Silverdell updates the market, remains suspended

The latest Silverdell update to the market may sound like better news for shareholders with confirmation of banking facilities, but the shares remain suspended.

When the suspension is lifted it is most likely to include a fundraising at some point and at least one knowledgeable smaller company analyst has guessed that the share price upon lifting of the suspension could well be in the 4p-6p range, around 50-60% lower than the suspended price.

http://www.stockopedia.co.uk/content/small-cap-value-report-14-aug-sid-qpp-mur-pgb-you-eck-76200/

4p-6p is a lot better than nothing, but it does mean a hefty dilution of the share price for share holders. Despite all this there has been no mention from the company as to who is going to accept blame for what looks like a costly mistake that put part of the company into administration. You might expect that heads would roll. I mean, it is not unreasonable to ask whether the management really is good enough if no one wants to take responsibility for what happened. Who would want to invest in such a company?

Silverdell buys a bit of itself to save itself.

Silverdell made a further announcement today following on from its statement of why its shares were suspended on AIM a few weeks ago.

Silverdell announces that on 23 July 2013 its subsidiary, Euro Dismantling Services Ltd ("EDS") acquired the business and certain assets of Kitsons Environmental Europe Limited (In Administration) (the "Kitsons Business"), thereby keeping the Kitsons Business within the Group. The Kitsons Business will operate as a separate division of EDS, with the objective of maximising cost efficiencies between the existing EDS division and the Kitsons Business and to facilitate a seamless transfer of ongoing customer contracts and relationships to EDS.

The consideration for the acquisition is payable in cash on a deferred basis and is capped at £8 million (subject to downward adjustment (if applicable) following the completion of a valuation of the Kitsons Business by an independent valuer). The deferred consideration is intended to be satisfied from the Group's banking facilities at that time.

http://www.digitallook.com/news/rns/21047864-188986/SID-Acquisition_html?ac=,&username=,

Looks like what has turned out to be a fairly costly mistake has been made somewhere along the line. The company is getting support from its bankers, but it could end up looking to raise more cash at some stage. Shareholders might be wondering what the share price will look like when the suspension is finally lifted, but I suppose they can be thankful that they will still have something rather than nothing which many might have feared a couple of weeks ago.

Silverdell, finally a statement

It's been a couple of weeks since Silverdell announced their suspension of dealings on AIM, finally this morning a company statement has been issued.

The Group announced on 2 July 2013 that it had requested a suspension of trading in Silverdell's shares pending clarification of the Group's financial position. This followed the appointment of administrators to Kitsons Environmental Europe Limited ("Kitsons"), one of the Group's principal trading subsidiaries.

The Board is pleased to confirm that discussions with the Group's bankers, HSBC, have reached a satisfactory outcome. HSBC has confirmed that it remains supportive of the business and will be providing additional short term facilities to the Group.

The Board also confirms that Kitsons is the only Group company which is in administration, and that all other Group companies continue to trade as normal. The Board is extremely grateful to the Group's employees, customers and suppliers for their patience and forbearance.

Further announcements will be issued in due course.

http://www.investegate.co.uk/silverdell-plc--sid-/rns/further-re-suspension-of-dealings/201307160700073973J/

This basically confirms the main rumour that the problem was with with a winding up order against Kitsons and it has clearly taken some time to negotiate with their bankers to continue to support the group. The group says that it is "extremely grateful to the Group's employees, customers and suppliers for their patience and forbearance", which is all very well, but perhaps they should have mentioned shareholders of the company as well who have been kept in the dark for a couple of weeks.

Next will be the lifting of the suspension and the market reaction to events. If there has to be a fund raising, a dilution of the shares, then expect the share price to be lower, perhaps significantly lower.

http://sevenpillarstrading.blogspot.co.uk/2013/07/silverdell-whats-going-on.html

Silverdell, the silence is deafening.

It's been over a week since the suspension of shares at AIM tiddler Silverdell, yet there has still been no statement from the company.

At the very least this is a poor show as investors in the company have been left in the dark as to what is going on. This has only served to add to rumour of what may or may not have happened.

The worst case scenario here is that the reason for the silence is because whatever the problem was that resulted in suspension is not that easy to clear up. Perhaps it is bigger than first thought? Who knows, but unfortunately the company silence doesn't help in the matter.

AIM shares in ISA'S, the dark side and buyer beware

It was perhaps ironic that after the announcement over the weekend that AIM shares would be allowed in tax free share ISA's from later this year, the market opened up Monday with a couple of its constituents under suspension.

