SpaceandPeople (LSE:SAL) has been one of my worst investments. The company works with owners of high footfall spaces such as shopping centres or railway stations to use that space by charging either retailers to set up a stall/unit or promoters to advertise and promote through things like tasting or talking to potential customers.
Naturally, it has been hard hit by the restrictions brought in to combat Covid-19. Its finances were not all that strong at the best of times and so it found itself in the summer with virtually no income, high staff costs, big losses and payables of £3m.
It had drawn down £750,000 of a revolving credit facility (theoretically this could be extended to £1m). It had also drawn down a CBIL loan of £1m.
This is a lot of borrowing for a company making losses of over £260,000 per month and with a market capitalisation of only 4.5p x 19.52m shares = £0.88m
The RCF ends 31 October 2021. I struggle to see how the company might make it through till then without breaching covenants. Even if it made it, I doubt the bank will renew the facility.
They have cut costs, yes, but when they have no income to speak of the challenge is just too great.
I note that the directors were not buying shares in their company even at 4.5p.
A glimmer of light
Last Wednesday (2nd December) the directors announced the company had signed exclusive agreements with the owners of four ………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
I'm a full-time investor running my portfolio. I invest other people's money into the same shares I hold under the Managed Portfolio Service at Henry Spain. Each of my client's individual accounts is invested in roughly the same proportions as my "Model Portfolio" for which we charge 1.2% + VAT per year. If you would like to join us contact Jackie.Tran@henryspain.co.uk
investing is about making the right decisions, not many decisions.