HODGINS AUCTIONEERS INC. (“HA”) pulls the plug on its TSX.V listing – and there is a very good lesson to learn from this.
Hodgins Auctioneers is a company Junior Mining.com has been watching for a while. The reason is not the obvious to most. Hodgins’ Bill Anderson called a special meeting and requested shareholder approval to reorganize and basically privatize his company; and in doing so delist from the TSX.V. It has been a tough battle and we can’t really say we blame him. On the 13th of January, Anderson announced the approved plan under which Hodgins Auctioneers is to cease being a reporting issuer. If you are daring enough to bore your way through the January 4, 2015 news release you will see how this was accomplished. Basically how Anderson appears to have engineered the privatization is by back to back rollbacks (4:1 in October 2015 and 2:1 in July 2015) so that he only had to solicit 15 shareholders to seek approval. At the time of the vote there was only 6,884,000 shares outstanding. If you check a chart on HA you will see that over the years the share price of HA, allowing for rollbacks (and there have been a few) has drifted down from a high of $4.80 and the $0.01 level when it was halted. The shares have trading over the last 90 days as though they came with fleas; as we say at JuniorMining.com “By appointment only”. In a November 30, 2015 news release, Anderson noted that aside from the goodwill associated with being a 50 year old Auction company, the company had $33,286 in debts and no tangible assets. He also noted that two shareholders controlled 52% of the shares. Anderson also stated that the company was proposing to raise $300,000 by way of a non-brokered private placement which “HAD” to be closed by December 31, 2015. They never got any subscribers, by the way. Anderson found themselves looking straight up at the side of a very steep mountain with no rope in sight; and that is a hard situation to overcome.
Now let us reveal why JuniorMining.com has been following HA. Aside from the complexity of the HA share structure, we think we were witnessing a unique but not all that uncommon scenario that investors should be on the lookout to avoid in junior venture companies. Companies that lack a promotable and financeable story. We think Anderson probably came this same conclusion when assessing his HA. For HA this led to a lack of sustainability, as it has and will for many issuers on public exchanges including the TSX.V and the CSE. We detail and highlight many such situations for JuniorMining.com members in our exclusive Case Studies section on the JuniorMining.com website. There is nothing like learning from experience.