A letter from Bruce Mauleverer and Michael McInerney, both clients of Rivington Street Holdings and Tom Winnifrith
Mr Mark Robertson, CEO
Rivington Street Holdings Plc
Third Floor
3 London Wall Buildings
London EC2 1Y
26 July 2012
Dear Mr Robertson, By
Email
Request for
Information
Introduction
This
letter is written as a formal request for the disclosure of information about
the many events leading up to the sale by Rivington Street Holdings Plc (RSH)
of 50.1% of the share capital in Rivington Street Corporate Finance Plc (RSCF)
– in a recent management buy-out. This
letter is written on behalf of Michael McInerney and myself, both of us writing
in our capacity as shareholders in RSH.
At
all relevant times we understand that Jim Mellon was Chairman of RSH and Tom
Winnifrith (TW) was CEO. We have each had a longstanding relationship with TW.
My first purchase of units in the SF T1ps Smaller Companies Growth Fund was in
November 2007. For all relevant purposes TW was our point of contact in the
investments that follow. There is a clear audit trail of emails, comments and
suggestions that illustrate the enthusiasm with which he recommended these
holdings. We always regarded TW as a man of high principles and integrity, who would
carry out excellent research and would not recommend any stock or fund unless
he was satisfied that it was a sensible asset to acquire.
We
are dismayed about what has become of RSH and RSCF – and to the value of our
holdings; and we are almost completely in the dark as to what has happened in
recent months.
We
discount of course the fact that the markets have fallen dramatically and that
small company stocks in particular have been hit hard. That is not our concern. Our concern is about transparency and about
the equitable treatment of shareholders. It also relates to issues such as Due
Diligence and compliance with FSA regulations and guidelines.
Because
we are so much in the dark, we have decided to set out a chronological list of
my purchases, simply to set the scene (Mr McInerney made similar investments
which can be listed if necessary); and then to ask a series of questions with a
view to elucidating what has happened and why our holdings have become so
severely depressed in value.
The
RSH website at present says:
We're having a
bit of a spring-clean at the moment and we'll be launching a new website
shortly.
That is not very informative.
Chronology of Share and Fund Purchases
Worship Street Investments Limited/Athol
Gold and Value Limited
With
the active encouragement of TW, in May 2009 I subscribed for 1,500,000 shares
in Worship Street Investments Limited (WSI).
The shares were 2p each. I invested £30,000. My wife Sara subscribed for
500,000 shares costing £10,000.
In
June 2010 I invested in a further 2,272,727 shares in WSI (at a cost of
£50,000). These shares were placed in my SIPP.
Our
understanding was that WSI invested in a wide range of private and listed
companies. However, whenever we asked TW for information about the fund we were
not given meaningful information. It seemed that TW was not running the fund.
In
February 2012, we were told, without prior notice or consultation, that WSI had
sold its portfolio to Athol Gold and Value Limited (AGV); and my wife and I were
each issued with ‘Consideration Shares’ in AGV (3.81 Consideration Shares for
every share held).
Following
this communication, in February 2012 I was sent a share certificate that showed
me as holding 7,460,408 shares in AGV. My wife’s share certificate, sent at the
same time, shows a figure of 1,908,477 shares.
On 6
July 2012, AGV made an announcement that referred to the continuing decline in
the value of its investments and gave an indicated NAV of 0.16p for its shares
as at close of play on 29 June 2012.
For
reasons that I do not understand, my Suffolk Life SIPP statement (through
Stocktrade brokers) shows that I have a holding of 8,674,894 shares in AGV, for
which it is said that I paid £24,289.70 (rather than £50,000) and which are now
said to be worth £9,889 (at 11p per share). I have not yet contacted Stocktrade
to request information about this anomaly; but on any view the shares are now
worth a fraction of what I paid for them.
Elite T1ps Smaller Companies Income &
Growth Fund
My
Stocktrade account describes these shares as Way Fund Managers Elite T1ps
Smaller Companies Fund. I appear to hold 49,751 shares, for which I paid
£50,000. They have declined in value by 33%.
