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Quarto

Posted: January 17th, 2020, 11:43 am
by Bouleversee
As mentioned by Mr. Contrarian yesterday in his small cap sweeps, Quarto want to raise £13.9m @ 68p by open offer to reduce debt. I have held these for some years (I think I bought because John Lee held ;I don't know whether he still does) and I am now losing a fair bit on them, the price now being less than it was 10 yrs ago, and they don't seem to be paying a dividend. I hold them in certificated form and must confess I haven't been paying much attention to them. Do any other Lemons hold and if so will you be buying more? I'm not sure what the difference is between an open offer and a rights issue and I haven't studied the details as yet (am trying to get my tax return done) but I can't say I feel any motivation to buy more and fear it would be throwing good money after bad as has happened all too often. Any views appreciated.

Re: Quarto

Posted: January 17th, 2020, 12:46 pm
by PinkDalek
Bouleversee wrote:[I'm not sure what the difference is between an open offer and a rights issue and I haven't studied the details as yet ...


Paul Scott discussed Quarto Group Inc in yesterday's Small Cap Value Report, for those who can access:

https://app.stockopedia.com/content/small-cap-value-report-thu-16-jan-2020-rbg-macro-eds-webinar-call-pmp-qrt-jdg-head-bwng-kie-xar-548181

Short extract:

Today Quarto announces a rather interesting fundraising, in that it's just an open offer (no placing element). i.e. only existing shareholders are participating in the fundraising. This is excellent, as nobody can complain about being diluted. It's just like a rights issue, except that there's no facility to buy or sell entitlements to new shares. With an open offer, you either take up your entitlement, with the ability to apply for excess if you wish, or just let it lapse. Or partially take it up.

If he were a shareholder he wouldn't take up the Open Offer and would ditch for reasons he outlines. There weren't many comments by others.

You should receive the paperwork as described below:

Intention to launch an Open Offer
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/QRT/14385954.html

Open Offer to raise £13.9 million
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/QRT/14386117.html

Publication of Prospectus and Circular
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/QRT/14387628.html

Yes, they haven't been paying a dividend in recent years (if ever).

PD - not a holder

Re: Quarto

Posted: January 17th, 2020, 3:56 pm
by Bouleversee
Thanks, PD. I couldn't access the article but your extract suggests to me that the big players aren't interested and if nobody wants to underwrite it they are relying (without too much confidence) on poor mugs like me to cough up. I think I'll resist the temptation. They were actually paying a dividend up to June or July 2017 and I think there was a t/o offer around then but I don't remember what happened about that. I might also ditch and cut my losses for once. However, the deals shown on HL's website today are all buys (I suppose I should look at LSE) and although it's down a bit today, the s.p. is about 50% higher than at its low point last Spring, so I might sleep on it, which I am on the point of doing at the present moment.

Re: Quarto

Posted: January 17th, 2020, 4:04 pm
by PinkDalek
Bouleversee wrote:[I couldn't access the article but your extract suggests to me that the big players aren't interested ...


I haven't looked again but I think Paul said the opposite in that it is fully underwritten and the PIs were, in effect, being bailed out.

I'd guess maybe three/four sales so far disclosed today (one a negotiated trade) but I didn't look at the bid/offer yesterday nor today:

https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/US74772E1001GBGBXSSX3.html

Re: Quarto

Posted: January 17th, 2020, 4:16 pm
by Bouleversee
You are right, as usual. I could have sworn I'd read the reverse yesterday; must have been having a bad dream! Will wait for the official documents.

Re: Quarto

Posted: January 17th, 2020, 4:18 pm
by PinkDalek
Bouleversee wrote:You are right, as usual. I could have sworn I'd read the reverse yesterday; must have been having a bad dream! Will wait for the official documents.


I was amending my reply as you were submitting. I'm often wrong anyway.

Re: Quarto

Posted: January 17th, 2020, 4:46 pm
by james51
Lord Lee's interest amendments say:

Interest deleted 12/12/2019
Quarto Group Inc (international publishers) (interest ceased 29 November 2018)

Re: Quarto

Posted: January 17th, 2020, 4:53 pm
by PinkDalek
james51 wrote:Lord Lee's interest amendments say:

Interest deleted 12/12/2019
Quarto Group Inc (international publishers) (interest ceased 29 November 2018)


Source (which is of interest generally and should be provided) https://www.parliament.uk/mps-lords-and-offices/standards-and-financial-interests/house-of-lords-commissioner-for-standards-/register-of-lords-interests/lords-interests-amendments-/?letter=L

Re: Quarto

Posted: January 17th, 2020, 5:28 pm
by Bouleversee
Thanks both. He must have seen what was coming. I must type in that long address at some point and see what if anything we still have in common.

I have now checked my records and see that I bought on Jan. 18, 2006 at 201p; 68p to sell now. Not a good start to the year, added to Cobham and Carpetright. Thank goodness for Greggs.

