Stamp duty conniptions

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Stamp duty conniptions

Stamp duty conniptions: readers will remember Osborne upping stamp duty on £1.5m+ properties from 5% to 12% and wondering just who would be muggins enough to pay that. And therefore why the raise had come into being.

However, the background was that quite a lot of Conservative voters felt that somehow they were missing out on life through mansions in Kensington rocketing on up from £5m to £10m. They yapped. As did Corbyn who, sensing that he could damage this country’s interest and urged on by his youth wing (is there any other wing?), was howling for more money from the wealthy. And what better evidence of surplus cash to hand than amongst those who were prepared to pay 12% stamp duty?

The result was a barmy move which has taken the yield of stamp duty on £1.5m+ properties down from c. £1bn to £600m and falling. Talk about superb governance.


Servision (LON:SEV) have announced a small placing raising just $2m at 11.4p. I think this changes the outlook for SEV and, accordingly, paid 6p, a substantial discount whose presence is unexplained. I might be wrong.


The chairman got me last night to buy AUD .v. USD. I paid .7675. So far so good. Apparently, the target is .78.

Comments (3)

  • B Butler says:

    The discount is not unexplained. The terms of the subscription require SEV to buy back the shares at the subscription price if they have not moved their listing to the main London market or Nasdaq.

    Plus Cascade has been granted an option on a further $4m of equity at 10.2p.

    Plus, the Chairman has provided a personal guarantee to Cascade.

    Consequently, Cascade’s equity ranks above you in the case of default, in the case of success they dilute you and if it just trundles along they get their money back.

    The discount is probably not large enough – more research required 😉

  • Simon Cawkwell says:

    Dear Mr Butler,

    You are quite right. Further evidence should have been assembled and shown. Mea Culpa.

    However, I still do not see why the shares should stand at 6.5p offer.


  • B Butler says:

    I enjoy your posts, so no mea culpa is required.

    The interesting question is what price did Cascade really pay for their shares.

    Clearly 11.4p for $2m, but this has to be reduced by the value of the options and if I run each $2m worth of SEV options through a model with conseervative assumptions, I can value these at the equivalent of 3.8p. This reduces their cost to 7.6p.

    After that, they have a guarantee to get all of their money back including that for exercising the options backed by the Chairman and which ranks ahead of exisitng shareholders.

    This can be modelled as a series of put options, which would under normal assumptions eclipse the value of their net cost of 7.6p, although you have to make a finger in the air judgement as to the credit worthiness of the Chairman.

    Anyway, net net, I would estimate they have paid less than 2p per share, through this structure. It’s effectively an interest free loan in exchange for substantial upside.

    I have no axe to grind on the company’s prospects, but you should hit the 5 bid whilst it’s still there!

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