Micro-cap TV production company Ten Alps (TAL:AIM) – co-founded by Boomtown Rat Bob Geldof – sinks 50% to 0.28p as its shares resume trading this morning following the £5 million acquisition of Reef Television, a restructuring of its board and a refinancing.
Shares in the company – which consists of a TV production arm, business to business publishing division and a modest marketing operation - have been suspended since 1 June pending this announcement. Because the transaction with Reef constitutes a reverse takeover under AIM rules it will need to be approved by shareholders at a meeting on 10 July when a 10 for 1 share consolidation and £4.5 million placing will also be put to a vote.
In an initiation note, newly appointed nomad N+1 Singer comes up with a 2016 mid-case valuation for the stock (based on a sum-of-the-parts analysis and post the share consolidation and refinancing) of 3p rising to 4.7p for 2017. These numbers are fairly punchy but it is tempting to regard them as little more than a finger in the air exercise at this early stage in the group's recovery.
Senior media analyst Johnathan Barrett writes: ‘We expect the value of TAL to rise rapidly as Publishing is made profitable, TV grows and Communicate scales rapidly.’
New CEO Mark Wood, appointed in December, clearly is not restricting his ambitions to a simple repair job and combining with Reef will create a factual content driven production business with output of 300 half hours a year.
A board reshuffle today also sees Geldof and Timothy Hoare step down and former Channel 4 chair Luke Johnson and serial media entrepreneur Jonnie Goodwin join as non-exec directors.
Wood has made a priority out of fixing the balance sheet as Ten Alps has been burdened by too much debt for some time. The planned refinancing is expected to reduce borrowings from £9 million to £2 million.