company will need to be placed into the appropriate insolvency process."


So if those owed money agree to take a monster haircut and a debt for equity swap  and the Israeli operations are sold then there may be a placing to fund the cash shell. I put it to you that existing shareholders will be diluted to oblivion. And that is the best case scenario!

Those about to lose 100% or 99.9% of their cash - you were warned repeatedly by the Sheriff of AIM but of course you knew better did you not?

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