Synthomer (SYNT) again

[gnawsome]

I did ask previously but received no replies - I thought that maybe I had been a 'bit previous'.

Now the cosolidation has happened - 1 for 20 - the share price is c 35p and the next part is a rights offer of 6 for 1 at £1.97. I calclate that a holding of 20000 would reduce to 1000 and taking up the offer would mean a holding then of 7000 shares but I can't see how to make a decision wrt taking up the offer.
With a share price drop of 96% it does have similarities with the classic scams whereby one is asked for further monies to release some documents.
On the other hand, perhaps the money is needed to escape some fatal event and move on to the 'sunny uplands'.

I would have expected that some hereabouts would be holders and needing to make similar decisions.
Suggestions as to how such decisions are being made would be gratefully received.

[tjh290633]

Have you read https://www.investegate.co.uk/announcem ... ue/7740384 which will give you the reasons for the rights issue?

That's starting point.

TJH

[gnawsome]

Have you read https://www.investegate.co.uk/announcem ... ue/7740384 which will give you the reasons for the rights issue?

That's starting point.

TJH

Thank you TJH.
I did as you suggested and read the announcement. Large information to a small brain but I was able to understand that the rights would (likely) have a value.
So it is my decision whether/or not to subscribe for the shares.
The funding is not a problem, just if it is a good investment at this time - noting the loss of divs together with the capital outlay
Trying to ignore all the repeated flamboyant, exagerated, self congratulatory nonsense it seems to be the share price is not a reflection of worth and is a level of risk I can justify as 'investing for my old age'

[sss555sss]

In my opinion, this company is garbage. In my view, they just went bankrupt in all but name. In my book, when the share price is down > 90% and the company issues shares at a fraction of the current price, I translate this to mean that it is this or bankruptcy. As far as investors go, losing 96% isn't very different from losing 100% so I treat the current situation as the company having gone bankrupt. My personal view is that they've put themselves in a very tough situation and even if they have the skill (and there's a big question mark here) they definitely do not have a conducive environment to get out of it. Unlike others I do not blame them for not seeing that rates can go from 0 to 5% within 18 months. However, I believe it was very stupid to straddle the company with so much debt in uncertain times. In any case, in 2018 the Fed had started raising rates (I believe they went to 2.5%). It wasn't a surprise that rates would be up by 2023. What was a surprise was COVID. So I do blame them that despite all of this, they thought taking on so much debt is wise. My view is that they played Russian roulette with the company, which I'm sure is fun especially if you're also paid well to do it and your head isn't in front of the gun. If in the unlikely event rates stayed low for another decade, they would have done well. If not, oh well, CEO just moves companies and investors take the hit. Ultimately, SYNT is looking more and more like one of the chaps who's been swimming naked...now that the tide is going out. It looks to me that in the UK, most swim naked.

Of course, the above is purely opinion based and I does not mean I will or will not buy, sell or hold any shares in the company.

[sss555sss]

COVID, a random event, resulted in large revenue and profit increases for SYNT. In 2021 they paid out 17.3p and in 2022 they paid out 21.3p in dividends. This was huge increase on their historic dividend payout - they just distributed the cash to investors. They were planning to pay out a further dividend in Sept 2022 and maintained that they will pay it out even after the ex-div date and only cancelled it very shortly before the payment date. This strikes me as either stupidity or dishonesty. Note that the dividend of 21.3p was up almost 250% relative to the dividend in 2021.

Anyway, in 2022, they paid out in dividends almost as much per share as the current share price. The dividend of 21.3p was paid in July 2022 a time when we had a war going on and a time in which for months a lot of economists and bankers had been calling on central banks to raise interest rates and central banks had indeed started raising interest rates fast. Furthermore, interest rates had started going up well before COVID so it wasn't a shocker that rates will be going up in the future and that the low rate era is over. The company didn't think to either lock in long term borrowing at current prices and/or to use the extra cash from COVID to reduce debt or to keep the cash as a cushion during this period of uncertainty given that they have a relatively large debt pile. To me this comes across as stupidity, frivolity and very likely not looking after the interests of investors.

You might think that "What's the problem - they handed money to investors and now they are just asking for some money back.". Well, given the short time between these events, this comes across as shortsighted and a huge mistake. It is very inefficient - all this money going back and forth means government gets a cut (tax on dividends) and banks take a cut (fees for capital raise).

When I buy companies I need to be happy with at least the following. The first is obvious - the price. The second, is the management. It is very easy to sleep at night with a company whose share price is down when I trust management is capable and looking after shareholders. It is not easy to sleep at night if you don't trust management, even if the share price is up double or triple digits. So without management you can trust, there's no point owning the company, irrespective of the price. I personally do not have faith in the management at SYNT given their actions and where they've driven the company. This is a personal view.

The above is purely my opinion and is not necessarily accurate or true - I might have misjudged, miscalculated, misquoted, misstated. It also does not mean that I am or that I'm not buying or selling shares in the company and/or that I have or do not have a position in the company - I could be doing any of these.