Thanks @Wini , all makes sense and if they got a total of $10-12m from exiting the Entertainment businesses that would be just fine. A figure under $9m you would wonder if it's not worth just keeping iFly and the positive circa $2m cash it generates each year - assuming that will continue and significant capex is not required any time soon.

It's a little disappointing that they would just walk away from the FREAK business, but on reflection it is probably more a hope they would get something for it (or it not cost anything to shut down). It's at best a break-even business and would require continued support from Red Cartel or an equivalent... Franchise opportunity??? also probably a bad idea, just a distraction for management.

Cheers

It's a little disappointing that they would just walk away from the FREAK business, but on reflection it is probably more a hope they would get something for it (or it not cost anything to shut down).

It's a tiny business and operates at breakeven. It's very difficult to find a buyer of those sort of businesses, at that size where there isn't a turn-key sort of "buy yourself a salary" opportunity. FWIW, for franchising to work the sites that are open now would have to be wildly profitable in order to prove their was an ability to replicate and sell the system.

I watched the SM interview a few weeks ago. I would be surprised if the entertainment businesses are not sold/shut within the next 6 months. They barely discuss it and you can see in their presentations how it's hardly mentioned. I bought a bit on the expectation that a cap raise is off the table with the sale and the debt conversion and the price was cheap.

I agree @UlladullaDave that a cap raise is not likely on the cards now.

As part of last years AGM they approved an additional 10% placement capacity which on top of the 15% allowable gave them the option to issue 140m additional shares (25% of the company) by 22 November 2025. The Birkdale debt conversion takes up 92.6m shares leaving just 48m they could issue, which is $1.9m at todays close of $0.04.

They have an additional 1m facility for their Causway debt and are cash flow positive, so I don’t see them needing to raise for working capital. An acquisition is always a reason to raise, so never say never.

As an aside, it looks like it was quite a buy day for XRG today, 2.4m shares and the price up 14%, mostly a late day rush by a big buyer (well big for XRG). 1.3m of the trades were XT, which means they were cross trades, buy and sell orders via the same broker. Probably means nothing but just interesting given the volume spike today without news.