Forum Topics RFT RFT Board Renewal

Pinned straw:

Added 4 months ago

With today's announcement, Rectifier has finally requested its shares be reinstated to the ASX.

The announcement was also used to finally express the opposing argument on the recent "Shit Show".


Bushmanpat
2 months ago

Yingming Wang stepped down as chairman yesterday. Dr Mu Deng will take over. The release mentions

"With RFT now steadily advancing corporate governance under the new Board, and the new management team seamlessly integrated into daily operations, I believe it is the right time to step down as Chairman. This transition will allow energetic young leaders to drive the Company towards greater success"

I still hold, mostly so when I look over my portfolio I have a reminder that there is downside as well as upside and to always be vigilant with microcaps, but also just to see what happens next. Mentally I've written the shares off.

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Bear77
2 months ago

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Bushmanpat
a month ago

"You'll always be haunting me, a whoa a whoa a whoaooo"

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mikebrisy
a month ago

@Bushmanpat My initial thought was to hold on because, eventually, the IP, technical capability, and product set will likely come good with some half decent management. That's often my initial reaction.

However, $RFT was a RL 1% allocation for me, which became a 0.2% position with its demise. So immaterial. Even if it now goes 10x, it stil doesn't make a material difference at the portfolio level.

So, I decided to exit recently ($0.11 and $0.12, RL and SM) purely to tidy up the tail of my portfolio and to use the tax loss. Ultimately, the test I applied was would I consider investing fresh money today? Answer, no. Because my initial thesis is no longer intact, and I'd rather have the capital sitting in a firm where I see value and have a "live" investment thesis.

Who knows how I consider that decision in 10 years time. But then again, you can say that about any future winner I don't hold.

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Bushmanpat
a month ago

Thanks @mikebrisy that's a well written summation of the situation. My investment style seems governed by sloth and indecision (and blind hope!), so I find it hard to sell losers. This is a skill I really need to work on.

Thinking rationally, if I sell and claim the losses then I've effectively made at least a third of my loss back, which is similar to a 150% jump in the share price. Might have to pull the trigger in the next couple of weeks.

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Wini
a month ago

@mikebrisy I was also sympathetic to the view that the IP, technical capability and product set could see a recovery over the medium/longer term but I understand some key staff have started to leave and it may not take long to see those tangible characteristics undermined quickly.

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thunderhead
4 months ago

What a white knuckle ride...far easier ways to make money than get involved with this mob, especially at this time. Doesn't pass the sleep at night test.

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nerdag
4 months ago

Yep, I decided to get out. It wasn't much of a holding for me and was just on break even before suspension, now a loss.

Too hard and I should have listened to my gut a few years ago.

Lesson learned.

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AlphaAngle
4 months ago

I'm just sitting on my hands for now there is too much uncertainty. I have no idea if the current price is cheap/expensive though I imagine a few people are just happy to be able to get out. I sort of want to sell and be done with it which usually is a sign thats the wrong move especially if a large contingent is feeling the same way.

Up or down from here I think the primary value I will receive from this investment is a few lessons learnt.

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mikebrisy
4 months ago

@AlphaAngle I'm also doing nothing for now. Today's mark down was in line with what I expected, and better than I feared.

As @Bear77 pointed out earlier today, buy and sell orders are broadly in balance (they've evened up since his post). Volumes after 11:15am pretty much dried up, with only a few larger orders (>200,000) through the rest of the day.

Of course, the game probably hasn't played out as current holders consider their options now anchored on the new SP. It would not be unusual for the price to grind lower over the coming days and weeks as further holders capitulate (tax loss selling coming up!), when they don't see a rally - which I am not expecting in the absence of a positive operational update.

