DMX Dolomatrix

[geezy]

Noticed that the DMX thread has been lost, wonder if anyone have any thoughts about TPI wanting to buy over this company? I had great expectations but of course with the global share market slump, this share has also suffered from its high at 1 dollar mark and now only being offered at 0.30 cents.

Any thoughts?

[geezy]

Directors response is to reject the take over bid from TPI. Company board has confidence in the business , which is a good sign :)

Don't sell out just yet!

[Lizard]

Just reported the "turnaround" result. Was hoping it might have marked the re-buy point, but not totally convincing. Reasonable prospect of growth, ROE still not attractive, so either need some write-downs in intangibles or a step-change in returns.

Good enough to put on the watchlist though. Just won't feel totally convinced until they change the name from Dominatrix...ooops Dolomatrix.

[lewinsky]

Interesting SSN posted today. Weston Aluminium increasing holding from 12.5% to 18.74%.

Or following Lizard's theme :- They have "tied up" a further 6% and this could "tickle" the sp into action and "whip"it up a few cents.

The half yearly ann will be worth keeping half an eye on.

LEW

[lewinsky]

A little move up to 26 cents today, but interesting to see virtually no shares available on the ask side.

Talking to myself, but good to have picked some up on wednesday.

[STRAT]

Just won't feel totally convinced until they change the name from Dominatrix....lol
Great minds think a like eh Liz or is that some other kind of mind?:lol:

Anyway when I first saw the thread thats exactly what I saw on the first take:scared:

[steve fleming]

There has been some interesting trading activity in DMX this week

- On Tuesday a 3.2m trade went through
- On Wednesday a 2m trade went through

Today SSH, Weston Aluminium, announced they were the buyer of the 2m parcel (as well as consistently buying on-market over the past few months), increasing their holding from 14% to 16%.

Although Weston was buying on market on the Tuesday, they didn’t take part in the big trade, someone else picked up the 3.2m parcel that went through on Tuesday, effectively gazumping Weston’s buys.

The other key SSH, TPI already have a 22% stake, so aren’t allowed to buy anymore (unless they maybe are creeping)

Will be interesting to follow and uncover who the mystery buyer was (and for that matter, the seller/s)

[steve fleming]

DMX have announced a doubling of their dividend today.


Market cap $32m

No net debt (cash = $8.1m, bank debt = $7.4m)
FY11 underlying EBITDA = $9.3m

EV/EBITDA = 3.3 x
PE = 7.3 x

Reported a 14% increase in revenues to $34m; together with very pleasing margin expansion to 27.5% (from 26.6%).

Generated surplus cash from operations after CAPEX of $6.5m. DMX notes “ With consistent cash flow the company has the ability to expand its operations further both organically and through acquisition.”

I really like the space DMX are in – environmentally friendly waste destruction and recycling, with a mixture of both government and industry (including mining) clients.

The local council had an e-waste/chemical collection a couple of weeks ago and DMX/Chemsal were there collecting all the old paints and other chemicals. This is the contract that they have just picked up to do across all of WA.

I have accumulated a decent amount of DMX under 20 cents over the past few months since their strong first half announcement.

So a 2c final dividend represents over 10% div yield with hopefully some nice capital growth to come.

[Lizard]

Hi Steve,

I thought that looked good too. You did well to accumulate under 20cps.

Cheap+growth outlook = good odds. :)

[Lizard]

Some good volume on the close and remaining on the bid at 25cps there.

[steve fleming]

Some good volume on the close and remaining on the bid at 25cps there.

Hi Liz,

One of the very few stocks in my portfolio that is looking healthy at the moment.

DMX is also ex a 2c div a week or so back, so has recovered nicely from its 18c lows in mid-Aug.

Strange bit of action in the last hour of trading...i keep waiting for some corporate activity here, but no one seems to want to make the first move.

[Lizard]

Hi Steve,

I bought a few before the div at 24cps and then more at 23cps after, so my entry not as good as yours.

I'd really rather not see a takeover - being obstinate enough to still buy and hold illiquid stocks in this market means having to be pretty picky, and it takes a lot of time to find a stock where the odds seem to stack up as well as DMX does for me. Only multi-baggers need apply...

