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Maybe the answer is that there is very little upside for shareholders from here. The balance sheet is probably terrible. Why would Seafox bid for the balance of the shares when they already control the business. I've been a long term holder with a fairly big position. I'm very close to where this company operates and have met people close to the financing side. I wish it was more positive as I paid close to 100p initially. Sadly I see more downside than up.
@Capt - you are missing the fact that this is currently a microcap stock, with new investors comprised solely of retail investors (or rather day traders). Institutions won't even buy into this as it won't pass their size criteria with a $35M market cap - the current institutional investors got in at the IPO time when the company was valued at $500M+. Market needs to see clear profitability guidance post this cleanup, but in any case, my view has been that the eventual bidder is SF.
Current value + $25m raise gives $60M valuation. Possible they will be net income positive this year with the lowered lending cost and depreciation charge. For 2019, depreciation + finance cost + tax = $65M. For 2021, this could be $50M or lower. Assuming all clean up done in 2020 and no one off costs in 2021, an EBITDA of $51M means breakeven at net income level. If they improve to $60M EBITDA, you are looking at net profit easily in excess of $6M (or 10 times post dilution earnings). Deleverage and invest in some growth, and you are buying a company today for 5 or 6 times earnings in couple of years. Of course, this will not be a straight line, as with all things in life.
As long as SF does not reverse merge into GMS that screws minority holders, I think we are fine.
Not uncommon for a placing to be executed at a premium to prevailing price on illiquid names as they are strategic investments. Even the last couple of days the notional traded is only c. £600k so puts into context what getting $25m away would take. Seafox have said they will take up their allocation which would maintain their percentage holding not take them above the threshold for mandatory bid.
Oh wait seafox are at just under 30% already and going over the boundary would need a compulsory offer, right? So I guess now their plan is to dilute significantly at the 10p they always wanted, giving them a vast majority holding then perhaps buy out the remainder for XXp?
Seem crazy to me to be able to buy this far below what the placing price will be, I'm surprised seafox themselves haven't been snapping up everything under 10p up to now, given their ambitions to buy the company out.
Struggling to see the downside from here(?)
Could the price fall over last couple of days just have been because of people who bought in short term for a binary play on the refinancing deal coming through and then selling out on news? Yours think they are probably sold up by now if so, so run back up to 10p short term, and beyond that medium term- thoughts anyone?
Does this suggest that they need to somehow get the price above 10p to get a rights issue away?
Can we expect a positive RNS to lift sentiment?
If I didn't already have 2 tranches in this I might be tempted to try a quick trade hoping to get back out if they can lift it to above 10p.
I can't help thinking there's a sting in the tail coming, it all seems far too positive considering how Seafox behaved up till now.
CaptNemo, these are my two cents. I’ve been following this ticker for a while, and I wasn’t expecting a significant change in the SP. If you remember last year when Timmy&Co released the previous deal, the market reacted similarly. My best guess is that, just like last year, there are still a few things they need to sort out before we see the full benefits of the deal realized in the SP.
I wouldn’t guess any price, but I’m quite confident there will be a bump after the annual results, and an even nicer bump after the 25M is raised. And of course, we might finally see the SP reacting positively with any RNS related to increase in utilization.
Same as yesterday mate no change on the day now up slightly market makers taking of some stale holders is my guessvshould build back from here. I see They have to get the plan out by end of March??
Like almost everyone else I was pleased to see the RNS yesterday, finally some clarity and real good news, almost all the bad news out of the way - with the possible exception of the finer points of the $25m raise, and the SP reacted very positively - for the first half of the day, but then tanked.
So, what am I missing? Anyone any thoughts on why the SP tanked and appears to have tanked again this morning ? I also looks like HL has gone 'tits-up' this morning and I cant get any real time valuations on anything.
And with the Maine backers partaking in the equity part, they will of course want a return 20p +
Me too......frustrating that no amount of good news has moved the SP. Utilasation is great in comparison with peer operators and backlog is good too. Evolution with cantilever is now working as it was intended at better rates and being the only one of its kind, it is likely to not stop. Expect her rates to increase as clients realise significant savings from the unique design. GMS is now running very lean so with a better bank deal I think we can expect to see a significant increase in EBITDA this year; agree that it will likely be spent on deleveraging. Hope to see a SP bump after the EoY Results and another after the 25M equity raise; circa 20-25p by end of year?!
Par value is the nominal value of each share...
eg: when a company says “raised £1m through the issue of 1m shares **of 50p each** @ £1” that 50p each is the par value.
Companies can’t issue shares for less than this figure... in this case it is 10p (hence why this is good value).
Exactly the same as limited companies shareholder structure.
Would need to call an egm & reduce par value which looks highly unlikely from here.
Cam evening
Can you enlighten me about tbis 10p bottom line pls.
Many thanks in advance
Duster
Toomuchshine - They cannot raise below 10p.
More likely a 5p fundraise
25p raise maybe low case 15p will be worked up imho
The equity rise will be much larger than the current share price
Si547 So what do you think, i'm a little disappointed after over 18 months wait.
Yes end of June hence the drop back.
End ofJune........
Yes I think once Equity is done then a 're rate imho, not long to wait as needs to be done before end of Match
ATB
@ Duster it all depends on business developments and time frame. Assuming they deleverage over the next couple of years to a normal level and EBITDA climbs higher through revenue and opex improvements, they should easily have a c. USD 600m Enterprise Value. Knock off 100-200m net debt as a sustainable run-rate level and the increase in shares assuming only a $25m raise, then you get to a share price of around 50p medium to long term. Obviously can be much higher if day rates for the fleet move into a structural bull market (it is so cyclical). Would guess more in the 20p range for most of this year though. Of course no crystal ball! But risk/reward is impressive. I think many of the worries minority shareholders have had over the past 12+ months, especially around intentions of SF, are being rapidly alleviated.
Where do you see this 're rating to AA after raise, I'd go for 25p + imho
This is good news and very obviously a better deal than before. Obviously it took a bit of time but these things always do.
Interesting that it reads as if they may very well never need to do the full $75m equity raise. They leave open the possibility of a broader refinancing after the $25m raise happening soon. If they are able to drive material cost reductions, efficiencies, contract wins, slowly improving day rates etc over the next 12-18 months then it appears they MIGHT manage to avoid the additional $50m raise. That $53m in interest savings for 2021 and 2022 is also uncanny and I can't help but think is being seen as temporarily "in-lieu" of the remaining $50m raise . It will go straight to extra cash in their pockets and hence net debt reduction. I can see a scenario where they clean up the business significantly over the next 12-18 months and refinance with a different set of banks and never have to raise more than the $25m now.
It's also interesting that they refer to "strategic and tactical alternatives" for the business once the balance sheet has de-levered. That obviously refers to either an eventual merger with SF or some other form of M&A/sector consolidation.
It's also interesting that SF and Mazroui are named as specifically working together re: NDA, committing to participate pro-rata in the upcoming $25m raise, etc. Where is Horizon in all of this? Horizon were of course key to getting them over 50% control. If Horizon are of a different mindset now then that is positive for us minority shareholders as SF have less power.
I also don't expect this to fully re-rate until the equity raise is complete. And I hope the $25m raise is structured as a rights issue in order to enable us all to participate. Although if not, can still at least partially offset any dilution by buying the corresponding entitlement amount in the open market.
Well done GMS and SF. Patient LTH's will benefit.
... is all that's required here now.
This is just the beginning of the turnaround and it has a long way to go yet.