First Artist Corporation Plc/Pivot
Entertainment Group Plc/Reach4Entertainment Enterprises Group Plc
In
February 2011, I bought 190,000 shares in this company for £38,000. At the same
time my wife bought 60,000 shares for £12,000. TW phoned me and strongly
recommended that I subscribe to the issue as the stock was likely to go to 40p
within a reasonable period of time.
In
May 2011 I bought two further tranches of shares in this company: the first for
35,000 shares at a cost of £10,430; and the second for 126,495 shares at a cost
of £39,485.
On 2
June 2011 we received a letter from the Share Centre to say that the company’s
name had been changed to Pivot Entertainment Group Plc. On 14 May 2012 we
received a further letter to say that the company’s name had been changed again
to Reach4Entertainment Enterprises Group Plc.
My
shareholding in Reach4Entertainment Enterprises Group Plc (noted as comprising
161,495 shares) is now showing a loss of 83% (always assuming that I could sell
at the Bid price in the market).
High Road Capital Plc/Agneash Soft
Commodities
In
March 2011 I subscribed for 4,000,000 shares in the above company at 0.5p per
share – an investment of £20,000.
In
June 2011 I was informed that the company had changed its name to Agneash Soft
Commodities (‘ASC’).
My
shareholding in ASC is now showing a loss of 44% (always assuming that I could
sell at the Bid price in the market).
Port Erin Biopharma Investments Limited
In
August 2011 I bought £50,000 worth of shares in this company. Later that month
I bought a further £10,000 worth of shares. The total number of shares that I
bought was 600,000. The value of the shares has declined in value and we do not
feel that we have been kept properly informed.
Elite T1ps India Fund
In
October 2011, I invested £50,000 in this fund.
In
June 2012, when it was clear that nothing was going to happen to this company,
I sold my shares for £49,240, representing a loss of £760.
Rivington Street Holdings Plc
In
May 2011 I invested £50,000 in RSH and placed it in my SIPP. RSH was one of
TW’s hot tips for the year.
In December
2011, as the direct result of a telephone invitation from TW, I bought a
further 120,000 shares in RSH at a price of 25p – costing £30,000. These shares
now appear to be valueless (or perhaps worth 1.5p at best).
SF T1ps Smaller
CompaniesGrowth Fund
My wife and I have each bought substantial quantities
of units in this Fund. I note that on my Share Centre account this Fund is now
called SF Webb Cap Smaller
CompaniesGrowth Fund. I have
received no notice of this change of name.
SF T1ps Smaller CompaniesGold Fund
My
wife and I have each bought substantial quantities of units in this Fund. I
note that on my Share Centre account this Fund is now called SF Webb Cap Smaller CompaniesGold Fund.
I have received no notice of this change of name.
Michael McInerney: Investments
Michael
McInerney invested in all the same funds and stocks; and a chronology of his purchases
can be provided if necessary. The only addition in his case is his investment
in the EIS Fund, details of which are provided below.
EIS Fund
In
2009/10/11 Michael McInerney invested £50,000 in EIS Funds 1,2 and 3, which
have recently been valued at £36,725.
On
18 July 2012, Suzanne Collins of RSH wrote to Mr McInerney:
Since the
departure of Tom Winnifrith we have been without a dedicated investment manager
for these schemes, although they are still beingmonitored and we do have a
resource we can call upon should it beconsidered necessary. Both the FSA
and FSC are aware of the currentsituation.
This is clearly unacceptable.
Generally
On 11 July 2012, Lucy
Williams of Peterhouse Corporate Finance (formerly of RSH) wrote to us;
Please see
attached the rivington street holdings announcement from this morning which
states MBO of Rivington Street Corporate Finance (the department I work in) was
concluded this morning and Peter Greensmith (CEO of RSCF) and the team now own
the majority of the company. We have now moved offices to 31 Lombard Street and
changed our name to Peterhouse Corporate Finance. Please note my new email
address.
If you have any
queries on any of the investments made through Rivington/T1ps please do feel
free to ask me and either I or one of my colleagues should be able to provide
you with an update.
As you can imagine, we have many questions about the
foregoing.
Questions
- Please confirm that TW was CEO and COO of RSH at all relevant times.
- Was TW also COO or some other officer of Athol?
- Please confirm that Jim Mellon was Chairman of RSH at all relevant times. What role has the Chairman played in this debacle?