[steve fleming]

After a couple of months of taking nibbles at 28c, DMX finally broke through 28c today to close at 30c.

Now at 52 week highs and still carries a 7% div yield.

[Lizard]

Yes, been ticking along steadily, although still looks a bit like just one major buyer slowly collecting, as saw the bid thin out considerably for a couple of days when they seemed to go quiet. We could yet be hung out to dry if the agm commentary doesn't stack up as well as hoped on Thursday, but I'm still pretty positive on this one.

[Lizard]

AGM speech didn't offer much guidance except to say all going well and profits up first quarter.... however, I note the Chairman's comment about employing KPMG to consider options to maximise shareholder value. Also the rather odd focus at the start of the MD's speech re shareholder distribution...

... I can't read their minds from here, but presumably some interest in getting a full buy-out from one of the major holders?

[steve fleming]

AGM speech didn't offer much guidance except to say all going well and profits up first quarter.... however, I note the Chairman's comment about employing KPMG to consider options to maximise shareholder value. Also the rather odd focus at the start of the MD's speech re shareholder distribution...

... I can't read their minds from here, but presumably some interest in getting a full buy-out from one of the major holders?

It takes a brave small cap to issue formal guidance these days Liz,unfotunately. – not many are doing it.


Re the KPMG review, I’d imagine they are canvassing all options.

There was talk previously of a merger with Weston’s company: http://www.westonal.com.au/



Also the following popped up on Mergermarket last week – also gives some insight in terms of possible strategy

------------------------------------------------------------------------------------------------------------------------

Dolomatrix, the Australian-listed waste management company, is seeking acquisitions to grow its core division Chemsal, said managing director John White. Target companies did not necessarily have to be waste management companies; they could be in a different field but allied to what Chemsal does.

White explained that targets would have to be synergistic by management or technologies to Chemsal - which specializes in hazardous chemical waste collection and disposal. It would also consider making acquisitions of individual technology assets, he said.

Expanding Chemsal acquisitively and organically was necessary as chemical waste management was too small a market in Australia in relation to other global markets which rely solely on organic growth. By contrast, Dolomatrix’s other five divisions - which are small in comparison to Chemsal - are targeted at offshore markets.The AUD 35m (USD 35.6m) market cap Dolomatrix is also looking to expand its existing China operations and into explore additional countries organically, he said. It also has representation in Mexico.

Potential targets would be private companies, smaller than Chemsal. Some companies in Australia have already been identified as suitable targets for Chemsal. Although, White acknowledged there was a general shortage of good targets and it was also difficult finding companies for sale at a reasonable price. Approaches from advisers would be considered. Its auditor is HLB Mann Judd.

Funding of acquisitions would be through debt or off the balance sheet if it was a very small target. White did not forsee any need to tap the equity capital markets in terms of its target size range. The company posted net profit after tax of AUD 4m, up 17% on FY 2010. Its revenue for FY 2011 was AUD 33m, up 14.3%. It has cash on hand of AUD 8m as of 30 June 2011. Its gearing ratio is of 8%.

Listed peers include Veolia, Transpacific and Tox Free and then a number of small private players. Transpacific made a failed takeover offer for Dolomatrix in 2008, but remains the largest shareholder with 23%. Weston Industries is next largest, with 14%. The top six shareholders have more than 60% of its share register and the largest 20 more than 83%. Improving liquidity in the stock was another reason for seeking to make acquisitions, White said.

There had been no further takeover approaches since Transpacific, possibly due to the intervening global financial crisis, White said. The current strength of the Australian dollar was another possibility, he said.

[Lizard]

TOX and DMX both in halt. From the wording of the announcements, it could be read that the transaction will mean TOX acquiring DMX.

[Lizard]

Asset sale to TOX and cash return to shareholders of about 39cps... should be still another 2-3cps left in the shell. I'm happy with that, but still like the business, so might be time to take another look at TOX.

[soulman]

Just saw DMX have $17 mil accumulated losses. Maybe Sir Ron will be all over this coy soon. I have taken a position at 36 cents.

Thanks for the heads up Liz.

[steve fleming]

What a nice Xmas present, and another shell to have some fun with post transaction! How good is that!