If I read everything correctly, overall, the Chairman appears to have prevailed. He has selected a replacement board and appointed his son as CEO. For now, Machin and Yeoh remain in their operational roles, with a little skin in the game - c. $0.4m of shares each. Not a lot, but likely neither is particularly wealthy, and if you thought your company was undervalued at c $0.04, then with nothing having changed operationally, you probably think it is very undervalued at $0.02, and are preparded to put in some effort to turn that around. Machin is the founding director and chief power engineer. He is the technical brains of the operation. I imagine he has a strong connection with the business and other key people (like Peter Sykes, Chief Engineer). People like this live for the technology and the products. Often they hate board and goverance BS.

Yeoh is the Sales Director and will have the key customer relationships. For him, I imagine not being on the Board is a bigger deal.

Together, Machin and Yeoh are probably quite powerful, partifularly if their teams are loyal to them. Both are probably back in their comfort zones now off the board and able to focus on their operational roles. I'm still unclear how they got caught up in the whole governance shambles, but with Arulampalam now out of the picture, perhaps things can settle down again. (What was the point of Arulampalam anyway? From his profile, you'd think the Chairman would have been expecting some fun and games? I don't understand why he was brought on in the first place. He looks like he was always going to be about capital structure and/or corporate deal doing.)

So, what of the business? At 31 Dec 2023, the business had net equity of $14.4m, or $0.01 per share. But that doesn't value the intangibles of IP (incl. new products in the offing) and customer relationships - albeit the forward value of the Tritium relationship might not be worth that much. With a modest cash burn, and debt of only $2.2m, and $4m cash with $9.6m of customer deposits secured against the inventory, and with the trade payables and other creditors at $1.4m, exceeded by Trade and other Receivables of $1.7m, there doesn't appear to be a short term issue with liquidity.

The bad taste of the governance issues means there is no way I am putting fresh money in (Lesson #1 learned!) and I have already benefited from applying Lesson #2 (don't allow yourself to have a large position in a unproven, high risk business - a hard learned lesson from previous poor portfolio decisions on my part). With today's haircut, I am down to less than 0.25% in RL.

@thunderheadrightly says, you don't need to be here, given that there are easier ways to make money. But given that I am here, I am curious to see how the #shitshow plays out. And I am damned if the major holders are going to make money out of me by picking up my holding at a discount!

So, my plan is to wait for the next operational update. How has inventory moved? How are the two new products progressing? Any future sales? Do Machin and Yeoh keep there heads down and focus on execution. etc.

So, for now, I think that's where I've landed.

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Bear77
4 months ago

Anybody care to speculate on what the RFT share price is likely to do on Monday? My bet is it goes down. Unlikely in my view that there was smoke, yet no fire, as today's announcement suggests.

Interesting that the announcement says, "Messrs Machin (Chief Power Engineer) and Yeoh (Group Director of Sales and Marketing) remain employed by RFT in the same senior executive roles managing the Company that they held prior to their resignations as directors. In these roles these executives contribute to implementing and managing the Company’s corporate governance practices. They have confirmed to the new board that they do not have any current concerns with the corporate governance of the Company."

Yingming Wang, the company's Chairman and largest shareholder, voted his shares against the re-election of Jitto Arulampalam at the November AGM apparently because he (Yingming Wang) was against the capital raising that Mr Arulampalam had proposed and the dilution that it would cause to his (Yingming Wang's) own shareholding, and that's also why he also voted against the placement and CR resolutions, however nowhere in today's announcement does it say WHY the Chairman (Yingming Wang) voted his shares against the re-election of Tino Vescovi and Mr Nicholas Yeoh. The fact that he was prepared to gut his own company's board without first proposing replacement directors is, I would have thought, enough of a corporate governance concern all by itself. I can understand if he was pissed that Tino and Nicholas supported Jitto's CR plans, but Yingming had the numbers to vote down the CR without getting rid of Tino and Nicholas as well. Fair enough if he thought the Board needed to be refreshed, but the way he chose to go about that lacked class, drew a lot of attention to the company, and all of it was negative, and just appears to be completely against good governance principles which surely include some form of stable management or at least oversight of the company at Board level. With the benefit of hindsight, the other directors resigning in apparent solidarity with those who Yingming was voting out was likely a tactical mistake on their part, as it seems to have played right into Yingming's hand, and has given him full control at both Board level and CEO level (via his son, their new CEO), assuming that the Board members he has appointed are aligned with Yingming and will do his bidding, which isn't certain by any means, but is probably a reasonable assumption to make on the basis of probability.