Silverdell and Pursuit Dynamics had their listing suspended, the former has yet to release a statement as to why, while the latter did so yesterday. In the absence of any information there has been much speculation about what has happened to Silverdell. Time will tell, but while there may be celebration that AIM shares can finally be included in ISA's, it is important to understand that many of these companies are high risk and regulation is very light touch.

AIM is a market that has its critics, Tom Winnifrith being one of the most vocal. Here's what he has to say about the decision to allow AIM companies into ISA's.

The crap at the bottom of AIM which is loss making now and always will be cannot attract institutional funding for a good reason. The bottom 450 companies on AIM are just not investment grade material.

Most are resource stocks or investment companies or just plain joke companies. They create no real jobs in the UK and in most cases merely seem to exist to support the same band of directors (who rarely have big stakes in the firms) and to pay fat City advisors fees. They simply DO NOT create very many jobs in the UK. The firms that create most jobs are small private companies. Claims that AIM creates real jobs outside the boardroom and the Square Mile on a meaningful scale are simply false and were part of the spin that financial services companies & City financiers served up to push for this ISA change.

This change will create very few if any real new jobs. Whether it will assist Middle England is saving in a more prudent, careful and measured manner is also something about which I have grave doubts. But the jury is out on that for now.

Will a flood of ISA money revive the Cesspit? Of course not. There will not be a flood of money for the small cap end of the market. For it to recover AIM regulation needs to kick out the miscreants who lie to investors, restore trust in the market and finally to attract a few real companies that make things rather than just more and more cash shells, investment companies and third rate resource exploration plays. Will that happen? I see no signs of it.

http://www.shareprophets.com/views/892/aim-shares-in-isas-misguided-folly-driven-by-city-misinformation
(Registration to site needed to access articles)

Not all AIM companies are bad and things can go wrong at any of them, but anyone buying them needs to be aware that even after you have done your due diligence you might just get a bad one and sometimes you won't know it until it happens.

ShareSoc also exists to look after the interests of UK investors, associate membership is free.

http://www.sharesoc.org/membership.html

Silverdell, what's going on?

Being a self regulated market AIM can throw up potential nightmare stories for investors from time to time. At face value things can look good with a company, results look impressive, news flow from the company itself positive, but the share price is declining, an investor may wonder why or question whether there is something not quite right going on?

Other than market drift which can often hit smaller company shares in a big way, it's difficult to know sometimes why a share price of a company that may be on reasonable fundamentals is falling. It might be technical, sometimes there's a rumour which often the company will deny. Investors will often blame the market makers, the short sellers, bears of the company, but with AIM companies a bolt out of the blue can happen at any time it would seem. Shareholders are often the last to know.

One company I've been following for a while is Silverdell, in part because although the share price was falling, and other than a rumour that a cash call to aid further growth might be needed - denied by the company, it seemed to have a lot going for it. Then suddenly today its shareholders were presented with this.

Suspension of Dealings

Silverdell has requested a suspension of its shares from trading pending clarification of the Group's financial position.  Further announcements will be made as and when appropriate.

http://www.investegate.co.uk/silverdell-plc--sid-/rns/suspension-of-dealings/201307020730033712I/

Silverdell investors will have woken up to this, I suspect largely unexpected news and wondered to themselves what is going on? After all, the company itself was very bullish if it's own recent statements are anything to go by.

This is what Silverdel's CEO Sean Nutley said in April.

‘We are targeting 15% year-on-year revenue growth over the next three years. The market only has us at 8%,’ he states. ‘At the 8% forecast growth rate, we can support that growth without going out for further funding from a bank or elsewhere. If we want to go to 15% growth, we will need additional financial support.’

http://www.sharesmagazine.co.uk/articles/silverdell-mulls-the-price-of-growth

Then in June.

Today Nutley tells me that Silverdell no longer needs additional working capital to hit the 15% target. ‘We’ve been able to get the right mix of business and right payment profile to meet our strategic targets,’ he states. Additional money is only needed if the group finds a way to ‘supercharge’ growth beyond the 15% rate, adds the CEO.

http://www.sharesmagazine.co.uk/news/silverdells-communication-challenge

So, have they suspended because they want more funding to "supercharge" at 15%+?  Most unlikely. Shares tend to be suspended for far more serious reasons, although you would be forgiven for wondering where the serious reason is in this case, but there just might be one.