Special Feature
5. Helphire. Current price 1.3p Shareholders of the rather aptly named HelpHire have certainly been in need of help over the last 18 months given the absolute drubbing the stock has endured. Many shareholders believe that the current Board should be ashamed to continue to hold a position in a public company given the mishaps and destruction of capital in recent years at their hands (an all too familiar story on AIM these days it seems...). That being said, the question is, does the company’s current market capitalisation of a measly £4m overly discount the risk with Helphire and thus offer opportunity? The chart below shows a collapse in the stock last spring from 20p down to 4p and with no ensuing bounce whatsoever over the subsequent months - a feat which is pretty rare as there is generally some type of takeover speculation that occurs in these bombed out companies. The answer as to why there has been no bounce is no doubt explained by the incessant selling of the stock by certain shareholders of which Schroders have been one of the most active in recent months.
Helphire chart
20 | www.financial-spread-betting.com | July 2012
The reason for the collapse last year was the discovery of ‘holes’ in the balance sheet - always an ominous sign... These holes related to historic claims that had been over-stated by the former FD (who ultimately resigned) and that summed to £40m. Given the heavy debt burden of Helphire this has created pressure on the balance sheet with a real risk of an equity re-financing or debt for equity swap. A modest boardroom clearout occurred in the summer of 2011 that included no less a luminary than the former Tory party leader Michael Howard being shown the door. The management change was instigated by major shareholder Neil Woodford of Invesco Perpetual whom are saddled with the thick end of just under 30% of the stock.