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Once again, hibu (LSE:HIBU), the company formerly known as Yell, has told investors via an RNS that its shares are worth very little or nothing. The stock is off 18% today but this is not the first time it has warned about this and after a few days folks seem to forget and traders “buy for the bounce”. That might work once or twice and you make a quick turn but one day the shares will be suspended and if you hold the stock you will feel like you are in the middle of Wembley Stadium with your pants and trousers around your ankles. You will be utterly exposed and there can be no get out.
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My last article on 13th November was on the day of the interims. In it I reiterated a sell stance at 0.25p with a 0p target. My original sell was in late October at 0.37p. The problem is that the company is drowning in debt and (to boot) trading badly.
You can read the full analysis here
Today’s statement reads:
As previously announced, hibu plc (“the Group”) has approached its lenders under its facilities agreement dated 30 November 2009 with a request for various waivers and an amendment including the ability to negotiate with the lenders on a capital restructure. The Group is pleased to announce that this request has now been obtained. As previously stated, a number of capital structure options are being considered. The Group can confirm that the options being considered are likely to result in little or no value being attributed to the Group’s ordinary shares.
So the banks are not pulling the plug yet. But there is – in a best case scenario a debt for equity swap which will see current shareholders diluted to virtually nothing. And that is the best case scenario. Back at 0.37p the shares remain a sell.
Tom Winnifrith is a minor speaker at the UKInvestor Show on April 13th. Headline speakers include investment legends Nigel Wray, Evil Knievil, Nick Leslau and gold guru Dominic Frisby all of whom really can be said to be a true master investor. Also on the main stage is UKIP leader Nigel Farage MEP. For a full list of the 16 big name speakers booked in so far or to secure your free ticket click here