I agree Liz, fair but not hugely generous - DMX was on track for $10m EBITDA in FY12 (vs $8.9m in FY11), so 5.8 X forecast EBITDA which is not a massive premium.


And 39 cents is not huge given the DMX directors so passionately argued against a TPI takeover at 30c?

TOX are trading at 5.5 x forecast eBITDA, so it makes lots of sense for them, given there is $1.5m of head office savings available (implying a 5x EBITDA acquisition multiple) plus synergies, which you would think there are plenty. It also brings the DMX assets into a more efficient capital structure, as DMX had pretty much zero net debt, thus leveraging the returns to TOX shareholders.



The questions now is, do a cashed up TPI come in with a counter proposal??? TPI saw value at 30c when DMX was not as a complete business as it is now, but that was before TPI hit their financial distress. TPI however has just completlely re-financed their debt in conjunction with a cap-raising and are now financially stronger than any time in recent years. Do TPI now come in with say a 45c offer for the 75% of DMX they don't own? At 45c DMX would still be relatively cheap.


Anyway happy with the offer given the current environment, and given I have a sub 20c average entry price from earlier in the year, – but DMX was paying excellent dividends with a lot of value left so a shame to see it go.

[mark100]

In at 35 and 35.5 this arvo. Still a nice low risk trade from here given the volatile market

[steve fleming]

Interesting comments from Tim Boreham....I would dispute a few of his comments though

http://www.theaustralian.com.au/business/opinion/tox-free-solutions-to-buy-dolomatrix-assets-for-58m/story-e6frg9lo-1226223390220

[Lizard]

Interesting comments from Tim Boreham....I would dispute a few of his comments though

http://www.theaustralian.com.au/business/opinion/tox-free-solutions-to-buy-dolomatrix-assets-for-58m/story-e6frg9lo-1226223390220

For anyone else trying that link and getting stuck at the log-on page, just go to google and get in that way... not sure why the direct link diverts to the newspaper login, but I can't post it without the same thing happening either...

[steve fleming]

What a nice Xmas present, and another shell to have some fun with post transaction! How good is that!


I agree Liz, fair but not hugely generous - DMX was on track for $10m EBITDA in FY12 (vs $8.9m in FY11), so 5.8 X forecast EBITDA which is not a massive premium.


And 39 cents is not huge given the DMX directors so passionately argued against a TPI takeover at 30c?

TOX are trading at 5.5 x forecast eBITDA, so it makes lots of sense for them, given there is $1.5m of head office savings available (implying a 5x EBITDA acquisition multiple) plus synergies, which you would think there are plenty. It also brings the DMX assets into a more efficient capital structure, as DMX had pretty much zero net debt, thus leveraging the returns to TOX shareholders.



The questions now is, do a cashed up TPI come in with a counter proposal??? TPI saw value at 30c when DMX was not as a complete business as it is now, but that was before TPI hit their financial distress. TPI however has just completlely re-financed their debt in conjunction with a cap-raising and are now financially stronger than any time in recent years. Do TPI now come in with say a 45c offer for the 75% of DMX they don't own? At 45c DMX would still be relatively cheap.


Anyway happy with the offer given the current environment, and given I have a sub 20c average entry price from earlier in the year, – but DMX was paying excellent dividends with a lot of value left so a shame to see it go.


So no sign of a TPI counter-bid (and they are running out of time, with the vote next Thursday, where they will be forced to show their hand)

But, I wonder what was up with the 15.8m ($6m / 10% of DMX) crossing yesterday???

[steve fleming]

So no sign of a TPI counter-bid (and they are running out of time, with the vote next Thursday, where they will be forced to show their hand)

But, I wonder what was up with the 15.8m ($6m / 10% of DMX) crossing yesterday???

So the vote was 75m for , 32m against. (70% / 30%)

TPI with 31m must have voted against the sale.

The whole transaction was obviously structured to defeat TPI ( i.e. a takeover offer wouldn't have got to the 90% level, and a scheme of arrangement would not have got to the 75% vote required). Yet this asset sale (which for all intents and purposes was a takeover) was able to get accross the line on the back of just an ordinary resolution (ie 50% vote)....pretty sneaky/poor form if you ask me.

