Bonhill Group (LON: BONH) shares are down 30% today. BONH shares are down as part of the company's process of euthanasia. Which really is probably the best word for what is going on. This is the voluntary death of the company and the return of all the money to the shareholders. It's all a little complicated but that's really what is happening - the handing out of the cash followed by the glass of whiskey and the single shot in the library. Bye Bye Bonhill.
The basics here are that Bonhill sold off all the operating parts of the business. This left it with a pile of cash. Also, no particular strategy, nor any grand option to have them. It's a blank shell that happens to have an expensive to maintain listing on the public markets. Sure, there's always the possibility of getting into another line of business but there's no particular reason to use the Bonhill shell to do it. So, return the money to the shareholders and close down the company as an existence.
Of course, some have managed to get this entirely wrong: “(Alliance News) - Bonhill Group PLC on Wednesday said it will raise GBP4.8 million through a tender offer of 48.0 million shares at 10 pence each.” No, really, just no. The tender offer is working the other way around. The company buys the shares, shareholders get cash, the company gives it out. Didn't stop other people from running the same nonsense report though. Good grief Shares Magazine, really?
Bonhill Group share price from London Stock Exchange
It's true that the details are a little complex but it's definitely money out of the company, not raising it: “as soon as practicable following Completion and, subject to certain approvals at the General Meeting, a return of substantially all of its available cash, amounting to approximately £4.8 million, equating to 4.0 pence per Ordinary Share (or 10.0 pence per Ordinary Share in the Tender Offer), to Shareholders by way of a tender offer (the "Tender Offer");” Each shareholder is only allowed to tender 40% (and change) of their holding to get the 10p. Whatever else left after the liquidation will follow but there's expected to be little to nothing - if they've got their calculations right.
The reason for the Bonhill share price drop today is that this is the closing date, Today's the day of record, claims for the tender offer must be in by 6 pm today.
So, yes, this is the euthanasia, perhaps possibly suicide, of Bonhill. By far the most fun thing about it is all those share dealing magazines (Morningstar? Really?) thinking it was a fund raise, not a fund return.
