Pre 8 a.m. comments

Communications group Hasgrove (LON:HGV) looks an unusual situation. They seem to have sold off their largest subsidiary, and now have surplus cash of £12.5m as at 10 May 2013. They intend returning £10.25m of this cash to shareholders via a tender offer at 82p (the shares are currently 78p), and then De-List.

As the market cap is only £18m, this means shareholders should get over half their money out, but I don't suppose they'll be thrilled with the de-listing, and the shares are likely to fall today as a result. I believe companies should only ever de-List as a last resort, when there really are no other options. Otherwise they are breaking what I regard as an implied contract with shareholders - i.e. when we buy shares in a Listed company, we are doing so on the basis that we will in future always have the facility to trade those shares on the stock market. To remove that facility totally changes the situation. Most investors don't want to hold shares in private companies, and of course if you hold them via spread bets or CFDs then you are forced to close, as you cannot hold unlisted shares via those instruments.

 

The Quindell Portfolio (LON:QPP) saga continues with a clarification statement last night that raises as many questions as it answers. They have not provided a proper explanation of their derivatives contracts entered into, other than to play them down as not being material. But they do admit to engaging in an "equity swap" (whatever that is!) as part of a fund-raising last year. This appears to have involved guaranteeing the losses of a new investor, in order to get a Placing away.

This is clearly outrageous behaviour, and might even be illegal? You cannot secretly guarantee that a new investor cannot suffer any losses if the share price falls! Since to do so would be favouring one shareholder over others, something that is totally against at least the spirit of company law.

It just confirms my suspicions that this is a company with a really bad smell around it. Hence a total bargepole situation as far as I'm concerned. I would expect more nasties to come out of the woodwork here in due course.

 

Post 8 a.m.…

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