- How were investment decisions made? Was TW answerable to the board of RSH or was he a free agent? Did the Board approve the transfer to the Isle of Man? Who made the final decisions?
- What was the reason for the precipitate departure of TW? He has told us that he is bound by a confidentiality agreement. However, where there has been such a longstanding relationship of trust, we as shareholders are clearly entitled to know what happened. There was much online rumour and gossip; and the whole situation, from our perspective, was and is far from satisfactory. Please explain.
- There has been considerable ambiguity as to TW's current and future role, if any, with RSH. Please let us know the true position.
- WSI/Athol: We based our investments on the trust we had in TW; but this may have been misplaced. The fund does not appear to have been properly run and decisions seem to have been taken in panic or on the hoof. The only common denominator with other investments was RSH via TW. Please explain the basis for investment decisions.
- Upon what factual basis was I encouraged to invest such a large amount of money in WSI?
- Why did Athol take over WSI’s investment portfolio? We had thought that Athol was a gold company?
- On 13 June 2012, Suzanne Collins of RSH wrote to MrMcInerney:Agneash Soft Commodities was bought out by another company called Athol Gold. Athol Gold was investment advised by TIM (IoM) but is now advised by Tom Winnifrith directly so I will ask him to get in touch with you about this, and any questions you have should go to him.At the moment I am not sure who is providing the investment advice to the Elite Fund, it was Way Fund Managers themselves, but they may have passed it on to another adviser. I have asked them for specific contact details but they have not yet come back to me – if you would like to contact them yourself on the number I provided I am sure they will be able to help – or when I have a response I will let you know.
Later
that day Suzanne Collins wrote again:
The portfolio
within Agneash was taken over and effectively became a holding within Athol
Gold – therefore as Athol gold was investment advised by Tom effectively
Agneash was too. Agneash became a shareholder in Athol Gold and as that
is an investment company the portfolio became part of the underlying assets of
Agneash.
Were
those statements true and correct? If not, why not?[1]
- Following our
investments we regularly had to chase for valuations and updates. These
were regularly promised but insufficient detail was provided. Please explain
why that was the case.
- We were not advised
of the restructuring plans and the difficulties RSH had in running the
fund– that had apparently invested in unquoted
or Plus Market quoted shares. Please explain why that was the case.
- We were advised indirectly
that WSI had been taken over by Athol; but we received no explanation or
rationale. TW was apparently COO. Why were we not informed?
- Were investment decisions in WSI/Athol taken after appropriate due diligence or only after personal contact and gut feeling? This question applies to decisions made in other funds as well.
- Athol appears subsequently to have been integrated with Agneash, although weare not at all clear as to what occurred. Please enlighten us. The common factor was TW; but was this a RSH board decision or TW acting independently?What happenedwas very unclear and far from transparent.
- We have similar questions for each of the other funds and stocks. For example, who is running the Elite Fund? Why has there been such a lack of transparency and communication?
- Why was the India fund wound up?
- Why was JPJ Share discontinued?
- Who are Way Fund Managers and what is their role?
- What has happened to or is to happen to T1ps.com?
- If RSCF was and is a company that has ‘strong performance’ of its business (see the announcement of 11 July 2012), how was it thought to be in the interests of the shareholders of RSH to sell 50.1% of RSCF in the buy-out (for £300,000 in cash) noted above?
- Please advise how RSH and/or the relevant Investment Managers carried out their Due Diligence duties. This is a matter of critical importance to us; and we need to be informed how investment decisions were made and generally about the issue of process.
Conclusion
As
you will see from the above chronology and list of questions, there is much to
cause us grave disquiet as to what has happened to our respective portfolios;
and we both feel aggrieved by the lack of communication and apparent disregard
for our interests as shareholders.
We
would appreciate carefully detailed, candid and transparent answers to our
questions.
We
reserve the right to ask further questions and to refer this correspondence to
the FSA.
We
look forward to hearing from you.
Yours faithfully,
P Bruce Mauleverer Michael
McInerney
[1] Also on 13 June 2012, TW wrote that Agneash had not been taken
over by Athol; that it remained listed on Plus; and that he did not run it.
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