I would imagine that there might be a few people who would no longer be comfortable remaining invested in this company and they might be looking to use the lifting of the trading suspension on Monday morning to get out.

Board-Renewal-Update.PDF [RFT Announcement, 3:08pm, Friday 22nd March 2024]

Reinstatement-to-Quotation.PDF [ASX Announcement regarding RFT, 7pm, Friday 22nd March 2024]

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Bushmanpat
4 months ago

Definitely a tanking on Monday as everyone who wants out can finally get out. I'm still in two minds whether i join them Monday or sit in my hands for while longer to see how this plays out.

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mikebrisy
4 months ago

@Bear77 good summary.

If I could get out with some value intact, I probably would. However, there is every chance that in the rush for the exit, there will be a massive over-reaction, so I am not putting any orders in at the open, and will see what happens. (-40%, -50%, -60%, -70%,...your guess is as good as mine ... you have to ask who would be the money on the other side of the trade given what has happened?)

As my position is small (<0.5% RL) and I believe there is valuable IP and product in this business, including inventory, PPE, and some cash, I am prepared to ride it out, long term if need be.

A company with this goverance isn't investible IMHO, but given I am there, liquidity is not my friend!

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Rick
4 months ago

Yes, finally the shackles have been released!…Who’s going first?

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Rick
4 months ago

This should help!

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Rick
4 months ago

Here is my trading strategy for RFT. It can’t be that hard!2645f836136bcf1d34079264def66a3e90801b.jpeg

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Bear77
4 months ago

If we see enough of a drop on Monday I reckon there's a better than average chance that Mr. Wang and associates might be on the other side of a few sell trades.

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Bushmanpat
4 months ago

Is that a new take on the hostile takeover?

Completely trash the share price then hoover them up from the fleeing masses.

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Longpar5
4 months ago

I agree, yingmang et al will be there to catch the selling, exactly where who knows. I'm hoping he's as out of touch with market sentiment as he was with his board and executive and maybe he sets up a wall at 5c!! If only.....

The whole thing has obviously been an atrocity, however I can sympathise with the guy in some ways. If some ASX banker showed up at the company I owned looking to unnecessarily dilute me for his buddies benefit I'd say no too. Perhaps just better communication in the first place and Aralumpalam would never have been on boarded

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Rick
4 months ago

@Longpar5 has me thinking about how much Mr Jitto Arulampalam’s involvement may have contributed to the implosion of the Rectifier Technologies Board.

@Longpar5 said “The whole thing has obviously been an atrocity, however I can sympathise with the guy (referring to the Chairman, Mr Wingming Wang) in some ways. If some ASX banker showed up at the company I owned looking to unnecessarily dilute me for his buddies benefit I'd say no too. Perhaps just better communication in the first place and Aralumpalam would never have been on boarded”

The ‘shit show’ all began with a proxy report circulated to the board by Jitto Arulampalam only 2 days ahead of the AGM proposing a capital raising which would dilute shareholders by 25%, and seemingly no prior discussions with the ex-Chairman and RFTs biggest shareholder, Mr Wingming Wang.

The whole Arulampalam intervention seems bizarre! What’s even more bizarre about all of this is the speed in which this has all unravelled, beginning with Mr Arulampalam’s appointment as Deputy Chairman on the 9th October 2023, only 6 weeks before the board meeting.

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Aralumpalam was appointed to the Board on the 9th October 2023 as Non-Execuitive Director and Deputy Chairman.

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On the 27th November, only 6 weeks after Aralumpalam was appointed to the Board, a proxy report was circulated proposing a capital raising for the business. Then on the 28th November Aralumpalam convened a board meeting on the morning prior to the board meeting.

