Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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I quite agree the HAYT sp can be expected to hover a bit below the merger price to reflect the risk of merger not proceeding (all other things being equal), and it was doing this in the days post announcement. I was thinking though that the subsequent fall of 10% on no new news required some particular explanation, because it’s such a significant fall. I can’t see how any shareholder can vote yes with any conviction given the restricted newsflow. The picture now will be very different from March. I also wondered if sweeteners can be given to secure those irrevocable vote undertakings. The balance sheet is perhaps stretched in the sense of “working hard” rather than stressed, but without updated figures and an explanation (which we’ve never had) for the long delay refinancing, we don’t really know. My understanding from what the bod have said (until they went to ground) is that the strong H2 2017 performance anticipated in the half yearly report, happened/is happening, just the wrong side of 31 March! With all forward business pointers strong too. Order levels may not have been very exciting in Q1 calendar year 2017, but may well be flowing in superfast now.
The HAYT SP is presently largely determined by the AVG SP which on its own is justified by its cash holdings and forward order book. That the HAYT SP is at a slight discount to the merger proposal terms principally reflects the risk the deal will not proceed for some reason. If one thinks the deal will be done and that looks likely then HAYT is essentially a cheap way into AVG. It is a good deal for AVG and once it is a done deal and the logic of the merger is better understood by the market (following brokers notes etc) the potential of the combined business ought to be reflected in a progressive improvement in the AVG price once the deal is completed. I agree ELB did do a good job over the years but the BOD completely screwed things up big time on a number of fronts all at the same time over the last year or so. That HAYT's balance sheet was stretched was clearly a problem but less so if the required order intake and hence forward order book was in place. If it was then the BOD and the committed larger shareholders would I think not be supporting the present terms. The HAYT preliminary figures claimed a record order book but that suggestion was due to the addition of Peter Brotherhood and in reality the order book was higher in early 2017 than at the end of March 2017. My reading is that they have been struggling to get the orders in otherwise we would have heard much more of them. Despite sterling weakness part of the problem appears to have been converting many OEM order prospects into orders in a timely manner or at all! Seemingly HAYT has been devoting additional resources to securing those or similar orders but that takes time. Meantime AVG has no certainty of HAYT short term revenue stream (or maybe it has via due diligence!) and has for its own shareholders to pitch its terms to reflect that. I get the impression that many contributors to these threads have been there to make a turn and already done so but those (perhaps a minority) in for the longer term ought to do well relative to the current price by staying with the merged businesses.
I’ve been mulling over the possible reasons for the SP declining over recent days, away from the merger price. Might it indicate increasing doubt over the approaching merger proceeding? That could perhaps be because (good) financial figures might be leaking, or suspected, boosting the No vote? Or the prospect of a MC inspired counter bid receding? Or it might reflect lack of real news, and suspicion that’s because bad news is being suppressed, or concern the ship is rudderless. I suspect the prevailing market view will be pessimistic because many interpret the delayed refinancing as difficulty refinancing. A board shake up is inevitable if merger doesn’t happen, meaning more volatility. PS I’m tempted to hold post-merger, for the reason you state, and because I like what I’ve seen of AVG so far anyway, even though right now (in the nicest possible way) I wish they’d b*gger off! I’d research AVG properly before selling, although have lost some confidence in ELB (who might get a board role). Generally he’s done a great job at HAYT over the years, but has dropped the ball this year imo.
Flundra - I don't know if prior to the vote the company will be obligated to state its trading position, I would hope so for transparency but I fear we won't hear anything until the next trading statement. You make an important point regarding deferred revenue and this should boost figures for the current trading period. We haven't heard much about new orders recently, but like you I suspect we are well on course to meeting targets and improving the company's financial position Let us not forget even if the deal succeeds we will later benefit when the improved trading position is eventually released to the market. Now is the time to accumulate and vote against, but if resistance is not enough then hold and reap the rewards of a combined AVG HTG entity
spell check!! Meant Wanglii
Wangle, I'm history on this blog my friend. Popped in to see how things were but I sold out at a shade under 48p. To be fair I bought in at 41/42p so not too shabby. Oh, for what it could have been though . . . . GLA
One frustration here is absence of financial news. We haven’t really had any news about cashflow since 31 March, ie nearly 4 months ago. The AR was very positive re FY 2018, eg improving sector conditions, record order book, low capex. Also the principal reason for low revenue in 2017 was explained by ELB as a cash flow issue, ie the orders expected to be completed in H2 2017 hadn’t gone away but were just “shifted to the right”, so those orders should now be being completed with the cash from them flowing in. So now here we are nearly 4 months on. The news about cash in 2018 can only be good can’t it? Anyone else suspicious not to have heard anything? I guess what must be disclosed atm depends on the applicable rules re mergers and what the bod wants to tell us. No surprise perhaps that a majority bod, wanting this merger to go through, is lying low. Not sure what to do about this, short of going to Luton with my shovel and electrodes...
If HAYT fall to 37p and AVG remain at this level it will be a bargain for anyone buying in here assuming the vote succeeds. What is more likely to happen is AVG will track this lower and vice versa or rise in tandem up until the shareholder vote because the ratios have been declared. I don't see any reason why there would be a discount to AVG shares accounting for the proposed takeover ratio. The question is are people buying at this price looking to vote in favour or reject? If MC and associates are planning on declaring his hand with a counter offer that would be hugely beneficial for holders. Although I am disappointed HAYT board members have sat on their hands all this time, having not effectively pursued a refinancing deal with the bank, I do still believe value of my share holding will rise post merger. The risk element attached to this stock is largely a result of mounting debt due over the short term, our continued delay in repaying the due £2.4m and a stubbornly low cash-flow position. As part of the enlarged group the value of HTG must surely rise. There will be an immediate boost in shareholder value if this reasoning is sound. £15m spent on the centre of excellence! Now an extra £9m will see AVG take control of all assets, recurring revenues and customers and future profitable cash-flow. I may buy more. Certainly won't be selling on fear.
Yep sold up wanted the company to continue, bod sold out cheap no doubt for a position on the new board.
I follow this board with great interest. In fairness I have correctly predicted the share offer price (to within 0.4p I believe) and more importantly I have been suggesting for many months that we would be bought out for a song. A disgrace too but when did morality enter the equation when profits are concerned? My shares have now been sold (at a reasonably healthy profit sorry). I notice GW and Chanjael have gone very quiet on here and I hope that they too have sold whilst it was in the early 50's as I did. As prev stated I bought AVG at 223 and will retain until they hit 255-270. My advice would be don't wait around for the inevitable but instead sell and come back in November as matters settle at HAYT around 37p.DYOR and GLA