Completion is due next Wednesday, so looks like TPI are now just going to sit back and cash in their holding, which is unfortunate for DMX shareholders who could have done quite nicely out of a bidding war. I'll take the 100% plus dividends in just under 12 months, but still are pretty disappointed to be giving up this asset.

(and still no disclosure of who bought the 10m holding from Acorn last week - not that it would have impacted the vote)

[steve fleming]

So it all ended very tamely.

Now,to see what ends up being backed into the shell - though that might be a bit of a wait!

[steve fleming]

So it all ended very tamely.

Now,to see what ends up being backed into the shell - though that might be a bit of a wait!

Finalisation of the adjustment period om Monday.

So we find out how much in excess of 35c we get.

I have been buying more DMX, on the expectation that the value of the shell + dividend + imputation credit + additional capital return will exceed DMXs current market cap of $6m

But these adjustments could go any way; so we'll see if I end up on the right side

[soulman]

Got out for a loss at 4.1 cents yesterday. It's been more than a week since the flagged finalisation of their books for the capital returns and FF div.

My feeling during the weekend is that they ran out of money. Just bad PR in DMX IMO. I guess most of the execs has cashed out and couldn't care less.

[Lizard]

Looks like a good thing you sold out, Soulman... Trading Halt and dispute with Tox Free does not sound so good.

Thankful to have taken the money a few months back at 38cps... but watching with interest. Surely at this point the deal wouldn't collapse completely, but more be an issue about timing and quantum of payment and consequent distribution?

[soulman]

Yep, as I suspected. The management noted that the announcement will be made on the 19th Mar and it took them more than a week later for this announcement?? As you know Liz, the first 35 cents has already been paid. Then probably another 4 cents with some franking credits and then a shell for 6 months.

I hope SF did not over-commit on this.

[Lizard]

To be honest, I had lost track of dates and presumed they were ex-distribution on the 35cps but not yet paid... so yes, was confused. :blush:

Thanks for clarifying!

[soulman]

No worries Liz.....and yes, I am glad I got out. Like they say, "timing is everything".

[soulman]

TOX has response to the claim by DMX. Oh my, this could be ugly and a long battle. Hence, DMX could be suspended for some time. And if DMX losses the case, then no distribution at all.

[steve fleming]

TOX has response to the claim by DMX. Oh my, this could be ugly and a long battle. Hence, DMX could be suspended for some time. And if DMX losses the case, then no distribution at all.


Unders and overs on working capital at completion can go either way.

TOX (as aquirer) put togethor the completion balance sheet....DMX dispute it

I wouldn't imagine that they could get the working cap too wrong....unless there has been a major deterioation in DMX's trading since 31 December....but yes, potentially all the distribution would be at risk.

However, even if DMX is forced to settle and pays out cash to TOX and there was no distribution, DMX's market cap is still approx $5mill, so pretty much priced as a shell already.

Anyway, entered DMX sub 20c, and have received the 35c cap return, so anything further is bonus for me.

[steve fleming]

Excellent!

So the adjustements went in DMX's favour!! TOX owes DMX, which I guess is where the dispute lay!



DoloMatrix International Limited (DMX) announces that, subject to finaldocumentation, it has settled its dispute with Tox Free Solutions Limited(Toxfree) regarding the completion adjustments pursuant to the ShareSale Agreement for the sale of its operating subsidiaries to Toxfree. Whenfinal payment is received from Toxfree, the Board of DMX will determinea further distribution of capital return together with a fully frankeddividend. This is expected to be about 3.6 cents in total, of which halfwould be the dividend

[steve fleming]

Excellent!

So the adjustements went in DMX's favour!! TOX owes DMX, which I guess is where the dispute lay!



DoloMatrix International Limited (DMX) announces that, subject to finaldocumentation, it has settled its dispute with Tox Free Solutions Limited(Toxfree) regarding the completion adjustments pursuant to the ShareSale Agreement for the sale of its operating subsidiaries to Toxfree. Whenfinal payment is received from Toxfree, the Board of DMX will determinea further distribution of capital return together with a fully frankeddividend. This is expected to be about 3.6 cents in total, of which half
would be the dividend


So DMX has settled up 0.8 at 4.5c

Clarified a 3.6c capital return/distn (plus approx 0.8c in imputation credits)

Which leaves DMX ex capital return at 0.9c (ignoring any value for the ICs) or an implied market cap of $1.3m

From memory there was approx $300k of cash to be left in DMX as well.

