The Lemon Fool

The Talenhouse saga continues.

Here is a quote from a press release made a week ago:-
"The board of directors of the Company is aware that the capital restructuring measures are extremely drastic, but sees them as the only way to preserve the possibility that the Company can continue as going concern. Certain previous commitments made by other investors, some of which also having been the subject of announcements by the Company, can likely not be implemented."

Publication of the 2022 annual report has been delayed while the company tries to get meaningful figures.
It appears that as part of the restructuring Talenthouse has a new investor, Garage Italia Finance Sarl, Luxembourg, who has rights that would allow it to have a 55% voting stake. (source press release of 21.05.2023)

It's getting worse, but we were probably expecting that! I've just noticed the following announcement from a couple of weeks ago:-

"(Baar / Switzerland) The auditors of Talenthouse AG ("Talenthouse" or "Company") have informed the Company that they have notified the competent court of an obvious over-indebtedness of the Company as present in their view (Art. 728c para. 3 Code of Obligations).
The immediate reason was that the investor referred to in the notifications of 14 May and 21 May 2023 did not provide the promised short-term liquidity required to initiate further restructuring measures (and thus, among other things, the planned conversions of debt into equity to strengthen the balance sheet).
The Company continues to work on a definitive solution to restructure Talenthouse and its subsidiaries, and is in contact with major shareholders, lenders and the aforementioned investor to that end.
Following the notification of the auditors mentioned above, the board of the Company will be invited by the competent court to comment on the matter. The objective of Talenthouse is to submit a solution to the court by which the bankruptcy of the Company can be avoided and Talenthouse and its subsidiaries can be maintained to the extent appropriate. The Company will continue to inform the public."

My understanding is that unless they pull a rabbit out of the hat, our debt stays as debt when they go into bankruptcy and there would be few, if any, assets to pay off the debt.

Kidman wrote:It's getting worse, but we were probably expecting that!

My understanding is that unless they pull a rabbit out of the hat, our debt stays as debt when they go into bankruptcy and there would be few, if any, assets to pay off the debt.

Many thanks for the update. I had already marked down the remaining value to one p per Chrysalis share - I think zero is now more appropriate.

On the assumption that there will be no further Chrysalis disposal payments, I have calculated the XIRR from a market purchase in February 2013 to the final disposal payment in September 2022. I have included all dividends, and a tax rebate from an enhanced buy back in April 2013. The result is 16.8%. If I had not taken part in the buy-back, and had received no tax rebates, then the result would have been 7.6%
I think I have included all the appropriate data - but if anyone gets different figures - please let me know

Hi Scotia

I bought on 1st February 2013 and followed the same path, enjoying a very nice effective tax rate of 42.6% on the EBB and have an XIRR on 20.5%. My cost per share (including the certification fee) was 59.556p.

Similarly, I have a higher figure in the absence of the EBB, removing the tax benefit and grossing up for shares no longer surrendered, which comes out at 11.1%

naflod

naflod wrote:Hi Scotia

I bought on 1st February 2013 and followed the same path, enjoying a very nice effective tax rate of 42.6% on the EBB and have an XIRR on 20.5%. My cost per share (including the certification fee) was 59.556p.

Similarly, I have a higher figure in the absence of the EBB, removing the tax benefit and grossing up for shares no longer surrendered, which comes out at 11.1%

naflod

Ok - it looks like investors were pushing the price up when they realised what could be achieved in the Enhanced Buy Back. So the market purchase of Chrysalis shares from Fastrade on 6th February was at 70.28p including commission and duty. Hence your superior return . But I'm not complaining
-

I wonder if we’re likely to get any formal communication from the liquidator soon given that it’s six months since we last heard from them.

It certainly seems that the final hoped 5p has evaporated.

No more news from Talenthouse yet and the last post from Downing on their Chrysalis page is 17 May 2023.

An update two days ago:-

"Talenthouse AG ("Talenthouse" or "Company") has entered into a term sheet with investors. The term sheet provides for the provision of short-term liquidity in order to tackle the urgently required restructuring measures. First contributions have been firmly committed by the investors and are expected to be transferred to the Company within the next days.
The planned restructuring measures include, among others, the conversion of debt into equity in order to strengthen the balance sheet, the completion and audit of the financial statements for the past financial year in order to maintain the listing, and a request for a provisional moratorium in order to find a solution with the remaining creditors and to avoid bankruptcy proceedings."

No detail. Will they receive the money? Are our loans being converted into equity? I assume so. Will the remaining creditors play ball? Will they manage to get their 2022 accounts audited and published? Will they get their SIX (Swiss Stock Exchange) listing back?

They are in a desperate situation, here is the last paragraph:-
"Talenthouse AG asks all shareholders, creditors and other stakeholders to support the planned restructuring measures. Without such support the threat of bankruptcy is imminent, which would in the view of the Company be the worst-case scenario for all parties."

We live in hope!

Oh gosh. Thanks for the info.

Doesn’t sound very promising. If we end up holding equity then their value won’t be much I guess and it could take years to realise them in to cash.

Sounding a lot like a total writeoff to me sadly.

A small update. I noticed this afternoon that the Talenthouse website is off the air and that is still the case.
Not a good sign, but I can't find any news items to give any information as to the company status.

A quick search implies they’re not good at paying their bills on time…. Looks like that includes internet hosting!

Still no sign of the Talenthouse website and their stock (THAG) seems to have stopped trading on SIX at about half a rappen a share.

