I’ve never wrote a piece on spread betting tiddler London Capital Group (LON: LCG) before but feel it’s time investors became aware of the tricky situation they’ve now gotten themselves into. CEO, Charles Henri-Sabet (double barrelled surname to boot) and his backers at GLIO are between the proverbial rock and a hard place regarding convertible loan stock they used as they attempted to gain control of the Company in 2014. Sabet has been a disaster for shareholders. LCG have cratered by over 75%.
LCG now propose raising approx £14m! See the RNS of the 21st July ( HERE) and don’t forget to have a good read of their last set of financials HERE An absolute litany of corporate greed.
The trashing of the stock price to 5p set against the Convertible Unsecured Loan Stock (CULS) conversion price of 25p served to put GLIO Holdings Ltd and Sabet in a tricky spot re gaining control of the company (over and above the Board control). The proposal to issue new stock will result in circa 65% & 85% of the enlarged share capital at a price of 5p per share being in their hands. This is nothing but in effect a de facto takeover of the Company yet another cash and grab for the boyos. Screwing current shareholders. Recent results reveal net book value adjusted for intangibles was £8.2m – nearly 10p per share. It is an absolute shocking derogation of duty for non executive directors to wave through a Concert Party who are forking out a miserly 5p And how in the name of God has this got past the FCA? The deal also sees them issue a further potential 7.096m shares to GLIO for the “underwriting “ of the ‘takeover’ (depending on the amount not taken up in the open offer) as well as a further 18.65m “interest”” shares on the CLN redemption. What this proves is total disregard for all stakeholders ,other than themselves!! How has this got approved?
There is no immediate need to raise capital and certainly not at such a piss poor price. The reasons (bullshit) being trotted out? Growing revenues and a commensurate increased capital base requirement. WELL IF THE ‘REVENUES’ ARE INCREASING WHY THE HELL DO YOU NEED TO RAISE CASH?
“Against this background, the Company believes that its Tier 1 capital ratios should be strengthened so that it is able to take advantage of its restructured platform in order to grow and improve its trading results.”
Running a business isn’t difficult, you don’t have to be a ‘Brain Surgeon’ to know that the best way would have been to wait until business has banked the ‘Growing Revenues’ ergo the share price rises and you can raise at a much higher price which is less dilutive. Common sense! The facts behind the capital raise just don’t stack stack up. It stinks. So what’s the reason/s? Maybe this? “Trading in the second quarter, however, has been noticeably weaker due to a lack of volatility and concerns about Brexit, reducing clients’ propensity to trade”. Corporate codswallop! The NED’s should hang their heads in shame. Change is needed here.
Sabet has no regard whatsoever for LGC SHAREHOLDERS the board is populated by yes men, lackeys! Genuine independent oversight does not exist. The board should resign. In the latter’s case, to simply put their name to what is a ‘take under’ at less than the current net book value is shameful. ‘Of course it’s par for the course’ with this board the recent admission that the LCG NED, Frank Chapman was UP TO HIS NECK in yet another ruinous company comes as no surprise. Mr Chapman was a non-executive director of ‘OF Holdings Limited’ (formerly Oxygen Finance Holdings Limited until 5 May 2016), when it was placed into administration on 25 February 2016. According to the joint adminstrator’s statement of affairs dated 11 March 2016, the company as at that date estimated a deficiency to creditors of approximately £342,000. The estimated total deficiency as regards members was approximately £352,000′ What a shambles but it is indicative of the wholesale disregard these fookers have for their own share-holders.
VOTE NO TO ALL RESOLUTIONS ON THE 6TH JULY.
Issuing stock below their nominal value requires court approval. The EGM is to be held on the 6th July 2015. The scumbags need 75% of the votes on the day in order for the resolutions to pass and the company to be gifted to Sabet and GLIO at a massive discount to book value. If these guys want LCG then they should be willing to pay a premium over net book value of 10p. 12p at the very least!
It’s up to you to kill off this scandalous EGM.
Vote ‘NO’ to all resolutions.
Viva!n
Dan