Edit: I expect I can just click on the link provided, if only I can remember it's there. I have made a note of it in case I don't. :lol:

Re: Quarto

Posted: January 17th, 2020, 5:48 pm
by monabri
Rights Issues & Open Offer

https://www.fool.co.uk/investing-basics ... en-offers/

"A rights issue is a way for a quoted company to raise money. Rather than take on debt, a quoted company can instead ask its shareholders to dig into their pockets to provide extra capital." The " rights" have a value and can be bought/sold just like a share . .A shareholder can take up all, some or none of the rights on offer.


"An open offer operates in a very similar way to a rights issue. However, although you are entitled to buy more shares, you cannot sell on this entitlement like you can with a rights issue. Similarly, if you let an open offer lapse, you won’t receive any cash."

Re: Quarto

Posted: January 17th, 2020, 5:54 pm
by monabri
They did pay a divi once upon a time.

http://financials.morningstar.com/ratio ... region=GBR

It has a lot of debt and makes a low margin. The only way it can reduce debt is to go to its shareholders. This buys time but what are they going to do to improve margins going forward?

http://financials.morningstar.com/ratio ... region=GBR

Sponsor a CEOs pay check? No thanks.

Re: Quarto

Posted: January 17th, 2020, 7:10 pm
by WickedLester
Personally i'd be inclined to hang on and see if they can start generating cash. I'm not sure i'd take up my entitlement though.

Re: Quarto

Posted: January 17th, 2020, 7:48 pm
by Bouleversee
I'd still get diluted then, wouldn't I?

Re: Quarto

Posted: January 17th, 2020, 9:33 pm
by monabri
Bouleversee wrote:I'd still get diluted then, wouldn't I?


The announcement say they are issuing 20.4 million new shares ... at 68p per share. Hence there will be a dilution.

The text says

"proposes to raise £13.9 million (approximately $18.2 million) in gross proceeds (£12.8 million (approximately $16.7 million) net of expenses) by the issue of 20,444,550 New Common Shares at 68 pence per New Common Share by way of an Open Offer"

Noting

"The Open Offer will raise gross proceeds of £13,902,294 (approximately $18,212,005) and £12,752,294 (approximately $16,705,505) net of expenses."

Expenses of £1.2m .....The market cap is only £14.5m.

This sounds quite desperate.

"In addition, as reported in the 2018 Annual Report, another challenge facing the Group is the level of administrative expenses within the business. The Group's administrative costs for the six months ending 30 June 2019 were $9.8 million and for the year ending 31 December 2018 were $23.9 million."

I definitely would not spend any more money here. TBH - I would suggest sell and lick wounds. Just an opinion , DYOR.

Re: Quarto

Posted: January 17th, 2020, 11:23 pm
by Bouleversee
I'm inclined to agree with you, Mon. I couldn't quite follow Paul Scott's comment about dilution. I suppose that if all shareholders took up all their allocation, there wouldn't, but that's not likely to happen as I think the underwriters might be left with rather a lot. Maybe they know something they are not going to tell us, however, and that's what the want to happen.

Re: Quarto

Posted: January 18th, 2020, 12:06 am
by PinkDalek
monabri wrote:
Bouleversee wrote:I'd still get diluted then, wouldn't I?


The announcement say they are issuing 20.4 million new shares ... at 68p per share. Hence there will be a dilution. ...


Bouleversee wrote:I'm inclined to agree with you, Mon. I couldn't quite follow Paul Scott's comment about dilution. I suppose that if all shareholders took up all their allocation, there wouldn't ...


I didn't follow why Monabri said there will be a dilution based merely on the fact that they'll be issuing new (I prefer bold to in colour) shares. There's only a dilution if you don't take up the open offer, as you say. If it had been an institutional placing, where you couldn't participate, that would have been a dilution.

Perhaps we are at cross purposes and he's talking about the discount, to entice, down from about 75p to 68p.

I don't disagree with the rest of his post.

Re: Quarto

Posted: January 18th, 2020, 10:14 am
by monabri
PD, you're correct, as long as one buys the additional shares on offer, you are not "diluted"....but I personally wouldn't participate in the offer.

Re: Quarto

Posted: January 18th, 2020, 3:21 pm
by G37y
I sold mine in August 2017 Bouleversee when they stopped paying a dividend, I felt miffed at the time as they had already halved in price that year, looks like the fabled turn round has not yet happened. Your guess is as good as anyone elses as to their future prospects. Best of luck what ever you decide.

Re: Quarto

Posted: January 18th, 2020, 6:04 pm
by jackdaww
my notes show it looked interesting several years ago , and directors were buying.

in mid 2017 questions were being raised about accounting , and the large debt figures.

the profit warning soon followed , downhill ever since , now a very small company .

what good reason could there be to buy or hold this company now?

ive never held it , if i had it would have been dumped long ago.

i would certainly drop it now , and all others you have like it also .

take the losses before they go lower.

there are plenty of good IT's around to put any proceeds into ..