Could be a little bit more value in DMX yet.

Note that major shareholder CVC Capital have been increasing their holding post the 35c return.

[soulman]

Good news indeed SF....Wished I didn't sell earlier but just bought a chunk today.

[mark100]

I was nervously holding these through the trading halt. Bought in at 35.5 for the arbitrage so it was going to be a wasted exercise if no more cash came through.

A 1.8c FF div and 1.8c capital return provides a gross return to aussie tax payers of around 4.37c. Even more for a super fund.

SF what sort of market cap do you expect a shell to be worth? If we assume $3m, then DMX is worth around 6.5c at present

[steve fleming]

I was nervously holding these through the trading halt. Bought in at 35.5 for the arbitrage so it was going to be a wasted exercise if no more cash came through.

A 1.8c FF div and 1.8c capital return provides a gross return to aussie tax payers of around 4.37c. Even more for a super fund.

SF what sort of market cap do you expect a shell to be worth? If we assume $3m, then DMX is worth around 6.5c at present

Theoretically a shell should be worth the costs that a company would save from not having to do an IPO (say $1m) plus the value of its net assets.

In reality shells are priced at differing levels depending on the quality of the directors and what projects they may be able to source as well as whether there is any sniff of a porject being backed in.

Anywhere between $1m and $5m is not unreasonable - but hard to put any exact value on it.

I had hoped that major shareholder Greg Soghomonian would use the opportunity to back in his Weston Aluminium business, but I understand that he is now retiring from the board,

[steve fleming]

Excellent - payment by 18 April !!


The Directors of DoloMatrix International Limited (DMX or the Company)are pleased to announce

further capital return of 1.8 cents per sharetogether with a fully franked dividend of 1.8 cents per share. The totaldistribution (further distribution) of the capital return and franked
dividend is 3.6 cents per share.

Soulman - you'll be accumulating a fair few franking credits now!

[soulman]

Thanks SF. Got some more at 4.5. This is in my father's account. He's currently not working so plenty of benefits with the FC. Currently, the shell is valued at 0.9 cents.

[steve fleming]

Thanks SF. Got some more at 4.5. This is in my father's account. He's currently not working so plenty of benefits with the FC. Currently, the shell is valued at 0.9 cents.

Ok, makes sense

1.8c div on 4.5c = 40% yield + fc

Obviously non-recurring, but a good opportunity to get some cheap fc's based on the hig div payout relative to price.

[soulman]

Seems to be a lot of sellers SF. I guess the management doesn't seem confident in acquiring a new business. Not sure whether Sir Ron is interested in DMX. They probably don't have a lot of attractive accumulated losses or a lot of attractive franking credits.

[soulman]

Nice little run in DMX today, up 30%. It seems that a fund has been buying DMX and has 8.89% of DMX at present. It's the Rocket Science Fund. After all, a shell does have some value in them.

[steve fleming]

Nice little run in DMX today, up 30%. It seems that a fund has been buying DMX and has 8.89% of DMX at present. It's the Rocket Science Fund. After all, a shell does have some value in them.

and another 54% up today.

Capital return and div should be in the bank tomorrow

[soulman]

Sold for 1.8 yesterday SF. Seems to flush out some sellers after the rush from 1 cents to 2 cents. A nice gain indeed in a short space of time.

You still holding on SF?

[steve fleming]

Sold for 1.8 yesterday SF. Seems to flush out some sellers after the rush from 1 cents to 2 cents. A nice gain indeed in a short space of time.

You still holding on SF?

Nice exit SMan

i am holding, am free carried many times over, so will hang to see if there is any interest in the shell

[soulman]

Fair enough. Just wondering if the payment of the capital return and dividend will be in cheque or direct deposit. Looks like plenty of cash coming your way soon SF. I supposed NZ will be paid in cheque. Just don't like the fact cheque takes 3 days to clear.

[steve fleming]

Fair enough. Just wondering if the payment of the capital return and dividend will be in cheque or direct deposit. Looks like plenty of cash coming your way soon SF. I supposed NZ will be paid in cheque. Just don't like the fact cheque takes 3 days to clear.