“At the Board Meeting Mr Arulampalam explained that he believed the Company had a good business but that it was undervalued by the market and that he had developed a strategy to address that (which was understood to involve a capital raising via connections of Mr Arulampalam, the effect of which was considered to unnecessarily dilute the interests of existing shareholders and the purpose of which was unclear), but was disappointed that he would not be able to implement it. Mr Arulampalam then resigned with immediate effect and circulated a proposed announcement that he asked the board to release to the ASX.” (ASX Board Renewal Announcement)

If the story proposed by the new board in the “Board Renewal” announcement is factual, you might be inclined to think Mr Arulampalam had a dummy spit when he realised his proposal and re-election would be quashed along with other supporting board members re-election.

The business and the board all seemed to be getting along just fine until Mr Arulampalam showed up. However, it could all be a sheer coincidence. Perhaps we’ll never know what really went down.

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mikebrisy
4 months ago

@Rick that seems to make sense. What I don’t understand is why the Executive Directors joined in on the “dummy spit”, by also resigning.

Might that indicate that Arulampalam had warmed them up beforehand and convinced them his plan was good? And gained their support? That bit for me is not clear.

It would make sense for a Director with an idea to warm up fellow Directors. What doesn’t make sense is that you wouldn’t informally also - or maybe even first - warm up the Chairman. Particularly where the Chair is a major shareholder.

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Scott
4 months ago

@Rick thanks for this insight. I wonder what he had in mind for the CR. A dilution of 25% means he wanted to raise $10+ million when they had $4m in cash, $11M in raw materials and $8M in completed stock. That is from their half year report that had a $2m loss. And this is after they invested in additional manufacturing capacity in Malaysia? a year or so ago.

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Bear77
4 months ago

It appears that 1.5 cents/share was the bottom this morning, as there is reasonable (for them) volume coming in above that level now and driving the price back up - still down -41.67% at 2.1 cps as I type this, but they WERE down as much as -58.33% earlier (at 1.5 cps, being -2.1 cps below their previous close of 3.6 cps). So there is a small recovery in the SP since around 10:15am Sydney time, from the 1.5 cps low back to 2.1 cps now. At this point the volume on the buy side (bids) is more than twice that on the sell side (offers) at 10.5m vs. 5m shares, so there are people prepared to pay 1.6 cps to 2 cps for RFT this morning. It's a low floor, but it does seem to be holding.

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Wini
4 months ago

@Scott Bear in mind the 25% figure is just the capacity for an equity raise without requiring further shareholder approval at an EGM. It comes from the allowed 15%, plus companies can have shareholders agree to an additional 10% at the AGM which is what RFT was doing. This is extremely common, most small companies will automatically do it whether they plan on raising capital or not. The update claims Jitto was trying to orchestrate a capital raise which we can't know for certain, but what was voted against at the AGM was not a raise itself but the increased capacity to do one.

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RhinoInvestor
4 months ago

Apparently Tritium has indicated it will appeal the delisting and do a 200:1 consolidation (there was supposed to be an EGM on Friday to vote on that).

On March 22, 2024, the Company intends to submit a request for a hearing before the Nasdaq Hearings Panel to appeal the Delisting Notice. The Company simultaneously is holding an extraordinary general meeting of shareholders on March 22, 2024 to vote upon a reverse stock split on the basis that every two-hundred (200) ordinary shares of the Company’s stock (the “Shares”) be consolidated into one (1) Share, with the consolidation to take effect upon the completion of administrative procedures pursuant to listing exchange requirements with an anticipated effective date of April 1, 2024.

I wonder how much patience Nasdaq will have for them though with a USD$12.75m market cap.

Looks like they further extended their bridge loan @12% per annum by another USD$11.5M and voted in favour of the consolidation. And the share price jumped 27.52% in after hours trading.

https://investors.tritiumcharging.com/static-files/517d31ea-9737-4050-8d48-d88e0d5d3a67

Looks like they raised nearly enough to buy half of RFT after it has dropped by 40% already this morning. ;)

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