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Starvault CEO explains his planned reduction in % ownership
Slapshot1188
Member LegendaryPosts: 17,717
I did not sell any current shares nor have any intention to do so.
We are doing a "företrädesemission" which means all current stock owners in SV has the rights to remain on their current ownership by buying stocks based on their current owner percent. If they want to pass to protect their current ownership they can sell that right via the stock market. As I have over 60% ownership Im putting most funds into the company if I am to buy my rights. (just like our previous emission) Which you can understand is a huge amount of money for one person. We have other interested people/companies that are interested in these shares which mean we will fill the emission without any worries. It's not common that one person owns that much in a listed public stock company, so its not a bad thing to spread the ownership a bit. I will still be in control of the company with my shares
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http://www.mortalonline.com/forums/60283-star-vault-annual-general-meeting-report-2.html#post1123527
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Hmm... Economics was never my strong point. Anyone able to explain what's happening here? I'm assuming henrik is saying that he is passing some of his shares while retaining control of the company but that's about all I get.
I did not read he is reducing his shares. In fact he says he is keeping 60% ownership. However it looks like there's going to be a possible share split option, that allows those who have shares to put them up for public use.
Not shure even I was confused by this article.
Well what they are doing is issuing additional stock in order to raise money. Each stockholder is allowed to purchse the new shares at a cost of around 5 or 6 cents US per share. The amount you can buy is based on the amount of stock you own. From what I read it seems like Henrick is not purchasing any of the new shares.. which will mean his % ownership goes down. It's hard to understand what he writes sometimes as English is not his native language.
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It is a rights offering. http://www.investopedia.com/terms/r/rightsoffering.asp
Basically, if you own shares you receive a certain amount of "rights' that allows you to purcahse more shares from the company at a discount. If you don't want the shares, you can sell the rights on the exahnge to someone who then can purcahse the shares.
Thanx for that small link,but i am still up in the air a bit.I understand they are adding additional stock,but as i remember form previous reading,they also have various levels or types of stock.Maybe someone can further explain it.
I don't see how they can simply add more stock and dilute the value of present owners stocks,it almost sounds illegal,but of course i don't fully understand this move or stocks.Explain please??I guess the value can actually go up with new investment,but my math tells me more stocks means less value does it not?
Never forget 3 mile Island and never trust a government official or company spokesman.
He is diluting the share value for all the existing investors, himself included. However, it doesn't affect him as much as it does anybody else, since he owns such a big portion of the shares.
Smaller investors who owned say, 2%, now may own 1%, or .5% of the company. Either way, the share value is going to plummet after expanding the share count, especially when the game isn't even turning a profit. The stock market for this game is kind of meaningless anyway, it's on a "special" exchange just for companies like SV, to get initial funding. This is not the Sweden official stock market.
It doesnt dillute your share value. The rights are distributed to shareholders. So, for example, lets pretend
Stock value now = $1.00
One right gives you the option to purchase one share of stock for $.50.
Each shareholder received one right for each share.
The entire company has 200 shares outstanding owned equally by A and B.
Because it has 200 shares at $1.00 it is worth $200 today.
A Shareholder
A receives 100 rights. Because each right allows you to buy a share for half of the current trading price, these rights are worth $50.
A exercises his rights and pays the company $50 for 100 shares.
B Shareholder
B receives 100 rights. B decides to sell the rights instead of keeping them. B sells the rights to C for $25 (the reason it is 25 is, see below). B has 100 shares and $25.
C shareholder
C pays the company $50 for 100 shares of stock . The company is now worth $300 with 400 shares outstanding. Each share is thus worth $0.75.
A ends up with 200 shares at .75 = $150 minus his $50 additional investment. So he has $100, same as to start.
B ends up with 100 shares at .75 = 75 plus $25 = $100 same as to start
C ends up with $75 in stock minus $25 to buy from B and $50 to the company. same as to start
Company ends up with $300 minus $200 to start = $100 new investment.
You're correct, but that is why they had to have the issue voted on at the Stockholder's meeting. They voted to do this. Looking at the financial reports it looked like they have significant debts and are losing significant money each month. I think they needed this money to either pay off the debts (and maybe get new ones) or simply to cover operating expenses. I'm not a financial expert, but that's what I take away from the report and the stock offering.
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One thing you are missing (I think) is that the VALUE of the shareholder stock will decrease (unless they purchase the new shares). This is why if you look at the stock chart you will see if fall off a cliff on or around Feb 15-16-17th which is when the offering was first announced.
Also, if I re-read Henrick's(the CEO) statement again, does this mean that he SOLD his rights?
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Right, but the value is made up for in cash from selling the rights. You are given the option to put more money in the company or sell some of your stock. If you wanted to maintain your position, you would have to sell some and buy some. Either way, you would end up in the same position. The $ per share goes down but total shares owned goes up
For clarity, if you own shares in SV now, you will receive rights. They effectively have split your ownership in SV into stock and rights. You exercise rights or sell them or both, but you end up in the same economic position.
