UK 16:09 Wednesday, 7 October 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Following on from my earlier piece on Challenger Acquisitions (CHAL), I thought I'd write a more balanced update following Friday's RNS.
Already a member? Sign in
• All premium articles
• Tom Winnifrith’s Bearcast
• Access to all the entire nearly 13 year archive
• ShareProphets Daily Newsletter
Cancel any time
This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.
Comments
Drunken Sailor
Do not be fooled by conversion prices. They are very easily adjusted later on. Very often they do get adjusted for one reason or other and very often that is downward. I only know of one situation (there may be others that I do not know about) where an adjustment to conversion price was made upward and that was where the Chairman and CEO of the company who had made the convertible loan to the company in question had a much bigger stake in the company receiving the loan and was himself the CEO of that company. Upon conversion of the loan, he promptly paid himself directors fees from the company that had the cash but no longer the debt thanks to that higher price conversion. Of course the AIM listed company that made the loan did not announce the conversion of the loan into the shares of the unlisted company and you has to read the full annual report produced over 6 months later to find out it had occurred and you had to anorak around in the Companies House filings of the unlisted company to find out that it had paid those director’s fees to know this. The AIM listed company in question routinely reduced the conversion price of the loans it had and dilution was absolutely horrible even after it got booted off the AIM casino.
Striebs
Cynical Bear .
What makes you think dividends from the NYC wheel will cover Challenger running costs of £250,000 – £300,000/month or even £250,000 – £300,000 per quarter ?
Tickets for the empire state are $30 . I can’t see Challenger making more than $20 profit from each passenger including restaurant and parking .
The project cost is $500m . Even in the most optimistic case , sponsorship and naming rights are unlikely to cover the cost of the attraction . Some equity interest will be required . Lets assume very optimistically that only 40% equity will be needed i.e. $200m and that no debt will be required .
Assuming 4 million passenger , $80m p.a. best case EBITDA ie $68m after tax .
So $68/$200 = 34% annual return . Ignoring that investment has to be made 3-5 years ahead of first revenues and investment has to be financed as Challenger have at 8% .
Challengers 3% of an estimated $68m would be $2.04m . Challengers running costs are going to be more than that .
The only way I can see that a big wheel company could grow organically is if sponsorship covers almost the entire cost of the wheel and debt can be used to minimise equity required for the rest and that Challenger have a material net interest .
Cynical Bear
@Striebs – not sure if you read my earlier bearish piece on CHAL but the short answer to your question is I don’t.
The only point I was making was that it makes more sense to put funding in place that is repayable as and when dividends may be coming through from NY.
Your point is totally correct though in that 2019 is a long way away if they have no way to pay their monthly bills and repay the shorter term liabilities which is why Jakarta or another Big Wheel project coming on stream shortly is critical otherwise the sp will just crater hence my request for an update on Jakarta.
For completeness I’m also bearish on the performance of the NY Wheel but didn’t feel it was worth going through all the details on something where it is going to be a couple of years of so before we find out. There is a lot of debt involved – about $200m of senior debt – and the forecasts are fanciful if they think it will make more money than the Empire State Building.
I’ve been to NY a few times as a tourist and have never been to Staten Island – would I go to go up a wheel to see views of a harbour – umm, no!
Striebs
Cynical Bear ,
I’ve been to New York once . Went to the top of the Empire State and thought it was just fabulous , not just the view , it had that early 20th century appeal . Didn’t get to Staten Island .
Took a look at a map and discovered Staten Island is over 4 miles from Manhattan so that is the closest the wheel , which is almost exactly half the height of the Empire State Building could be to Manhattan . Location is wrong .
Watching videos of Mark G , one can detect talent beyond fund raising . Think he may just have been unlucky up to now .
The Starneth acquisition is a genius stroke and may save them . IMHO it’s their key to taking majority stakes in future wheel projects .
Will wait for their future projects to develop before reconsidering whether to invest .