Tuesday, 3 January 2017

New Year brings Crowdcube investors in Airlander to the ground with a heavy bump - no parachutes issued.



Airlander - the new/old Zeppelin idea  - has had to reduce its share 'value' by 60% to gain more, much needed funding. Leaving Crowdcube investors with large potential losses.


Airlander has always talked a great game - big numbers, massive enthusiasm and glittering future prospects. Who knows the latter might yet materialise. But progress has not been good from an investors' standpoint.

In their first raise in 2015, Airlander shares were valued at £1, then again shortly afterwards they raised more on CC, at a share price of £1.42; valuing the company at over £55m. Below is the confirmation of these figures in a reply to a Q on the CC forum in the second raise. 


When we started the Crowdcube raise in March last year the company was valued at £34.4 million (with a share price of £1 per share). Today we are valued at £55.0 million (with a share price of £1.42 per share). The change in valuation is explained by a reduction in risk in the business, with the build of the aircraft now complete, and due to additional resources secured by the company. Since we commenced the last raise we have secured £3.9 million in equity, £5.3 million in grants and £4.5 million in convertible loans. All these funds add value to the company.

We are currently raising a total of £4 million of equity (of which the crowdfunding forms a part - hence why we are able to overfund by a small amount) which funds the Flight Test Programme. From that point onwards, the business plan forecasts we should break-even by getting customers to pay for the results of trials and demonstrations. At some point in the near future, we need to raise £30 million for productionisation of the Airlander, which is likely to come from an IPO or potentially through deals with other companies. So this raise will be undertaken with the benefit of secured orders in place. The level of dilution created by that raise is clearly dependent on the share prices achieved and that is extremely hard to forecast as it will depend on many factors. That said, our model suggest that the dilution percentage would be in the mid to low teens, but it could be higher of lower.
We hope that gives you a full picture of the future raises currently forecast. With anything forward-looking we cannot guarantee what will happen, but this is our plan and our best estimate as to what will happen.
The Airlander Team 

You can take all of that with a mouthwash of salt  - especially the bit about the dilution being in the low teens. All apart from the bit about we haven't a clue what will happen.
Just before Christmas 16, investors were sent a Christmas card with a lovely present  - news that this round of crowdfunding had just completed the remainder of the £4m (the 4 mentioned above) but at a share value of £0.575 per share. Crowdcube investors remember, all 1462 of them, had paid £1.42. The excuse for the discrepancy appears to be that some 'international' investors will bring extra benefit to the company - thereby making the lower valuation justified. What is it Luke Lang always says about Crowdcube giving the little a guy a fair chance! This value is not just a down round it represents value almost half of the previous, previous round.

Dear Fellow Shareholders

I am very pleased to report that we have successfully secured the first £4 million of investment in the current equity fundraising round.  In doing this we have added a number of significant international investors and we think their quality, when added to that of our existing shareholder base, will be very important to the success of the company as we go forward.


In order to secure this level of funding we have had to reduce the per share price for this round to £0.575. These funds will allow us to return Airlander to flight and to progress our discussions with customers towards securing revenue. Successes in these areas are what will drive huge value appreciation back into the company and so the Board was happy to accept this price and put the company on a good footing to start 2017.

As has always been the case, we are very keen to ensure that all shareholders have an equal opportunity to invest in new share issues.  This new price means that any investment will get more of the company for the same amount that we were offering you initially this round.  This also means that there will be more dilution to existing shareholdings than would have been the case had we achieved a higher price.  So if you didn’t participate in this fundraising or if you would like to increase your investment please reply to this email and indicate how much you would like to invest.  The amount available is limited so new applications will be accepted on a first come first served basis.

Similarly if you have any questions (for example, as to how much you would need to invest to maintain your percentage ownership of the company) then please just ask and we will come back to you.

I have pleasure in attaching our HAV Christmas Card and in wishing you all the very best for the festive season.

Regards

Steve

Stephen McGlennan FRAeS
Chief Executive

The picture at the top of this post is of the Airlander's second attempted landing - no one was hurt. It hasnt flown since. 

We dont suppose that Crowdcube even know about this double down round and if they do that they will as ever brush its embarrassing fall in share value under their increasingly lumpy office carpet. 

Of course you also have to know that Crowdcube are a sponsor of Airlander; so all the information you get from the platform on this company is highly subjective. Can it be right that an FCA platform is pushing millions of pounds into a company that it is directly linked to? That sounds like Trumponics to us. 

What's important here is to maintain some perspective. Airlander might just be a the next big thing - no one knows now. If it is, this massive fall in value will be inconsequential. However the cock up or greed on behalf the management is self evident right now - producing fictional values to rob ordinary unsophisticated investors of value. The more sosphisticated 'international' investors could not be fooled. This message is not lost on those feeling slightly bruised by the rough landing.

One thing we can guarantee is that Crowdcube, in their shortly to be PRinged Reveiw of the Successes of 2016 will make no mention of this down round and the loss of around £1.4m in 'value' on the £3.4m invested by over 2000 of the platform's investors. More for the overworked carpet cleaner intern to dispose of.

4 comments:

  1. You have to be making that up... oh wait, you aren't...
    So out of the claimed £4m, only £1.2m appeared (from crowdcube) at £55m and then everybody else came in at nearly a third of the share price? Did I get that right?

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    1. Not sure about the exact figures - CC investors (2nd time) certainly paid £1.47 for each share (valuing company at around £55m) and the remnants of the £4m (we dont have figures for how much that is) was brought in at £0.575 per share by December 2016. So essentially yes. Crowdube first round investors paid £1 so even they have been dumped.

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  2. At least he provides an opportunity to pull out if you decide you don't fancy being royally screwed?!

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    Replies
    1. How? 1400 Crowdcube investors at £1.42 have already been royally screwed.

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