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"Signs commitments for GBP500 million of new debt facilities, consisting of GBP380 million term loan facility to 2026 and GBP120 million super senior revolving credit facility to 2025. Notes the new facilities provide the group with enhanced liquidity and long-term financing, with the term loan being used to repay and refinance in full all of the group's existing debt facilities.
Restaurant Group says no leverage tests will be held until June 2022. Adds net debt as at December 27 is GBP340 million, which is in line with its expectations."
I'll say again
"Restaurant Group says no leverage tests will be held until June 2022" - this is a far more generous deal than Card need but it shows we can refinance and get covs waived for the next few months - easy!
12 months time back to £80m EBITDA we'd be 1.1x debt/ EBITDA. Put £20m or so into digital and advertising. The rest? Dividends!
As an example, for me the risk of an RI here is still 50/50. So my response was to sell 50% of my share holding in mid jan so that I can act accordingly should an RI happen.
I initially had 80k shares, so I’ve missed out on a good few thousand there. Whilst that stings a bit, at the end of the day where I see real risk, I try to avoid getting caught with my pants down because in my opinion, If you don’t have a plan B in this game then you have no plan at all. Learned that the hard and expensive way! Ha ha
From the over negative to the over positive. Oh well... At least as a holder of a sizeable long position it makes me feel better. I do somewhat fear the refinancing though, although less so the more the share price rises.
Well said MSM/ Carllapos, I am disappointed by the way in which some have turned on Paddyboy, even blaming him for missing out on "another 10,000" (PaperHands). This game isn't for you if you're that easily swayed but are putting down the kind of money where a 50% uptick is worth another £10k (presumably). Paddyboy raised concerns about debt, RI etc. Fair enough. If you know the history of CARD you know it has always carried fairly significant debt - more than I like. But you choose to invest or not invest. And hedge funds are not paying people like Paddy to deramp shares to get a few out of private investors' hands! Paddy has his point of view, that's his prerogative. And we should remind ourselves that the specter of a RI has not gone away, there is clearly some form or refinancing being considered or actually discussed. Anyone who is holding shares probably has a better feeling than a week ago. Perhaps a wry remark to those who missed out, but no need for the vitriol in my opinion.
Well said Carllapos. Too many here do not want to see the negatives but are all too quick to shout about the positives. You need to evaluate both sides and ultimately make your own choices. Paddy did not press sell or buy for you...that is your decision. I sold...not because of Paddy but for me I was happy to bank the profit. Yes I would have loved another 20% today but hindsight is a great thing. Card has potential to go on from here but as Carllapos has said...it is not without risk. Enjoy the rise but don't allow the conversation to become one sided...if someone is not your cup of tea stick them on ignore.
I’m in long, but I’m still expecting some bumps in the road. As great a business as card is, it’s been very poorly managed over the years and rather than sitting on large cash reserves, it’s sitting on large debt.
They’re being very coy about this refinancing and offering little forward guidance, so I’m expecting a nasty surprise at some point. But it will recover and card will head north because a return to profit is almost a given.
I agree. Who are CARD alleged to have lost market share to? This company had some serious moat and customer loyalty the last time I checked. I must have imagined the online growth in 2020 (and that was with a poor website)
Google already loves card because it is called called. Mo9npig have to advertise and hope people remember the stupid name.. Card factory win already. Top of google without spending a penny. Luck I expect but good luck.
Anyway online is fake. People like shops. Buy a card, buy a bottle of wine.. done. No waiting for online to lose your delivery or smash the bottle.
There’s a lot of merit to what has been said on this thread. But I don’t buy into the fact that card has lost permanent market share. It’s pure unfounded speculation. CARD has a strong usp as a budget/value retailer and I don’t believe it’s competitors are able to compete on that element and many such as moonpig have no interest in going budget.
Yes card need to evolve, but I don’t think we’re going to see a mass exodus of their client base.
For me though, the bigger target is not the return to retail, but the return to socialising. Because without social occasions, there’s not much for the shops to be open for.
You believe if card becomes profitable they will suddenly make a special dividend? I know the BOD will take bonuses as thats what every BOD does then what's left will be shared with shareholders. I haven't looked into it but have card BOD took a pay cut to support the firm in the last year? I know my company has and they are one of the most profitable ftse companies
@steve which ftse100 company is paying directors more than shareholders?
The point here is say we RI for £70m so we are at the 3x ebitda leverage point. In 12 months when ebitda is back at £80m we can go back to 2x leverage so in effect take out a big bank loan to pay back the RI. This is the policy card factory has been very clear on over the last few years just take a look at those special dividends they payed every year
Danl90, if you believe they will repay all the profits to shareholders you are very trusting. I work for one of the top ftse 100 companies and I know for certain if they had excess money some would be paid to shareholders but most would be paid to the directors as they are the ones who choose the fate of the firm.
This issue isn’t too much debt. It’s that the EBITDA is too low. All we need is to bridge until the EBITDA recovers
This business is very solvent and cash generative. We are just at a point where we are technically breaching a cov but when stores open we will be so far inside our covenant we will just have a silly amount of spare cash and debt headroom we can just draw the debt back and pay shareholders the RI back
Maths right.... They are also not with rental arrears as most was covered by govt grants.... The total figure of 50m - 100m could be right but that's it. That suggests a shareholder dilution assuming a RI at 32p of between 33% to 50% NOT a 90% dilution as you imply....
That's a real positive and should help a good deal with reopening costs / cash flow while also taking pressure off the refinancing. Clearly, better to wait a bit to refinance if possible as the SP recovers a little...
@scorpion but the data doesn’t show a loss of market share. When stores were open they traded a head of PY. Yeah a bit of this was Christmas brought forward but shows the emotional attachment a lot still have to card purchases
Also the freehold estate point I get but it’s not a solvency point here it’s purely a timing point. Debt to ebitda multiple and our ebitda is low as stores are closed. Even if there are some customers who are gone (let’s say 30%) and assume no online growth (so I think a fairly strong downside case as stores went up after last lockdown and estate trading also went up) then knocking 30% of FY19 EBITDA is £56m so we are well under the 2x normal covenant period. This isn’t a solvency issue at all it’s purely a “we can’t tick that box as the stores are closed”
Raising cash will reduce that debt number and just mean we are back on track sooner
On the grants point from chancellor im sceptical we will get anything
doubt if open offer fund raise would work for Card. Quite an interesting one MAB have used actually. Not seen that one before. In any event don't MAB have a consortium waiting in the wings? Yes, they have prime estate in their portfolio which i understand property developers are rather keen on too. Different gravy to this entirely!