I will back a rights issue in 2015, but will sell in 2014 first. I think when the rights issue is announced, the drop in SP will be about the same as we saw with Thomas Cook. They are different companies, but the same in that the respective rights issues will finally put the debt problem to bed.
Leaner and stand alone?. Looking at the facts the have reclassified the restructuring costs as one offs, and yet the "contribution" (a change in the reporting to make year on year difficult to do for hovis) hasn't improved.
MC tried, GD is trying... Will it need another CEO to try?.
I'm in still, but with a small investment now, as it feels like there's nothing inventive coming in regards to hovis. Remember all the low hanging fruit improvements will have been done first, all they have seemingly done is stopped the rot a bit.
To sort Hovis they need to invest in the business but they haven't got the money. I don't believe the line that they are looking for someone to 'invest' in the business as any money coming in even from a part disposal will surely go to the banks. Now if they could sell it for a good sum then they should but they tried last year and failed - all the cost saving they have done this year has been just to strip out the excess costs left over after losing the coop contract so again I don't believe its really in any better shape now albeit they should have closed the worst bakeries.
That said, results for Hovis could be slightly better than expected this year as the falling wheat price will give them a temporary benefit before the retailers come to get it.
Agree on the point re the rights issue - I'll ask the question I've asked before to see if the answer has changed - would any of you back a rights issue and add a further 60% on top of your current investment?
Just because they have'nt succeded in sorting Hovis in the last two years, it does'nt mean they won't succeed in the next two years. Indeed, the last two years has been about restructuring to make Hovis a leaner, but stand alone facility. The aim of selling a stake is to attract investment, ie cash pumped into the business, which if it can be shown that Hovis has further potential, well that equates to selling the whole thing off to pay down debt. It must be noted that Hovis being sold is not an alternative to a rights issue, but the eventual sale of Hovis will be in addition to a rights isssue.
I don't agree about "in a few years" it'll be a better proposition. They have been trying to fix hovis for 2 years plus now, and got nowhere. Maybe GD now he has seen the business is starting to see that.
50-70m of free cash flow this year, deficit pension contributions starting in January of 47m. Is that silly to worry about?, frankly it would scare me to death, in theory 1.6b of sales creating cashflow of 20m (high end).
IMO a RI along with something on Hovis could be what saves premier
The best that can realistically be hoped for is the sale of a Hovis Stake, not the sale of Hovis. Hovis itself will become a much better proposition to a foreign buyer in a few years time. The amount of money that would be received would, hopefully be enough to end for good all those silly stories about a cash shortage in 2014. Indeed, the ''lump sum'' would keep PF going until the pooposed rights issue in 2015. Some sceptics argue, that in 2014 with extra pension payments and interest, we should expect to see the shares crash after the headlines read ''Premier Foods in emergency bank loan'' will not happen, but by selling the stake that would ensure a smooth ride upto 2015.
Would this be a straight "Dragons Den" type investment i.e £5 billion for 50% stake in the company (say)? If an investor puts money in surely they will want a guaranteed return which could lead to 100% of the profits going to (say) 50% of the investors (not us!!!) or if no profits gradual sale of bakeries ,mills etc to generate cash just to pay the returns.
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