Trading had resumed on the 8th August after suspension on the 1st June. There is no announcement to say why there is now no trading.

The Talenhouse website came back a couple of weks ago and now we have a new announcement. I'm not sure what to make of it so here it is in full:-

"03.10.2023
PRESS RELEASE
Ad hoc Announcement pursuant to Art.53 LR
Confirmation of Target in Reverse Merger Transaction
PRESS RELEASE
(Baar / Switzerland) ATIS Advanced Technologies International Solution Holding S.à.r.l., Luxembourg ("ATIS"), has confirmed towards Talenthouse AG ("Talenthouse" or the "Company") today that it has acquired a 60% controlling stake in Dreamer Entertainment LLP, London („Dreamer"), and that such stake is the asset which ATIS shall contribute to Talenthouse against shares in the Company, in a transaction which may be referred to as "Reverse Merger" ("Transaction"). The Company informed about certain aspects of the Transaction already in its media release of 7 September 2023. The implementation of the Transaction remains subject to various conditions.
Before ATIS acquired the stake, Dreamer fully belonged to the Turkish Calinos group. The owners of the Calinos group keep a minority stake in Dreamer. Dreamer and its subsidiaries are active in the entertainment business. The business was founded in 1999, and was the first Turkish business to export Turkish series, movies and TV shows internationally. The business has over 200 employees and is one of the largest entertainment businesses in Turkey. The estimated value of the 60% stake in Dreamer indicated to Talenthouse exceeds CHF 500 Mio. The valuation will have to be confirmed by the Company and a licensed auditor when it comes to the planned contribution in kind."

I understand that this arragnement will significantly dilute existing Talenthouse shareholders but don't know whether the CYS loan has been converted to shares yet.

Kidman wrote:The Talenhouse website came back a couple of weks ago and now we have a new announcement.
I understand that this arragnement will significantly dilute existing Talenthouse shareholders but don't know whether the CYS loan has been converted to shares yet.

Thanks for the trouble you take trying to work out what has happened to the CYS loan. I fear its long gone

scotia wrote:Thanks for the trouble you take trying to work out what has happened to the CYS loan. I fear its long gone

I quite agree.
I had a look at the Companies House records for Dreamer Entertainment LLP, and am somewhat puzzled how a partnership with nothing but zeroes in its accounts is worth so much. It appears to have had three partners, a Turk who moved to Dominica three years ago and two British Virgin Island companies who left the partnership last week. Quite exotic but it doesn't give me any confidence. I suspect the story will roll on for months to give us some entertainment but no return!

It is almost 3 years since the liquidator was appointed. I think VCT reliefs expire on the 3 year anniversary of a liquidator appointment. What a shame CYS did not accept the same offer that Edge negotiated to guarantee a timely Coolabi cash exit.

Doesn't time fly - especally when one is waiting in hope for the last penny or two?

Three years ago I voted against the ex-directors who sold themsleves to the liquidators as well-paid advisors. No doubt they have done well out of this as-yet unconcluded liquidation. I recall that they got bonuses for early exits and it transpired that several exits were almost agreed before the liquidation started.

I suspect we are nearing the stage when the liquidators will run out of money if they don't receive the remaining Coolabi funds and I don't know what the position is then. I assume they will have to take a decision on the likelihood of any incoming money to make it worth their while carrying on. Talenthouse are due to release their latest financial reports by the end of this month and have had their delisting stayed for the moment but there is no sign of recapitalisation yet. Even if they do receive new capital, we don't know whether our loans are still loans or severely depressed stock!

from the downing website concerning chrysalis https://www.downing.co.uk/existing-investor/chrysalis-vct

Update 1 November 2023: The Manager is continuing to pursue options seeking to achieve some realisation of value from the Company’s final investment, being the vendor loan made in respect of the Coolabi disposal. There is still no firm news as to the quantum or timing of any such realisation although we are hopeful this will be resolved shortly.

Wishful thinking?

Another update from Talenthouse. Make of it what you will! I think the key phrase which affects CYS shareholders is "including by way of a debt-equity swap".

"(Baar / Switzerland) Talenthouse AG ("Talenthouse" or the "Company") convenes an Extraordinary General Meeting to be held on 6 December 2023 at 10am in Zurich. The invitation will be published in the Swiss Official Gazette of Commerce on 15 November 2023.
The first item on the agenda of the Extraordinary General Meeting concerns two crucial restructuring measures. The board of directors of the company believes that the key conditions for a successful restructuring will be met, if these measures can be implemented, and the listing of the company's shares maintained. The board of directors proposes specifically a reduction of the nominal value of the existing shares to CHF 0.01 and a simultaneous ordinary capital increase by a minimum of CHF 42,054,961.50 and a maximum of CHF 435,327,226.50 by issuing up to 43,532,722,650 fully paid-up registered shares with a nominal value of CHF 0.01 each. The nominal value reduction and simultaneous ordinary capital increase are intended to strengthen the company's equity base, including by way of a debt-equity swap. In addition, the capital increase serves the purpose to acquire a 60% membership share in Dreamer Entertainment LLP, London, United Kingdom ("Dreamer"), via a contribution in kind from ATIS Advanced Technologies International Solution Holding S.à.r.l., Luxembourg, Luxembourg ("ATIS"). The corresponding transaction has already been announced. The Company expects significant synergies between Dreamer and its existing entertainment business operated by the Coolabi Group, which ATIS agreed to keep within the Talenthouse group."