PS: Why is there no spell check on this thing.
Heres what I got from the thread...
The relatively rare occasions when a company issues new shares to raise cash - insurance companies have recently made rights issues to strengthen their balance sheets. The proceeds go directly into the company's bank account, instead of giving a profit (or a loss) to an existing shareholder. Shareholders do not like rights issues. By putting more shares on the market, a company dilutes the value of its existing shares.
If you already hold shares in a company making a rights issue, this means that you will be offered more shares in the company at a discount to the prevailing price in the market. To give you an incentive to take part, the shares are almost certainly going to be issued at a deep discount to the current market value - a 20% reduction is common. As a result, the market value of existing shares is likely to fall after a rights issue.
A rights issue aka företrädesemission by a highly geared company intended to strengthen its balance sheet is often a bad sign. Profits are already low (or negative) and future profits are diluted. Unless the underlying business is improved, changing its capital structure achieves little.
A rights issue to fund expansion can usually be regarded somewhat more optimistically, although, as with acquisitions, shareholders should be suspicious because management may be empire-building at their expense (the usual agency problem with expansion).
It would seem so. If his % ownership drops, he is selling his rights and lowering his ownership in the company.
That's exactly what stock dilution is though. I won't bother to explain it, because Wikipedia does a much better job:
http://en.wikipedia.org/wiki/Stock_dilution
Investors have had the right to sell the stock all along. SV is diluting the value of their own company by allowing more ownership in it, just so they can raise some more funding. Honestly I don't know how many people are going to line up and buy up that stock if they even do five minutes of research though, but I've got a feeling it has a lot to do with Henrik's dad.
I agree with this. My point is that it is not illegal or robbing people as the above poster questioned. Your % share of control over the company is diluted if you do not fully exercise all of your rights. Your total value in the company stays the same if you sell some rights and use the money to exercise the remaining rights. You lose value and % if you sell all of your rights.
Yeah.. I guess if the company is losing money it has to come from somewhere... thus the investors are asked to pony-up more cash.
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I don't see how this is going to work in the first place. The volume for STVA AB shares is very small, how are they going to find any buyers of the rights if the current investors wont put up more money. Some days I look at their ticker and there has been no trades at all.
EDIT: Today for example.
Basically what he's saying to the current & future shareholders is "I fucked up with your money before and we're up shit creek without a paddle, please give me more money and I promise I won't fuck up again."
So those people who believed in SV and purchased shares now have to spend more money just to retain their percentage of ownership postion, I dont know about you guys but thats dilution to me. It is basically saying, buy more or you own less. I feel bad for those of you who have invested in this organization.
Yup, for those who stuck by SV it's certainly not been getting any better. They are grown up adults however, they made their own business decisions. Certainly nobody held a gun to their head and forced them to give Henrik money.
The last investor I know who had interest in investing in Starvault cancelled everything after receiving documentation regarding SV's and Henrik's conduct towards their business, their volunteers and staff. I got my player account banned for that.
In short, they need more cash so they are selling new shares. He is not selling his shares, the company is making new ones and selling them.
Well its not something a healthy and profitable company would do, it seems like grasping at straws to me. Problem is, any investor they're hoping to attract - and Im somehow thinking they're not looking for 1-5,000 investments - will do research on them and their business. The emotional attachment put aside, most sound people with money will invest it elsewhere.
He diluted the shareholders shares. No matter what anyone here says (you have to realize SV has people post disinformation on these boards in favor of them). I used to work in the stock market. What he did was issue more shares to raise money and the stock price fell through the floor. The only way hes going to save the company now is by getting people to pay for the game. Im not sure how much longer they can keep the company a float.
Well.. tomorrow starts their period where you can trade your subscription rights. I think it is no coincidence that the stock tumbled 21.57% today down to .40 SEK (6 cents US)... Remember, this is a stock that was trading at 2.5 SEK one year ago and has been as high as 4 SEK...
http://www.aktietorget.se/QuotesInstrument.aspx?Language=2&InstrumentID=SE0002149369
It should be in interesting few weeks to watch where it goes from here...
All time classic MY NEW FAVORITE POST! (Keep laying those bricks)
"I should point out that no other company has shipped out a beta on a disc before this." - Official Mortal Online Lead Community Moderator
Proudly wearing the Harbinger badge since Dec 23, 2017.
Coined the phrase "Role-Playing a Development Team" January 2018
"Oddly Slap is the main reason I stay in these forums." - Mystichaze April 9th 2018
The thing in the US I've realized a long time ago, and it's generally true world wide, is that penny stocks (as SV is) are priced that way because the companies suck, and the ones with high value (Google, Apple, etc) are priced that way because they have really good value.
It's not surprising that SV lost market value hand over fist, especially with the way the company is run.