Shares in AMZ Holdings have fallen by more than three-fifths following the rejection in a referendum of a proposal to site a gaming resort on Penghu Island, Taiwan.
The share price slumped by 86p to 52.5p, which values AMZ at £8.44m.
AMZ is the largest private landholder on Penghu Island and it believed that if the population had voted to legalise gambling then the value of the land would increase.
This leaves AMZ with a problem. It has to redeem £1.6m of convertible loan stock on 24 October 2009 but it will be difficult to raise the cash for this or for additional working capital. AMZ withdrew an EGM motion relating to a fundraising on the day before the referendum.
AMZ says that its property on Penghu Island, which has an international resort permit, has recently been valued at $46.2m but this is not a liquid asset. The balance sheet value was £6.45m at the end of November 2008.There was cash of £2.51m at that time and the convertibles had a value of £4.77m. That was nearly one year ago and if the rate of cash outflow has not been stemmed then the cash position will be less than half the November 2008 level. The stated NAV was £3.9m.
Penghu Island is popular with mainland Chinese but AMZ has land with no developments on it. AMZ would need to sell on to a potential developer but it would be difficult to get the valuation recently quoted by the professional adviser.
The convertibles are traded on Plus-quoted and their price has fallen 30p to 100p, although the bid/offer spread is 70p/130p.
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