Soulman, i got paid overnight - payment was scheduled for the 18 April so would have been transferred at midnight.

I was paid by direct deposit - the registry has my account details

[soulman]

Thanks SF. Dang it. Now if I get the cheque, there will be another 3-4 business days before it clear.

Oh well. Seems DMX has spiral down since the spike to 2.1 cents. I will stay away from DMX for the time being.

[soulman]

Well, for my last post, finally got the direct deposit after giving my bank detail. They only do DD, which is fair enough.

Got back in DMX today at 1 cents after seeing WAM (Geoff Wilson is one of the best stock picker out there) getting on board last night. Then today Rocket Science Fund and CVC both got into it as well.

Seems all 3 funds got roughly 10 million odd shares in DMX yesterday. Obviously someone want this shell to look after their asset.

SF, you sitting tight, free carried still?

[steve fleming]

Well, for my last post, finally got the direct deposit after giving my bank detail. They only do DD, which is fair enough. Got back in DMX today at 1 cents after seeing WAM (Geoff Wilson is one of the best stock picker out there) getting on board last night. Then today Rocket Science Fund and CVC both got into it as well. Seems all 3 funds got roughly 10 million odd shares in DMX yesterday. Obviously someone want this shell to look after their asset. SF, you sitting tight, free carried still?



Hi Soulman



yes, still holding. should have picked up some more sub 1c, but too slow.



TPI offloaded their 31 mil shares yesterday, which as you said, picked up by WAM, CVC and Rocket science.



Strange sort of play for WAM, but you'd think Geoff Wilson knows what he is doing here.

[soulman]

Hi Soulman



yes, still holding. should have picked up some more sub 1c, but too slow.



TPI offloaded their 31 mil shares yesterday, which as you said, picked up by WAM, CVC and Rocket science.



Strange sort of play for WAM, but you'd think Geoff Wilson knows what he is doing here.

Weird that the announcement of TPI offloading those shares you mentioned SF just coming out today instead of last week.

I offload my shares at 1.3 and 1.5. A decent win in an uncertain market.

[soulman]

Announcement out about future business. Not looking good but I don't think Rocket Science, CVC and WAM will let their stake go unnotice. 2 directors have let go their small stake.

Aug 15th is the dateline.

[steve fleming]

Announcement out about future business. Not looking good but I don't think Rocket Science, CVC and WAM will let his stake go unnotice. 2 directors have let go their small stake.

Aug 15th is the dateline.

The ASX is very strictly enforcing the 6 month cash box rule now - see LMC as well:

http://stocknessmonster.com/news-item?S=LMC&E=ASX&N=375702

[soulman]

The ASX is very strictly enforcing the 6 month cash box rule now - see LMC as well:

http://stocknessmonster.com/news-item?S=LMC&E=ASX&N=375702

During a bit of research, LMC has $5.2 mil in cash. There is a dispute for a further $2 mil held in escrow to be paid to LMC subsidiary in Malaysia.

$5.2 mil is roughly 60 cents per share. Another US$2 mil from the claim, if LMC win could potentially add another 20 cents to the backing. All this irrelevant if LMC were to be suspended but not delisted. Too much uncertainty.

Not worth the risk. Long gone are the days these shell announce an acquisition of tenements in Mongolia prospecting for coking/thermal coal. Just look at ROB and DRG.

[steve fleming]

Announcement out about future business. Not looking good but I don't think Rocket Science, CVC and WAM will let their stake go unnotice. 2 directors have let go their small stake.

Aug 15th is the dateline.

Someone took 19.9% of DMX yesterday (two weeks prior to its suspension) as CVC sold out.

Currently in a trading halt - looks like it is being set up for something, in the nick of time.

[soulman]

Set up as a LIC SF. As usual, controversy always arise. Rocket Science Fund will oppose the move. Currently in TH.

[mark100]

Most of these guys who think they will be good fund managers turn out to be duds. Converting to a LIC sounds like a reason to stay listed longer and draw more director fees

[soulman]

Most of these guys who think they will be good fund managers turn out to be duds. Converting to a LIC sounds like a reason to stay listed longer and draw more director fees

Definitely Mark. Cheap entry throught shell and DMX is the cheapest out there. Everything is spruik in this world.